Credit Suisse Group downgraded Carnival (CCL) and Royal Caribbean Cruises (RCL) to neutral from outperform.
Analyst Scott Barry says his checks with large off-line and online retailers indicate weaker-than-expected wave season bookings and materially higher promotional activity year over year. He notes indications of demand re-acceleration or extended duration of wave season would likely cause him to revisit the rating. Meanwhile, for Carnival, he cuts his $3.10 fiscal year 2006 (ending November) earnings per share (EPS) estimate to $3.05, his $3.66 fiscal year 2007 EPS to $3.48, and his $60 stock price target to $56. For Royal Caribbean Cruises, he cuts his $3.00 2006 EPS estimate to $2.90, his $3.50 2007 EPS to $3.36, and his $55 stock price target to $50.