Embattled cruise operator Carnival (LON:CCL) is finally seeing something go right, says broker Credit Suisse, which has upgraded its view on the Costa Concordia operator.
Its 'overweight' stance marks a material change of direction for the broker, which has held as a neutral view on the company since 2013 due to what it describes as continued snafus and failure to build on its market leading position.
Following the appointment of new chief executive Arnold Donald, Credit Suisse suggests Carnival is now making steps towards a business transformation.
The fourth quarter was better than expected, as was 2014 guidance, which has prompted Credit Suisse to raise its earnings estimate for 2014/2015 to US$1.67.US$2.50 and its target price by a chunky 43% to to US$43 from US$30.
“We are pleased to see management shift its focus towards harnessing its scale advantage and while exact specifics are limited, we see potential for significant cost reductions and better brand synergies longer term.“
Deutsche Bank, also a buyer, said Carnival Cruise’s rejuvenation strategy has started "to have a positive impact on both ticket price and on board spends following the launch of a nationwide marketing campaign and travel agent outreach programme.
“This is very significant news as the key bear case for CCL has been that this brand has been permanently damaged and cannot be turned around.” Its price target is 2,312p.