Carnival stock gains 2% despite a downbeat forecast for fiscal 2020 amidst the Coronavirus crisis

In
an announcement on Wednesday, Carnival said that its performance in fiscal 2020
may take a severe hit due to the recent outbreak of Coronavirus in China. The cruise
line valued the loss at 55 to 65 cents per share this year if operations remain
suspended in Asia for longer than expected. Carnival is currently anticipating
the suspension to be over before the end of April.

Following
the announcement, Carnival was seen trading 2.0% higher in the stock market despite
the downbeat forecast for 2020. As per the analysts, since investors were
already expecting the health emergency to cast a significant impact on the
cruise line’s performance, the outlook didn’t translate
into a drop in Carnival’s stock. On a year to date basis, however, Carnival
is currently trading 13% down.

Coronavirus
Has Infected 45,000 People And Caused Over 1,100 Casualties

The
Coronavirus outbreak that started from Wuhan, China has now turned into a
global health emergency with 45,000 people infecting so far and over 1,100
casualties. Owing to the widespread of the virus, cruise lines and a range of
travel stocks are currently under pressure. In a previous announcement, Carnival
had decided in favor of suspending operations to and from Chinese ports.
Recently, however, the suspension has been expanded to all of China.

The
canceled voyages and global bookings, as per the company, is expected to contribute
the most in keeping performance weighed in fiscal 2020 due to the virus. In a
previous estimate in December before the health crisis in China, the company
had highlighted that it expects to make $4.30 to $4.60 of earnings per share in
the new year.

The
next earnings report (first quarter) will be revealed by the cruise line in
March 2020. Diamond Princess cruise ships declared 39 new coronavirus victims
on board on Tuesday, as per the Health Ministry of Japan. The total count, as
of Tuesday, is now 175. Diamond Princess cruise ships is a subsidiary of
Carnival’s Princess Cruises.

Carnival
Traded Almost Flat In The Stock Market In 2019

Due
to the fast spread of Coronavirus, Princess
Cruises had put as many as 3,700 passengers including the crew members
under quarantine (two weeks) last week after 10 passengers were found infected
with the virus.

Carnival’s
performance in the stock market in 2019 was close to flat on average with the
stock opening at around $48 per share in January while closing the year around
$50. Carnival currently has a market cap of $29.74 billion.