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

Carnival stock gains 2% despite a downbeat forecast for fiscal 2020 amidst the Coronavirus crisis
Written by:
Michael Harris
13th February, 06:24
Updated: 11th March, 08:59
  • Carnival stock gains 2% despite a downbeat forecast for fiscal 2020 amidst the Coronavirus crisis.
  • Carnival says it could take a hit worth 55-65 cents/share in 2020 due to the Coronavirus outbreak.
  • Carnival is currently trading 13% down year to date.

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.

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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.

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