Investing.com – Carnival (NYSE:CCL) sank Thursday after the cruise company cut its profit outlook as the U.S. ban on cruises to Cuba and higher costs weighed on performance.
Carnival said the policy change from the Trump administration will dent earnings by between $0.04 and $0.06 this year while trip cancellations for its Carnival Vista ocean liner will cost $0.08 to $0.10 a share, sending shares more than 9% lower before recovering to a 7.6% loss for the day.
Carnival said it now expects full-year adjusted per-share earnings between $4.25 and $4.35, down from its previous guidance in March of $4.35 to $4.55 and short of Capital IQ's consensus of $4.50.
The cruise company reported earlier in the day that Carnival had canceled the Vista's July 6, 13 and 20 cruises.
"The Carnival Vista has been experiencing an issue affecting its maximum cruising speed," Carnival said, according to media reports. "Unfortunately, we will be unable to operate the above voyages, as it is necessary to remove the ship from service to complete the required repairs."
The warning on profit overshadowed better-than-expected fiscal second-quarter $0.66 a share on revenue of $4.84 billion, prompting Wall Street to turn bearish on shares of the cruise company.
William Blair downgraded Carnival to Market Perform from Outperform on expectations for weaker revenue yields, or revenue per available lower-berth day compared to rivals.
The bank expects the cruise company’s net revenue yields to come in flat, compared to estimates of mid single-digit growth for Royal Caribbean and Norwegian Cruise Line.
The stock is down about 1% for the year.
Carnival has been subject to bad publicity this year. Earlier this month, the Miami-based cruise giant, which was fined $40 million for illegally dumping oil contaminated waste and covering up its dirty deeds in 2017, was handed a $20 million penalty for violating its environmental probation terms.