Goldman Sachs Discusses Carnival Corp.

Goldman Sachs is out with a research note on Carnival Corp. CCL. It has a $51 price target, and shares are on the America's Buy List. In a note to clients, Goldman writes, "(1) While there is undoubtedly an impact from the recent geopolitical events, we still believe that some of the softness in European bookings is due to over-supply in that market. (2) Carnival indicated that spot prices for Bunker fuel and Brent (which are now more closely correlated than those for WTI and Bunker) have seen a slight uptick since CCL reported 1Q. (3) We are encouraged that the company is still focused on cost controls and should be able to offset the stated $0.05 revenue impact from softer European bookings in 2H2011. (4) We think this ongoing volatility in earnings guidance may likely cause the company to take an even closer look at a fuel hedging strategy that could help mitigate some of this volatility. (5) We are surprised the company did not update guidance before meeting with investors over the past couple of weeks. We are buyers of CCL as we believe it remains well positioned to benefit from the long-term positive industry dynamics of lower supply and higher demand." Shares of CCL closed at $35.27 yesterday.