Credit Suisse Cuts Carnival and Royal Caribbean to Neutral

Says bookings for cruises are weaker than expected this year compared to last year

Credit Suisse Group downgraded Carnival (CCL) and Royal Caribbean Cruises (RCL) to neutral from outperform.

Analyst Scott Barry says his checks with large off-line and online retailers indicate weaker-than-expected wave season bookings and materially higher promotional activity year over year. He notes indications of demand re-acceleration or extended duration of wave season would likely cause him to revisit the rating. Meanwhile, for Carnival, he cuts his $3.10 fiscal year 2006 (ending November) earnings per share (EPS) estimate to $3.05, his $3.66 fiscal year 2007 EPS to $3.48, and his $60 stock price target to $56. For Royal Caribbean Cruises, he cuts his $3.00 2006 EPS estimate to $2.90, his $3.50 2007 EPS to $3.36, and his $55 stock price target to $50.

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