Cruise ship disaster runs Carnival stock aground

Kathy Lee is not impressed

Shares of cruise company Carnival were in the red on Tuesday, the company’s first day of trading after a cruise ship ran aground off the coast of Italy, killing 11 passengers and leaving another 24 unaccounted for. Italian officials and the vessel’s owner, Costa Crociere (a unit of Carnival) are pointing the finger at the ship’s captain, Francesco Schettino for the crash. It is believed that Schettino, who has been taken into custody by Italian authorities, took an unauthorized detour from the planned route, apparently to bring the ship closer to an island where those on shore could see it.

As the ship ran aground, it lost power and announcements over a loudspeaker told those on board to remain calm and that it was an electrical issue. Some 20 minutes later, the evacuation alarm sounded, sending passengers – and Captain Schettino – scrambling for life boats. In the wake of the accident, Susquehanna downgraded shares of Carnival and peer Royal Caribbean to neutral ratings while cutting price targets for both by nearly one-third due to the potential impact of the tragedy on the sector. Citigroup also cut its target prices, but remains bullish on both names.

Carnival (CCL : NYSE : US$29.60), Net Change: -4.68, % Change: -13.65%, Volume: 39,915,735
Royal Caribbean (RCL : NYSE : US$26.97), Net Change: -1.78, % Change: -6.19%, Volume: 12,318,799

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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