Shares of cruise ship operators slumped in midday trading Monday, amid concerns that the spike in crude oil prices could act as a drag on earnings, writes Tomi Kilgore in an article published in Market Watch.
Cruise Stocks Now
Carnival Corp.’s stock CCL, +0.57% fell 2.6%, Royal Caribbean Cruises Ltd. shares RCL, -0.22% lost 1.3% and Norwegian Cruise Line Holdings Ltd. shares NCLH, -0.42% dropped 2.2%, all underperforming the S&P 500’s SPX, +0.67% 0.5% decline.
Jump in Oil Prices
Crude oil futures clv9 shot up 11.5% after the weekend attack on Saudi Aramco’s Abqaig oil processing plant. Instinet analyst Harry Curtis said the impact on earnings for cruise operators depends on how long it takes to get full production at the oil processing plant up and running. He estimates a sustained 10% jump in oil prices could cut annual earnings for Carnival by 24 cents a share, Royal Caribbean by 17 cents a share and Norwegian by 9 cents a share.
Can It Be a Buying Opportunity?
“If the production gap is filled within days rather than weeks or months, then we believe close-in weakness in the stocks…should be viewed as a buying opportunity, much like the temporary impact of hurricanes,” Curtis wrote in a note to clients.
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Source: MarketWatch
