Analyst Update: Allegiant Travel Company, Carnival Corp, and Royal Caribbean Cruises Ltd

Analysts are weighing in on Allegiant Travel Company (ALGT), Carnival Corp (CCL), and Royal Caribbean Cruises Ltd (RCL)

Oct 27, 2016 at 2:50 PM
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Analysts are weighing in on travel stocks Allegiant Travel Company (NASDAQ:ALGT)Carnival Corp (NYSE:CCL), and Royal Caribbean Cruises Ltd (NYSE:RCL). Here's a quick roundup of today's brokerage notes on ALGT, CCL, and RCL.

  • ALGT is taking a hit today, off 12.6% at $134.55 after the company reported better-than-expected quarterly earnings last night, but warned the effects of Hurricane Matthew may negatively impact current-quarter results. Raymond James lowered its rating on the stock to "market perform" from "outperform," with an analyst at the firm noting Allegiant Travel Company's total revenue per available seat mile (TRASM) figures may take longer than predicted to recover due to "pressures during the transition to a single fleet type … thus, capping the upside to earnings in the near term.” Meanwhile, Deutsche Bank and Credit Suisse cut their price targets on the stock to $190 and $131, respectively, while Wolfe Research diverged from the pack, lifting its target price to $174. Despite ALGT's nearly 20% year-to-date deficit, analysts are broadly in the stock's bullish camp. Out of eight firms providing coverage, six recommend buying the shares, and not one recommends selling.
  • A price-target cut to $46 from $58 at J.P. Morgan Securities has CCL sliding 1.7% to $46.34, widening its 2016 loss to 15%. The drop has the shares giving up a recent foothold above the 80-day moving average, which has alternately served as support and resistance numerous times since March. Meanwhile, it looks like traders might be lowering their expectations for Carnival Corp, as well. Short interest on the equity -- while representing a modest 4.6% of CCL's available float -- has risen sharply, up nearly 29% in the two most recent reporting periods. The stock could encounter more headwinds, should short sellers continue to up the bearish ante.

  • RCL is preparing to report third-quarter earnings ahead of the opening bell tomorrow, but a few analysts couldn't wait to lower their outlooks on the stock. J.P. Morgan Securities downgraded Royal Caribbean Cruises Ltd to "neutral" from "overweight" and slashed its price target to $73 from $96, while Susquehanna trimmed its target price by $1 to $81. It hasn't been smooth sailing for shareholders this year, with RCL giving up one-third of its value in 2016, including a 3.2% dip to $67.67 today. Plus, familiar resistance in the form of the 80-day moving average has reasserted itself in recent weeks, limiting the stock's upward moves. Nonetheless, the action in RCL's options pits, though light on an absolute basis, has been strongly skewed to the bullish side of late. The equity's 10-day call/put volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits just 6 percentage points from an annual high, at 3.44. Perhaps some recent call buyers are betting history will repeat itself for this habitual fourth-quarter outperformer
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