Galvan Research and Trading recommends to 'sell' shares of cruise operator Carnival, saying that recent prices cuts are putting pressure on margins.

In the wake of the Costa Concordia tragedy in January, Carnival said that it was having to reduce prices. The firm said in June that pre-tax profits in the second quarter were just $14m, compared with $206m the year before, partly due to a $145m adjustment relating to fuel derivatives.

"Although Carnival shares and the firm's reputation have rebounded to some degree since the Costa Concordia disaster, the cruise operator has had to cut prices in order to maintain sales. Not only has this had a dramatic impact on profit margins, but with fuel prices continuing to rise there is a real risk the company could slip into a loss," said Galvan's head of research, Andrew Gibson.

"For the Galvan Research team, this backdrop means that the shares look vulnerable at current levels. Sell."

Gibson says that the stock has delivered "multiple charting failure" at and just above the 2,200p level since the beginning of July.

"The current technical picture suggests that while there is no fresh break of 2,200p, there is downside towards the May support zone under 2,000p."

Despite the negative comments , shares were up 1.22% at 2,153p by 11:31 on Wednesday.

BC

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