Numis Securities has maintained a neutral stance on shares of Carnival but said that the investment case is "starting to look more interesting".

The broker said that it is in "no rush to buy" but the potential for a recovery in yields and growth at the cruise operator "remains enticing". It pointed out that for every 100 basis-point increase in yields leads to a rise in earnings of around 8%.

Second-quarter results from Carnival announced on Tuesday were "strong", Numis said, with reported earnings per share (EPS) of 10 cents beating the consensus forecast of just two cents, helped by both yields and costs.

However, the mid-point of the full-year EPS guidance of $1.60-1.75 was below analysts' $1.70 estimate. As such, Numis said it doesn't expect consensus forecasts to move materially.

The broker said: "Management claims to have made 'significant strides' in identifying opportunities for cross-brand operational efficiencies (global sourcing of food and airline seats for example), that the brands (and pricing) are gaining momentum, and that the company has reached a positive inflection point as it returns to earnings growth."

However, the stock's valuation already reflects this optimism, Numis said.

The broker kept a 'hold' rating and 2,550p target price on the stock, which was trading 2.6% lower at 2,217p by 11:56.

BC

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