"Deutsche Bank downgraded Carnival Corp. to 'sell' from 'buy.'

According to Reuters, analyst Simon Champion said the cruise operator's returns may be lower than its cost of capital in coming years.

Citing steep fuel prices and newbuild costs, Champion suggested a strategic shift may be needed.

Deutsche Bank lowered Carnival's price target to $32 from $52.50. "

Well if this turns out to be the case then RCI and NCL are totally stuffed and likely to disappear altogether.

We will have to see how others view the same info but DB is a well respected institution. Personally I will hold my stock, even at $32 and that is a huge reaccessment of target price, I am well up but there are many out there who bought at well over $60.

Also if this is the case then expect a rush to cancel ship yard orders, at least in Carnivals case they have the cash to pay out if they do, others do not.

I may have said it before but RCI are taking a huge risk with the Freedom class, Oasis class and Solstice class - the finance on these ships (and indeed any new ship going forward) is going to be very expensive (much higher than anyone would have thought perhaps - the days of "cheap" money are over) and there are several people out there (Micky Arison for one) who worked out that even full they will not be able to earn enough to pay the financing costs and will run at a loss. Apollo will no doubt of done these sums - perhaps that has more to do with F3 than redesign !

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Originally posted by mike sa:

Well if this turns out to be the case then RCI and NCL are totally stuffed and likely to disappear altogether.

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More doom and gloom. Personally I don't see it happening. If it does, then we will all have bigger problems then a cruise line going under to worry about.

If RCI and NCL were to go under, then say goodbye to the cruise industry all together. If the economy turns that sour, Carnival Corp. would no doubt have to downsize dramatically laying up ships and shutting down brands. We would be left with essentially one company owning the entire cruise industry, what is left of it. There are not too many industries that have a monopoly like that. If we go into a deep enough recession/depression, then no one will be cruising except the extremely wealthy, and guess what, they are not going to cruise on Carnival, Costa, P&O, AIDA, and HAL. All these cruise lines are marketed towards the middle class which in this scenario will not have cash to take a cruise. Perhaps Seabourn might survive in such a doomsday scenario.

I am a bit more optimistic and don't take one banks recommendation as a prelude to the end of the cruise industry as we know it.

Carnival has one thing DB doesn't.

CASH

Carnival has one thing RCL and NCL/Star/Apollo don't.

CASH

The only other player in the industry with cash:

Any comment from anybody at Carnival, about anybody including their own company, has to be taken with many grains of salt.

RCI will be fine, as will Carnival. And I would expect to see Fain play many options before the line could, or would fail outright. And no matter what, that fleet will sail under its own brand regardless. Arison might sit there and kvetch about how RCI is wasting money, but oh how his tune would change if he had the chance to own the line. And don't think for an instant he wouldn't continue to build ships as big if he did own the line.

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Originally posted by Patsy:
Cunard will be one struggling at the prices they're charging. They'll have to come down a lot.

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I'm not so sure. Lower the price and Cunard may turn into something else!