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Morgan Stanley raises pricing, demand and overcapacity concerns, Carnival plc falls more than 6%

Shares in Carnival plc, the British holding company in the carnival Corporation & plc group, fell more than 6% on 5 June following a reported negative outlook expressed by Morgan Stanley, the US investment bank

“Our channel checks show solid booking volumes but at flat prices, and agents cite concerns about the Caribbean and general Q4 demand,” Proactiveinvestor.co.uk website quoted Morgan Stanley as saying in a report to clients.

“We cut forecasts for fuel/FX (fuel/ foreign exchange), with FY19e (financial year 2019 estimate) EPS (earnings per share) -11% for CCL, -5% for NCLH and -3% for RCL, and stay cautious on the cruise space due to oversupply risk,” the bank was cited as saying. CCL refers to the Carnival group, whose Carnival Corporation holdimng unit is domiciled in Panama and head quartered in the US, RCL refer to Royal Caribbean Cruises, Ltd. and NCLH to Norwegian Cruise Line Holdings.

“The double whammy of the recent rally in oil prices, plus the stronger dollar in addition to hurricane threats and a risk of over capacity led the investment bank to slash their earnings forecast for the firm,” a report on cityindex.co.uk said, referring to the Morgan Stanley report.

Shares in Carnival plc closed 6.40% lower at £45.61 in London, while Carnival Corporation was 4.33% lower at $60.63 at lunchtime in New York. Both Royal Caribbean and Norwegian traded more than 4% lower in New York at the same time.

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