Carnival delivers early Christmas present

Following yesterday's upgrade to Overweight and a $51 price target, Carnival (CCL) released 4th quarter and year end earnings this morning delivering investors an early Christmas present.

Earnings were in line with analyst expectations, overcoming some of the expected costs associated with the Splendor engine fire.   Carnival posted net income of $248 million, or 31 cents a share.  Carnival also guided full year 2011 earnings in range of $2.90 to $3.10 a share versus analyst's average estimate of $2.92.  The generally upbeat expectations mirrored the sentiment of travel agents in the recently completed fourth quarter Cruise Pulse Survey.  Agents reported average ticket pricing 14% higher ($1,639) than in the previous quarter ($1,406). Compared to the same quarter the year prior ($1,582), ticket pricing was 3.5% higher.  Agents stated cruises booked so far 2011 were averaging $1,718, a 4.8% increase over current quarter pricing.  Increased pricing power is not the only good news for the cruise industry.  Additional capacity coming online in 2011 will help drive more passengers aboard cruise ships of all brands.  Annualized total passengers carried world wide will be 19.2 million in 2011, a 4.1% increase over 2010.

The market responded with its own form of holiday cheer by driving Carnival's price per share (pps) up 4.5% to a new 52 week high.  Not to be outdone, Royal Caribbean (RCL) itself rode the wave of news higher, with its stock price increasing nearly 8%.