Cruise company Carnival found itself in stormy seas amid mounting fears over rising costs and the outlook for its fleet.
Shares in the firm behind the famous Cunard line fell 16.3 per cent, or 127.6p, to 653.2p on the FTSE 250, after analysts at Morgan Stanley cut the target price on the stock from 1050p to just 575p and said it now expects Carnival to rack up losses of close to £750million this year.
The bank had previously expected profits of around £750million but took a red pen to its forecasts after Carnival last week reported a half-year loss of £3.1billion.
Choppy seas: Shares in Cruise company Carnival fell 17.4% amid mounting fears over rising costs and the outlook for its fleet
Warning of further Covid restrictions this winter ‘as well as weaker pricing’, Morgan Stanley trimmed its profits forecasts for next year by 10 per cent to just over £4billion.
It expects Carnival’s debt to remain above £25billion for some time, nearly triple its pre-Covid level.
Shares in Carnival, whose Cunard line includes the Queen Mary 2 and Queen Elizabeth ships, remain down more than 80 per cent since before the pandemic.
Matt Britzman, an equity researcher at Hargreaves Lansdown, said: ‘Cruise ships come with very high fixed costs. Costs that must be paid whether they leave the port or not.
‘That means the group took a hammering during lockdowns.
‘And just when we thought profit was on the horizon, ongoing uncertainty and rising fuel costs mean Carnival now expects to report a full-year loss once more.
‘Carnival’s future depends on how quickly the travel industry rebounds, and the group’s competitive position when it does.
‘Given the uncertainty ahead and the difficult financial position, investors should proceed with caution.’
A string of blue-chip firms also fell victim to City scribblers with Bank of America turning bearish on the UK’s biggest commercial property companies.
British Land, which owns swathes of the City of London and the Meadowhall shopping centre, near Sheffield, fell 8.7 per cent, or 43.9p, to 463.3p after its target price was cut to 440p from 560p.
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Shoe Zone is on track to smash profit forecasts.
The footwear firm expects profit for the year to October of at least £8.5million, more than the £6.5milion forecast by adviser and broker Zeus Capital.
It comes after Shoe Zone said it has been trading well since last month’s interim results, driven by strong margin improvements and cost savings following rent reductions and good supply chain management.
The shares climbed 12.9 per cent, or 20p, to 175p.
Rival Land Securities, whose empire includes Piccadilly Lights in London as well as shopping centres in Oxford and Leeds, was down 6.5 per cent, or 48.2p, to 688.4p after its price target was trimmed to 720p from 870p.
Education publisher Pearson fell 5.3 per cent, or 41.6p, to 747p after a downgrade from UBS.
And drinks giant Diageo fell 2.9 per cent, or 105.5p, to 3574.5p after a downgrade from Deutsche Bank.
With fears of global recession mounting, it made for a rocky day on the financial markets and the FTSE 100 fell 0.15 per cent, or 11.09 points to 7312.32, while the FTSE 250 was down 1.61 per cent or 312.48 points to 19.038.79.
Oil nudged over $120 a barrel before easing, lifting BP up 0.2 per cent, or 0.65p, to 397.7p and Shell gained 0.4 per cent, or 8p, to 2185p.
Two lockdown winners – Moonpig and B&M – reported falling sales as shopping habits change and the cost-of-living crisis bites.
Greetings card company Moonpig reported a 17.3 per cent slide in revenues to £304.3million for the year to April 30, with profits down 30.9 per cent to £51.5million. Shares fell 3.6 per cent, or 8.8p, to 236.2p.
Budget retailer B&M revealed another slump in sales against a year earlier, when trade was boosted amid Covid restrictions.
Sales fell 9.1 per cent across its 705 UK stores in the quarter to June 25. B&M, which also owns 311 Heron Foods shops and has 109 stores in France, said total group sales fell 2.2 per cent to £1.2billion. Shares rose 1.8 per cent, or 6.7p, to 386.4p.
Car dealership Lookers climbed 3.2 per cent, or 2.4p, to 76.4p after it nudged up its profits forecasts for the first half to £45million, though still below the £50.3million it made in the same period last year.