P&O cruise operator Carnival (CCL) is making waves as its fourth quarter revenue rose from $3.7bn to $3.9bn. That's for the three months to 30 November.
Shares in the firm are 3% higher at £41.45 as its profit more than doubled from $270m to $609m over the same period.
Carnival is one of the few travel stocks that has a confident outlook following the Brexit vote.
This is despite rising operating costs, food and fuel in particular. Carnival spends about $250m on catering for its guests, nearly as much as its $267m fuel costs.
But average cruise prices are firming, expected to increase by 2.5%, on a constant currency basis, in 2017.
Carnival says that advance bookings for the first three quarters of 2017 are well ahead of the prior year at ‘considerably higher prices.’
The challenge is to push through higher prices at least to match the rising cost of running its liners, a concern for some analysts. Stuart Gordon, of investment bank Berenberg, has recently downgraded Carnival from ‘buy’ to ‘hold’ as trends in the cost of fuel, a stronger dollar and higher interest rates will create difficult headwinds, in his opinion
The analyst has shaved his target price for the stock accordingly, from $55.00 to $50.00, or about £40.46, a fraction below the current trading price.
He says that while yield growth is expected to remain strong on a constant currency basis, a stronger dollar will act as a drag.
Full year to 30 November 2017 adjusted earnings per share is expected to be in the range of $3.00 to $3.60, compared to $3.45 in 2016.
