Mindful Money’s weekly share watch: Carnival & United Utilities

22nd September 2014

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Investors will be hoping the more benign economic backdrop will mean some good news is forthcoming when cruise operator Carnival updates the market with its third quarter results on Tuesday.

Shares in the blue-chip firm, which boasts a number of divisions across North America, Europe and Australia have only edged up by 2% over the past year. But notably the last three months has seen them firm by 9% and ahead of this week’s announcement, the analyst consensus opinion is pointing towards a ‘cautious buy’.

Looking ahead to its report, Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, notes that the company’s recent commencement of a cruise ship programme from China may be underlined, whilst an update on its targeting of growth for the Australian market place where its fleet is due to increase from three to five ships in 2015 could also feature.

He adds: “The recent move lower in global oil prices, a core group cost, could also buoy outlook comments. On the downside, a significant industry capacity increase in the Caribbean is again likely to have dragged on performance, while volatile currency rates remain an ongoing headwind.”

Wednesday sees fellow FTSE 100 constituent United Utilities publish its second quarter trading update. The water and waste-water company, which supplies seven million people in the North West of England with their drinking water, has enjoyed a 20% hike in its share price over the past 12 months and is up by 7% over the past six. Ahead of the report, the market consensus is pointing to a ‘hold’.

But Sheridan Admans, investment research manager at The Share Centre is more upbeat and has United Utilities on his ‘buy’ list. He says: “Investors will expect trading to be in line with expectations, a trend that many utility companies tend to follow. There may be comments surrounding the recent draft price proposals from its regulator Ofwat for the next five year regulatory period. These would be welcomed by investors as the group announced in August that it would respond by 3 October.”

Bowman also anticipates that business should have remained in line with management’s expectations. He adds: “Trading is likely to. Reference to Ofwat’s final determination regarding its current price review for the period 1 April 2015 to 31 March 2020 is highly likely to made, with a final decision expected on 12 December 2014. Management’s focus on improving customer service levels may also again feature.”

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