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Stifel analyst sees opportunity in Carnival

The Associated Press

A Stifel industry analyst said Wednesday that he thinks the recent problems at Carnival Corp. are a matter of "bad luck" and the recent drop in stock price is an opportunity to invest.

THE OPINION: Carnival Corp. is struggling in the wake of problems with its cruise ships.

The Carnival Triumph was crippled by an engine fire last month and left 4,200 people stranded out in the Gulf of Mexico for five days. The company announced Tuesday that the Triumph will be out of service longer than initially expected.

And the company ended the voyage of the Carnival Dream last week after the ship's backup emergency diesel generator failed, causing problems with elevators and toilets. Carnival was forced to charter airplanes to fly home the ship's 4,300 passengers back to Florida from the Caribbean island of St. Maarten. The Dream's next trip, which was supposed to start Sunday, was canceled. It also cancelled two European trips on another ship and cut short a cruise on yet another.

In its earnings report last week, the Miami-based company said advance bookings for 2013 are running behind a year ago. The company blamed Europe's economic problems for its inability to raise prices. North American prices are up slightly but those in Europe and Asia are lagging.

Carnival issued a full-year forecast below analyst's predictions as well.

Analyst Steve Wieczynski said that even after accounting for the company's revised outlook for the year, he believes it is an attractive time to invest in Carnival given the drop in its stock price and an opportunity for growth ahead.

The analyst said he views the recent events as largely unlucky and out of management's control. He said he continues to believe underlying industry demand trends cast a much more positive picture than what is currently reflected in Carnival's current stock price.

Wieczynski kept a "Buy" rating on Carnival shares with a target price to $43.

THE STOCK: The company's stock has fallen nearly 14 percent since the Triumph event. They rose 43 cents to close at $33.64 amid a broad market rally on Wednesday.