Royal Caribbean Cruises Ltd (RCL.N) RCL.OL, the world's second-largest cruise operator, warned that earnings in the current quarter could fall by as much as 50 percent as the Costa Concordia disaster off the coast of Italy caused a sharp drop-off in new cruise bookings.
Last month, the Costa Concordia cruise ship operated by rival Carnival Corp (CCL.N) hit a reef off the Tuscan coast, killing 17 people. Another 15 are missing.
Carnival cut its profit outlook for the year as a result.
"While we like the long-term prospects for the cruise industry and for Royal Caribbean, the company could not escape the halo effect that the Costa Concordia tragedy has created over cruising," Morningstar analyst Jaime Katz said.
Royal Caribbean said overall booking volumes from North America have fallen by low to mid-teen percentages, and dropped more in Europe, where media coverage of the accident has been more extensive.
The company also said it saw booking orders for the "wave" season - from January to March - drop 20 percent, but that it started to see improvements in the last week.
The company's various brands have mostly been able to retain pre-Concordia prices, the company said.
Royal Caribbean shares were up 3 percent at $29.09 in early afternoon, after falling as much as 5.7 percent in the morning.
"The company provided a lot of transparency on the booking curve, and pricing didn't seem to be falling apart after the Costa tragedy," Katz said, referring to the stock rise.
Carnival shares were up 1.1 percent at $31.27.
"We are still on track to achieve our original projections for the first quarter, but there is a high degree of uncertainty and it is difficult to judge the impact of the tragedy on the balance of the year," Royal Caribbean's chief financial officer, Brian Rice, said in a news release.
The company, whose brands include Celebrity, said it expects to earn between 10 and 20 cents a share in the first quarter.
Wall Street's forecast was for 25 cents, according to Thomson Reuters I/B/E/S.
"That's a big slice of earnings they are taking off," said Katz. Royal Caribbean had earned 42 cents a share in the same quarter last year.
Royal Caribbean's fourth-quarter net income rose to $36.6 million, or 17 cents a share, compared with $31.9 million or 15 cents a share last year. Analysts had expected 15 cents.
"Masking a fourth quarter that would typically be perceived as solid is the forecast that takes into account the depressed demand it has encountered since mid-January," analyst Katz said.
"Once we drudge through what is likely to be a difficult quarter or two for both Royal Caribbean and Carnival, we think there will be a number of positive catalysts that will make these stocks compelling," she said.
(Reporting By Phil Wahba in New York and Nivedita Bhattacharjee in Chicago; Editing by Derek Caney and Matthew Lewis)