Goldman Sachs Takes Carnival´s Rating Down a Peg

Goldman Sachs has downgraded its rating for Carnival Corp. in the wake of the cruise line´s decision not to embrace recommendations made by the Wall Street investment firm in a report last month.

Among those recommendations, Goldman Sachs suggested that cruise lines reduce the commissions they pay travel agents for bookings from an average of 14 percent to 10 percent.

In a follow-up report released on March 30, Goldman Sachs cut Carnival´s rating from “outperform” to “inline,” while retaining the outperform rating for Carnival competitor Royal Caribbean.

Carnival´s inline rating means that Goldman Sachs expects the value of the company´s stock to rise and fall in line with the Standard & Poor 500 over the next 12 months. It expects Royal Caribbean to outperform the S&P 500.

In its initial report, Goldman Sachs made nine recommendations for Carnival to boost profitability. In addition to cutting commissions, it recommended hedging fuel.

Royal Caribbean spokesman Michael Sheehan said the cruise line had no comment on the report.