Travelzoo Inc. (TZOO), Priceline.com Inc (PCLN), Carnival Corporation (CCL): Today’s Top Upgrades & Downgrades

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, in honor of the season, our headlines are all vacation, all the time, as we check out a pair of price-target hikes for travel websites Travelzoo Inc. (NASDAQ:TZOO) and Priceline.com Inc (NASDAQ:PCLN). But first, let’s examine why one analyst thinks…

Carnival Corporation (NYSE:CCL) Cruise Lines is a shipwreck
Carnival Corporation (NYSE:CCL) Cruise Lines updated investors on its prospects — or lack thereof — yesterday, warning that revenues are likely to slip 2% to 3% in fiscal 2013, with earnings ranging from $1.45 to $1.65 per share. That’s down from previous promises of only flat revenues, and earnings as high as $2.10.

The news shook Wall Street pretty badly, with William Blair, UBS, and HSBC pulling their buy ratings on the stock, and downgrading to various flavors of “hold.” UBS, in particular, while admitting that it’s closing the barn door after the earnings warning has already run down the country road, is quoted by StreetInsider.com today as worrying that “the worst is not behind Carnival Corporation (NYSE:CCL) just yet. We had maintained BUY after previous incidents with belief that perception issues would start to resolve going forward, but lower guidance tonight means bookings have gotten worse, not better, in the last few weeks.”

That’s bad news for Carnival Corporation (NYSE:CCL) — bad news that investors can ill afford to ignore. Priced at 17.5 times earnings today, the stock may not look unfairly priced based on Carnival Corporation (NYSE:CCL)’s 2.9% dividend yield and 14% projected growth rate. However, now that analysts are saying the growth rate is in question — and Carnival Corporation (NYSE:CCL) is confirming it — there’s a real risk that this apparently fairly priced stock will begin to look overvalued once earnings growth projections adjust.

Add in the fact that, with just $770 million in trailing free cash flow showing up on its cash flow statement, Carnival Corporation (NYSE:CCL) apparently produces only one dollar of real cash profit for every $2 it claims to be “earning” under GAAP, and the stock could deserve even worse ratings than the “hold”s that Wall Street analysts are handing out today.