Royal Caribbean: Strong Financial Performance and Growth Outlook Justify Buy Rating

Daniel Politzer, an analyst from Wells Fargo, maintained the Buy rating on Royal Caribbean (RCL – Research Report). The associated price target was raised to $159.00.

Daniel Politzer has given his Buy rating due to a combination of factors indicating Royal Caribbean’s strong financial performance and promising outlook. The company reported a significant first-quarter EBITDA beat and raised its full-year 2024 EBITDA guidance by approximately $200 million, suggesting robust growth. The upgrade in the full-year yield guidance to +9.5% year-over-year, despite increased costs, demonstrates the company’s ability to generate higher revenue per ticket, more than compensating for added expenses. Additionally, the current year bookings are solid with 88% of capacity already booked, and future bookings for 2025 are looking encouraging, hinting at sustained demand and pricing strength.
Furthermore, Daniel emphasizes the potential for Royal Caribbean to benefit from new offerings like private beach clubs and new ship deliveries in the upcoming years, as well as successful market penetration in China and increased onboard spending. These factors, combined with the possibility of capital returns to shareholders as the company nears investment-grade metrics, present a compelling case for a positive long-term outlook. The analyst also notes a strong demand across various markets, with increased volume and pricing in Europe and Alaska, a surge in new-to-cruise customers, and robust demand for new ships, which further solidifies the rationale behind the Buy rating.

In another report released today, Barclays also maintained a Buy rating on the stock with a $165.00 price target.

RCL’s price has also changed dramatically for the past six months – from $82.220 to $137.470, which is a 67.20% increase.

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Royal Caribbean (RCL) Company Description:

Royal Caribbean Cruises Ltd. operates as a global cruise vacation company. It operates global cruise brands: Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises. The firm also holds interest in TUI Cruises, Pullmantur and SkySea Cruises brands. The company was founded in 1968 and is headquartered in Miami, FL.