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Investing.com - Bernstein maintains its positive outlook on cruise stocks despite a 16-27% decline since September, viewing the pullback as a buying opportunity for long-term investors. Royal Caribbean (NYSE:RCL), currently trading at $263.43, has experienced volatile price movements recently but still maintains a 15.27% year-to-date return according to InvestingPro data.
According to Bernstein, recent market concerns about potential cruise yield pullbacks and Caribbean capacity growth pressuring pricing appear overblown. The firm notes that fourth-quarter guidance implies yield growth of 3.5-4.3% heading into 2026, with both Carnival (NYSE:CCL) and Royal Caribbean (NYSE:RCL) positioned to deliver at least 3% underlying yield growth. This outlook aligns with Royal Caribbean’s strong financial performance, as the company has achieved 8.61% revenue growth over the last twelve months.
Bernstein expects Royal Caribbean’s 2026 yield growth to reach 3.4%, driven by new ships and private destinations, while Carnival should achieve 3% underlying net yield growth. The firm points out that industry-wide supply growth is set to decelerate to 4% in 2026, down from 6% this year, creating a tailwind for yields. Royal Caribbean’s strong 13% return on invested capital positions it well to capitalize on these industry trends.
While Caribbean capacity from major cruise lines will grow nearly 10% in Q4 2025 and maintain high single-digit growth in 2026, Bernstein notes that Norwegian Cruise Line (NYSE:NCLH) is expanding into markets outside Royal Caribbean’s core Florida base, targeting customers who don’t need to fly to embark.
Bernstein continues to prefer Royal Caribbean among cruise stocks, citing its industry-leading return on invested capital, margin profile, fleet, and destination strategy, while upcoming commentary from Viking on November 19 and Carnival on December 19 could provide short-term catalysts. With a P/E ratio of 17.85 and trading slightly above InvestingPro’s Fair Value estimate, RCL offers a mix of growth potential and established market presence. InvestingPro analysis reveals additional insights through 10+ ProTips and comprehensive metrics in the Pro Research Report, one of 1,400+ deep-dive reports available for serious investors.
In other recent news, Royal Caribbean Cruises has reported a cost-driven earnings beat for the third quarter of 2025, though it has provided fourth-quarter earnings guidance below Street expectations. The company also indicated that its 2026 earnings per share would have a "$17 handle," which is below the analyst consensus of $18.16. In response to these developments, several analyst firms have adjusted their price targets for the company. UBS has lowered its price target to $304 while maintaining a Buy rating, citing a reduced net yield forecast for 2025. Stifel has also reduced its price target to $400, maintaining a Buy rating despite what it describes as a market overreaction to the company’s financial results. BofA Securities has adjusted its price target to $325, maintaining a Neutral rating after the earnings report. Additionally, Bernstein SocGen Group reiterated an Outperform rating with a price target of $360, suggesting that concerns about cruise demand may be overstated. William Blair continues to rate the stock as Outperform, noting that the stock’s decline may be an outsized reaction to a minor deviation from consensus EPS expectations.
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