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On Tuesday, UBS analyst Robin Farley updated the financial model for Royal Caribbean Cruises (NYSE:RCL), leading to an increased price target of $301.00, up from the previous $271.00, while retaining a Buy rating on the company’s shares. The revision comes in the wake of Royal Caribbean’s Q4 earnings report, which showed impressive revenue growth of 18.6% year-over-year. According to InvestingPro data, eight analysts have recently revised their earnings estimates upward, with price targets ranging from $225 to $315.
Farley cited the addition of new private destinations, including beach clubs and Perfect Day Mexico, as key factors in the decision to raise the price target. These new ventures are expected to contribute positively to the cruise line’s financial performance, although the river cruise business is not anticipated to add to earnings per share (EPS) in 2027 or 2028. The company’s strong execution is reflected in its impressive financial health score of "GREAT" on InvestingPro, with particularly high marks in price momentum and growth metrics.
The analyst has also adjusted the net yield growth estimates for 2026 and 2027, maintaining them at the same level but basing them on an increased 2025 net yield growth estimate, which has been raised by 100 basis points in constant foreign exchange (FX). This increase is partially balanced by a rise in non-commissionable cruise costs (NCCs) excluding fuel per capacity day estimates for 2026 and 2027, which have been increased by 50 basis points in constant FX to account for start-up costs associated with Royal Caribbean’s newly announced river cruise business.
According to Farley’s calculations, a 100 basis point improvement in net yield could potentially add approximately 55-60 cents to Royal Caribbean’s 2026 EPS. Conversely, a 50 basis point increase in NCCs is likely to reduce the 2026 EPS by roughly 12-15 cents. However, when considering additional factors such as slightly higher fuel, depreciation and amortization (D+A), and interest expenses, the net impact is an estimated increase of about 30 cents in the company’s 2026 EPS.
In other recent news, Royal Caribbean Cruises has been the subject of several analyst updates. Macquarie lifted its price target for the company to $300, following a strong fourth quarter performance with earnings per share of $1.63 and revenue of $3.76 billion. Stifel maintained a Buy rating for Royal Caribbean with a price target of $310, citing the potential for an uplift in full-year yield guidance due to a strong Wave Season.
Mizuho (NYSE:MFG) Securities raised its outlook on Royal Caribbean, increasing the price target to $277 and maintaining an Outperform rating. The firm noted an accelerating demand outlook for the company, with bookings showing an uptick since the last earnings call. Wells Fargo (NYSE:WFC) adjusted the price target on Royal Caribbean to $297, focusing on the cruise line’s expansion into the river cruise market through its Celebrity brand.
Citi analyst James Hardiman increased the price target on Royal Caribbean to $304, maintaining a Buy rating for the stock. The company’s robust demand momentum heading into 2024 was highlighted as a key factor for the positive outlook. These are recent developments that provide investors with insights into the company’s financial trajectory.
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