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Investing.com -- Truist Securities downgraded Royal Caribbean (NYSE:RCL) to Hold from Buy in a note Monday, citing softening industry trends and a stock valuation that has surged to record levels.
While cruise bookings have recovered since a dip in April, analysts say the rebound lacks strength.
In a note based on industry data and discussions with travel executives, Truist observed that “bookings [are] ‘better’ since April’s pullback but not ‘amazing.’”
From March through early July, year-over-year booking growth is tracking only in the low- to mid-single digits, well below the high-teens pace seen in early 2024.
“Our downgrade is from a combination of a stock that has had a fantastic run... and from our above-noted industry observations that trends are ‘decent but normalizing’ but not ‘amazing and significantly outperforming,’” Truist analysts wrote.
Despite the downgrade, Truist raised its price target on RCL from $275 to $337 and said that over the past several years, Royal Caribbean has been “one of the most innovative — and importantly executing — on their creative initiatives” in the sector.
The firm continues to assign an 18x P/E multiple on the stock, “the highest multiple on a cruise company we have ever given (during ‘normal’ economic times).”
Royal Caribbean shares have nearly doubled over the past three months and are up roughly 50% year-to-date, following a 2024 gain of about 80% and a 160% jump in 2023.
But with valuations now at peak levels, Truist said its above-consensus 2026 earnings projections no longer offer sufficient upside to justify a Buy rating.