Royal Caribbean Cruises Ltd (RCL) delivered a strong performance in the third quarter, exceeding analysts’ expectations. The company’s earnings report, released amidst a bustling earnings season, sparked a flurry of reactions from analysts. While some remain bullish, others are taking a more cautious stance on the company’s future prospects.
Lizzie Dove, an analyst at [Analyst Firm Name], maintained her ‘Buy’ rating on RCL shares while raising her price target from $220 to $245. Dove acknowledged that the company’s net yields fell short of investor expectations and that the implied decline in the fourth quarter was initially a cause for concern. However, she attributed this to factors like the impact of Hurricane Milton and canceled itineraries. She also emphasized the company’s focus on growth in 2025 and beyond, suggesting that investors should look beyond the slightly disappointing fourth-quarter guidance and third-quarter results. Dove highlighted the company’s guidance for 2025 adjusted earnings of $14 per share, which she considers a starting point with significant upside potential, particularly given the company’s stock buyback program.
Patrick Scholes, another analyst, reiterated a ‘Hold’ rating on RCL shares with a price target of $204. While acknowledging the company’s strong earnings beat, he pointed out that it was primarily driven by cost management rather than revenue growth. Scholes expressed concern about the slower growth in commission expense compared to passenger ticket revenue. He also highlighted that despite the earnings beat, the company’s full-year guidance increase was modest and the fourth-quarter earnings guidance fell short of consensus expectations.
The mixed analyst reactions highlight the complexities of navigating the cruise industry. While Royal Caribbean Cruises delivered a strong performance in the third quarter, factors like hurricane impacts, slower-than-expected revenue growth, and a cautious outlook for the fourth quarter suggest that the company’s path to sustained growth may be more challenging than anticipated. Investors will be watching closely to see how the company navigates these challenges and whether it can deliver on its ambitious 2025 earnings target.
