Royal Caribbean (NYSE:RCL) stock shot off the blocks to start Monday’s trading after Stifel signaled increasing bullishness on bookings.
A team of analysts at the firm led by Steven M. Wieczynski told clients that recent meetings with management served to bolster their confidence in a “Buy” rating on the stock. Stemming from the discussion, the team sees a continued bounce-back in post-COVID bookings as showing no signs of slowing despite economic headwinds pressuring consumers.
“We feel comfortable enough to significantly raise our 2023/2024 EBITDA estimates based on continued strength in booking/pricing patterns,” the team wrote. “We sense bookings have materially accelerated since Labor Day as COVID restrictions were removed/lowered and
cancellation rates are now back to normal, if not below.”
Indeed, the removal of COVID-related restrictions on a number of routes throughout the past month has led to a “material increase” in demand according to the analysts, with 2023 bookings expected to be in-line with historical norms. Given China is still essentially non-operational, that suggests stronger-than-historical trends.
“Given RCL’s ample liquidity position, unwavering, if not growing, customer demand trends and streamlined cost structure, our confidence in the company’s long-term business prospects could not be higher,” the note concluded. “With that said and with our expectation for their load factors to be back to normal over the next six months, we encourage investors to continue to take advantage of the current dislocation in the share price to add to positions in the name.”
Alongside the reiteration of a “Buy” rating on the name, Stifel took its price target to $70 from a prior $60. Shares of Royal Caribbean (RCL) rose nearly 4% in early trading before moderating gains and even sliding into the red amid some mid-day choppiness. Both Carnival Corporation (CCL) and Norwegian Cruise Line Holdings (NCLH) followed a similar trajectory.
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