Stifel Reiterates Buy Rating on Royal Caribbean Cruises (RCL)

Stifel analyst Steven Wieczynski reiterated a Buy rating and $415.00 price target on Royal Caribbean Cruises (NYSE: RCL).

The analyst comments "Our Take: Let’s start by saying this is all speculation right now, and we aren’t sure if/if not anything gets done. But given the reaction in the share price this afternoon (RCL -6% versus a flat S&P) and the fact the Financial Times is a very reputable source, we thought it would be helpful to share our quick thoughts on this proposed transaction. Clearly the market doesn’t like this type of transaction. Not sure that we really understand the rationale either. We think it’s fair to say that for the most part, when we have seen a company diversify away from their core competency, it typically hasn’t worked out in the long-term. This type of proposed transaction would fall under that category. Meaning operating an all-inclusive land-based asset is much different than operating a cruise ship. While RCL currently operates private destinations for their cruise ships, we still view the resort model as totally different. We would also point out that Sandals has an adult only policy which to us goes against the entire family-oriented them that RCL has been going after (especially the Royal Caribbean brand). Some other pushback we got this afternoon from the investment community centered around: (1) Is RCL potentially making a move like this because they know growth in their core Caribbean cruise market is going to be tough to come by for an extended period of time? (2) Will RCL have to raise equity to get a transaction of this size over the finish line? (3) Is the cruise industry getting worse looking into 2027 and beyond and this is a Hail Mary type transaction?".

For an analyst ratings summary and ratings history on Royal Caribbean Cruises click here. For more ratings news on Royal Caribbean Cruises click here.

Shares of Royal Caribbean Cruises closed at $234.89 yesterday.

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