Jefferies analyst David Katz highlighted that the cruise line operator's investment in Sandals Resorts is expected to enhance its earnings outlook, leading to a revised 12-month price target of $330, which represents a nearly 17% upside from the stock's recent close.
Katz acknowledged that previous caution regarding Royal Caribbean was justified due to external factors like slowing comparisons and geopolitical tensions, but he now sees a favorable setup for fiscal year 2027, with net yield expectations increasing from 2.9% to 3.3%.
Despite a 2% drop in stock price following the announcement of the Sandals deal, Katz believes that the earnings estimates could rise, indicating greater upside potential than what current valuations suggest. The consensus among analysts remains positive, with 24 out of 30 rating Royal Caribbean as a buy or strong buy, reflecting strong market confidence in the company's future performance