Royal Caribbean: Strong Earnings Outlook and Demand Momentum Justify Buy Rating Despite Near-Term Yield Softness

In a report released today, Richard Clarke from Bernstein maintained a Buy rating on Royal Caribbean, with a price target of $360.00.

Richard Clarke has given his Buy rating due to a combination of factors that point to continued earnings strength despite some near‑term softness. Royal Caribbean’s latest quarter showed solid constant-currency net yield expansion and an EBITDA outcome ahead of expectations, but the more important driver is management’s outlook. Full-year 2026 yield guidance, while modest, appears sufficient to ease worries about Caribbean pricing pressure, especially when combined with an upgrade to earnings per share that sits above consensus even before considering the benefit of share repurchases. The softer yield outlook for the first quarter is largely framed as a seasonal and itinerary-specific issue, with the most acute Caribbean pressure concentrated early in the year rather than indicating a structural problem.

Guidance on costs further underpins Clarke’s positive stance, with projected non-fuel operating expense growth running at or below inflation and lagging anticipated yield growth, which supports another year of strong margin expansion and EPS beats. Management commentary that the WAVE booking season is off to a strong start adds evidence of healthy demand momentum. Although planned capital expenditures are higher than previously expected, Clarke views this as the primary negative in an otherwise supportive investment case, particularly given that the elevated spend is tied to fleet renewal and growth initiatives. New vessel orders, including a fresh class of ships for the core brand and an expanded river cruise program for Celebrity, reinforce confidence in long-term demand and earnings durability, justifying the Buy recommendation.

Based on the recent corporate insider activity of 54 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of RCL in relation to earlier this year.