Royal Caribbean, the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Richard Clarke from Bernstein maintained a Buy rating on the stock and has a $360.00 price target.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Richard Clarke’s rating is based on Royal Caribbean’s remarkable transformation post-pandemic, where the company has significantly improved its operating margins and return on invested capital (ROIC). By the end of 2025, operating margins are projected to be 8.3% above 2019 levels, with a company-defined ROIC reaching 16.1% in 2024, surpassing the cost of capital. This improvement is attributed to a combination of effective execution and favorable macroeconomic factors, such as inflation and currency dynamics, which have enhanced capital sales productivity.
Furthermore, Royal Caribbean’s future prospects are bolstered by new hardware and ongoing operational execution. The introduction of the new Star of the Seas ship is expected to contribute to ROIC expansion, with projections of an 18% ROIC in the first year, increasing to over 20% within five years. Additionally, the company’s consistent yield growth ahead of costs since 2014, along with anticipated lower fuel costs, supports continued margin expansion. These factors position Royal Caribbean as a quality compounder, justifying the Buy rating with an updated 12-month price target of $360.
In another report released on June 30, Barclays also maintained a Buy rating on the stock with a $263.00 price target.