Royal Caribbean stock jumped to another record high Wednesday after an analyst said the cruise line has reignited itself after the pandemic. The news helped other cruise-line stocks extend gains to all-time highs.
Bernstein analyst Richard Clarke raised the firm's price target on Royal Caribbean to 360 from 290 and kept an outperform rating. The analyst said Royal Caribbean has emerged from its "pandemic cocoon" as a transformed business, TheFly.com reported.
Operating margins by the end of 2025 are projected to be 8.3% above 2019 levels, and other metrics look favorable.
Bernstein's note followed CFRA, which on Tuesday raised Royal Caribbean by 55 to a 357 price target. The research firm also raised its 2025 earnings estimate to $15.55 from $14.90 and 2026 EPS to $18.54 from $17.32.
CFRA analysts cited stronger-than-expected May-quarter results for rival Carnival, which suggest strong bookings for Royal Caribbean, according to FactSet. But CFRA cut Royal Caribbean to buy from strong buy, adding that the stock price already reflects the company's execution. Still, new ship launches and the opening of its first beach club in The Bahamas could help propel the cruise line to $20 billion in revenue next year.
Royal Caribbean At Record High
Shares of Royal Caribbean added 2.7% to a record high, on pace for a 10th consecutive advance. The stock cleared a 255.80 buy point from a cup-with-handle base on May 27 and is up 26% from that entry, according to MarketSurge pattern recognition.
So far, the stock shows no sign of fatigue, with its relative strength line also making new highs. An up-down volume ratio of 3.1 and Accumulation/Distribution Rating of A indicate continued demand from institutional investors.
Royal Caribbean stock has a 21-day average true range (ATR) of 2.91%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
Royal Caribbean has a three-year sales growth rate of 67%, according to the IBD Stock Checkup. The company's three-year EPS growth rate is 258%. The Composite Rating is 98.
Of 27 analysts who cover the cruise line, 21 have buy ratings, and the rest are at hold. The average price target is 276.67, according to FactSet. The stock currently trades around 322.
Other Cruise Stocks Climb
Bernstein's research note helped other cruise stocks stretch their rallies.
Carnival rose 2.4% to a four-year high. The stock is extended from a breakout at a 23.46 handle entry May 27. The stock has a Composite Rating of 98 and an ATR of 3.49%.
Viking Holdings, which went public on the NYSE in May of last year, also climbed to an all-time high. Shares have risen in eight of the past nine sessions, adding another 0.3% in midday trading. The stock, which has a 95 Composite Rating, is extended from the 48.58 buy point of a cup-with-handle base.
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Norwegian Cruise Line is lagging its peers as shares trade 27% below the Jan. 31 peak and below the 200-day moving average. The stock has a Composite Rating of 66 and ATR of 4.1%. Shares rose 1.4% Wednesday.
Cruise lines are in IBD's Leisure Services industry group, which rose 1.4% midday Wednesday and has climbed to No. 15 out of 197 groups.
Royal Caribbean is the largest holding in the Invesco Leisure & Entertainment ETF, which is trading near a record high of its own. The ETF is up 7% from the 53.25 buy point of a cup-with-handle base.
