J.P. Morgan Updates Estimates On Royal Caribbean Cruises

According to J.P. Morgan, Royal Caribbean Cruises

is set to report its 1Q11 results. J.P. Morgan said that it is updating estimates for RCL ahead of earnings, and are taking FY11 EPS down to $3.10 (from $3.18, and versus the Street's $3.21 [or $3.13 for consensus estimates that have been updated over the last 4 weeks]), to account for higher fuel expense given bunker market increases through the 1Q11 (and since it last updated estimates on 3/11/11). “We are in print at $0.11 for 1Q11. We think the upward fuel moves will be modestly offset by positive moves in the EURO and GBP, which are up +6.4% and +3.8%, respectively, since RCL reported 4Q10 results on 1/27/11. These revisions should not come as a surprise to investors given the well publicized unrest in the Middle East and the derivative effects it has had on the price of fuel. We think RCL's favorable fuel hedging and option strategy has helped RCL soften the sustained upward pressure in fuel prices (~48% of its consumption hedged in FY11 or ~ 69% incl. fuel options).” Royal Caribbean Cruises closed yesterday at $38.38.