Argus Sees Friendly Waters in China for Royal Caribbean

Despite a 16-point share price crash two weeks ago after the company fell short on fourth-quarter revenue, Argus is bullish on Royal Caribbean Cruises Ltd RCL. Argus analyst John Staszak says the cruise line is “on track” to double its 2014 earnings and make a return on its investment capital by 2017.
Staszak gave Royal Caribbean a $6.10 EPS estimate for 2016, and projected $7.10 in earnings the following year.
He reiterated the firm’s long-term Buy rating and $116 price target.
Staszak’s analysis rests on his assessment of the company’s investment in “highly profitable and fast-growing Asian markets.”
Staszak wrote “investors have overreacted to the economic slowdown in China and fears of a recession in the U.S,” noting that shares of the cruise company had doubled since Argus upgraded the company to Buy in November 2012.

He allayed fears of the Chinese economy's slowdown, writing "management noted that Chinese customers generally sign up for the most expensive cruises and are willing to pay premium prices" for onboard amenities.

Royal Caribbean faces little price competition from Carnival Corp CCL given the size of their combined market share, wrote Staszak.

Despite the investor fear, SunTrust and Susquehanna were also optimistic on the company. They maintained Buy and Positive ratings, respectively. SunTrust maintained its price target of $105 and Susquehanna lowered its target to $86.
Royal Caribbean shares were trending slightly lower after hours Tuesday.