S&P Thinks Royal Caribbean Stock Poised to Cruise

In today’s morning briefing, Feb 9, 10, S&P upgraded Royal Caribbean Cruises (NYSE: RCL) to buy from hold. The stock is up modestly from a SmarTrend recommendation in November, 12.3%.

“S&P RAISES OPINION ON SHARES OF ROYAL CARIBBEAN CRUISES (RCL 25 ****) TO BUY FROM HOLD: In our view, recent price weakness creates a buying opportunity.

Trading at 0.7X price-to book and 10.7X EV/EBITDA on our '10 estimates, we think the shares are attractive. We have slightly raised our EBIT estimates, reflecting lower fuel costs. We think that RCL is essentially a play on global consumer confidence, especially in the U.S. and Europe.

In our view, what we see to be RCL's relatively high operating and financial leverage is likely to be beneficial as conditions improve. With higher profit estimates, we are raising our 12-month target price to $28 from $27./P. Rambhiya, T. Graves-CFA”