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JP Morgan Upgrades Royal Caribbean After Going To Miami

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In a report published Tuesday, JP Morgan analyst Kevin Minolta upgraded his rating on Royal Caribbean Cruises Ltd (NYSE: RCL) from Neutral to Overweight. The price target was raised from $83 to $90. The analyst expressed greater confidence in the stock following the recent meeting in Miami, Florida, attended by the company's key executives.

The analyst believes that Royal Caribbean stands to gain during 2015 and 2016 from its new ship introductions in the high growth markets of the Asia Pacific and China, which are also more profitable regions for the company.

"Additionally, management's focus on its double-double program aligns its interests with investors, who have been calling for RCL (and the industry) to improve its return on invested capital performance," the analyst said.

According to the JP Morgan report, the company is on a robust and sustainable path to get back to double digit ROIC by 2017. The growth is likely to be driven not only by the new ship introductions but also by continued cost control and the retiring of the older and less profitable, lower yielding ships.

"On the horizon, we are hopeful that once RCL's de-levering effort and quest for an investment grade rating is complete, which will be accomplished through EBITDA growth, that the investment story will be complemented by a more comprehensive capital return," the analyst added.

Royal Caribbean has also been added to JP Morgan's Analyst Focus List.

Latest Ratings for RCL

DateFirmActionFromTo
Feb 2021JP MorganMaintainsOverweight
Feb 2021BerenbergDowngradesHoldSell
Jan 2021Morgan StanleyMaintainsUnderweight

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