Market Overview

Amid Downgrades, Are There Better Cruise Line Stocks Than Royal Caribbean?


Royal Caribbean Cruises Ltd (NYSE: RCL) received downgrades from five different Wall Street research firms over the past couple of weeks, even though the company could potentially benefit from renewed talks between the U.S. and Cuba.

So, is it time to jump ship on Royal Caribbean?

The Ratings

The first downgrade from the past two weeks came from Swedbank, which changed its rating from a Buy to a Neutral, but still raised its price target by approximately 17 percent to $80.

The most recent downgrade took place on December 23, when Handelsbanken changed its recommendation from Buy to Accumulate, still boosting its price target from $80 to $90.

As of this writing, the stock is trading near $82.50. While some, like Handelsbanken and Stifel Nicolaus (with a price target of $96), see plenty of upside potential, others like Swedbank, SpareBank 1 ($76), Danske Bank ($71) and DNB Markets ($69.97) only see the stock going down.

Two Other Industry Options

Carnival Corporation (NYSE: CCL), another cruise line operator (with double the market cap of Royal Caribbean -- $36.2 billion versus $18.7 billion), appears to look better to analysts.

Over the past week, the trend has been quite different: Both Deutsche Bank and Stifel Nicolaus reiterated their Buy ratings for the stock, setting price targets of $48 and $54, respectively.

Related Link: Carnival CEO On Strategy For Cuba, Impact Of Crude Prices

Norwegian Cruise Line Holdings Ltd (NASDAQ: NCLH) is a smaller peer and its prospects -- according to a handful of analysts -- are not as good as Carnival’s. In fact, research firm DNB downgraded the stock from a Buy to a Hold last week, setting a price target of $44.

The stock is currently priced just above $47 a share.


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