Zacks Investment Research upgraded shares of Royal Caribbean Cruises Ltd. (RCL) from NEUTRAL to OUTPERFORM on November 16, 2012, with a target price of $40.00.
Royal Caribbean is recovering at a steady pace from its close competitor Carnival's ship grounding in January this year and consequent dip in passenger confidence. Although the economic turmoil in Europe continues to nag the company, the extreme upheaval seems to have dispersed. The company's increased earnings guidance and third-quarter top- and bottom-line consensus beat are indicative of the fact. The company also experienced slight increase in on-board revenue in the third quarter and its cost containment efforts are also paying off. Relatively stabilized booking patterns, cost containment efforts, fuel conservation initiatives, increasing exposure to countries like China in order to tap the developing cruise travel market and the slowdown in industry capacity are positives for the shares. Hence, we upgrade the recommendation from Neutral to Outperform.
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