RCL: Earnings Upside Will Emerge As Conservative 2026 Guidance Resets Expectations

Analysts have modestly reduced their price target for Royal Caribbean Cruises, trimming it from approximately $344 to $337. They cite a slightly higher discount rate, marginally slower revenue growth and profit margin projections, as well as recent indications of softer yield momentum in upcoming quarters.

Analyst Commentary

Analysts have provided a range of insights on Royal Caribbean’s outlook following the recent updates to price targets and earnings guidance. Their notes reflect both enduring strengths and some emerging uncertainties impacting the company's growth trajectory and valuation.

• Bullish analysts remain positive on Royal Caribbean’s long-term earnings growth potential, pointing to superior fleet investments that are expected to drive yield outperformance through 2028.
• Recent resetting of expectations, particularly conservative initial 2026 EPS guidance, is viewed as creating potential upside for future earnings relative to consensus estimates.
• The company’s management team is regarded as a key asset, with a demonstrated ability to execute and navigate industry challenges.
• Some believe the post-earnings pullback in share price presents a buying opportunity for investors seeking exposure to a leading cruise operator with significant projected EPS growth.

• Bearish analysts have trimmed price targets due to a sharper than expected revenue yield slowdown and FY26 EPS guidance falling below previous expectations.
• Caution centers on mixed booking and pricing trends for future cruises, which could impact the ability to significantly outperform prior results.
• There is some uncertainty over the company’s ability to maintain recent momentum, particularly as discount rates move higher and margin expansion appears more limited.
• Guidance for earnings growth, while still positive, now suggests a more moderate trajectory, which has led to minor reductions in forward estimates.

What's in the News

• Stifel analyst lowered Royal Caribbean's price target to $400 from $420, maintaining a Buy rating. The analyst views the recent selloff as a buying opportunity due to conservative 2026 EPS guidance and strong management (Periodical).
• Royal Caribbean unveiled its 2027-28 Caribbean vacation lineup, featuring new and expanded year-round itineraries from major Florida ports on ships such as Star of the Seas, Harmony of the Seas, Utopia of the Seas, and Wonder of the Seas.
• The company completed a repurchase of 2,282,115 shares, representing 0.84% of outstanding shares, for $643.93 million as part of its ongoing buyback program.
• Recent quarterly results show higher occupancy rates and passenger numbers. The third quarter load factor was 112%, with continued growth in cruise days and passenger volume.
• Royal Caribbean's Board of Directors declared a quarterly dividend of $1.00 per common share, payable on October 13, 2025 to shareholders of record as of September 25, 2025.

Valuation Changes

• Consensus Analyst Price Target: Lowered from $344.09 to $336.78. This reflects a modest decrease in fair value estimates.
• Discount Rate: Increased slightly from 8.98% to 9.01%. This signals increased perceived risk or cost of capital.
• Revenue Growth: Edged down from 9.42% to 9.32%. This indicates only a minor reduction in expected future growth.
• Net Profit Margin: Declined from 26.39% to 25.93%. This suggests a smaller portion of revenue is projected to convert into net income.
• Future P/E: Increased marginally from 20.84x to 20.98x. This points to a slightly higher valuation multiple on forecast profits.