Deutsche Bank Upgrades Royal Caribbean to “Buy” Following Solid Q3 Earnings Results (RCL)

Cruise line operator Royal Caribbean Cruises Ltd. (RCL) on Friday received a big upgrade from analysts at Deutsche Bank.

The firm boosted its rating on RCL from “Hold” to “Buy” and lifted its price target from $27 to $39. That new target suggests a nearly 16% upside to the stock’s Thursday closing price of $33.74.

A Deutsche Bank analyst commented, “While we had expected guidance to be raised, we had not anticipated the size of the recovery in Q3 net yields or such positive commentary on FY13, with APD’s higher in Q1/13 through to Q3/13 vs. this time last year, which is very encouraging given the Cost Concordia impact is yet to be lapped. Consequently, we raise our FY12E & FY13E EPS by 9% and increase our TP by 44% to $39 to reflect the rise in EPS and our view that RCL shares will start to price in stronger earnings recovery and therefore should trade on a 10% premium to the group’s 5 year EV/EBITDA average of 9.1x.”

Royal Caribbean shares were mostly flat in premarket trading Friday.

The Bottom Line
Shares of Royal Caribbean Cruises (RCL) have a 1.42% dividend yield, based on last night’s closing stock price of $33.74. The stock has technical support in the $30 price area. If the shares can firm up, we see overhead resistance around the $35-$37 price levels.

Royal Caribbean Cruises Ltd. (RCL) is not recommended at this time, holding a DARS™ Rating of 3.2 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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