© Reuters. Cruise line stocks slide, Citi says Royal Caribbean expectations were ‘sky-high’
Cruise line stocks are on the slide Friday, only a day after Royal Caribbean (NYSE:) reported its latest quarterly earnings, which gave the sector an initial lift after it provided an upbeat outlook.
At the time of writing, RCL is down over 4%, Carnival Corp. (NYSE:) has declined more than 2%, and Norwegian Cruise Line (NYSE:) is 1.2% lower.
Citi analysts lifted their price target for RCL to $153 from $148 in a note following the company’s quarterly release, keeping a Buy rating on the stock. They believe that expectations were “sky-high.”
“RCL shares were (somewhat surprisingly) flattish in Thursday trading (vs. +1.25% for the S&P) despite the across-the-board strength in its business,
likely a function of sky-high expectations coming into the day,” they wrote.
They believe investors are looking for something to pick apart and will likely focus on the implied deceleration in net yields over the course of 2024.
“When we correct for the occupancy catch-up benefit in 1Q and the increasingly difficult Y/Y comparisons in 2Q and beyond, net yield guidance vs. 2019 is fairly consistent throughout the year, while still leaving room for upside if the current trend of accelerating pricing power continues,” added the analysts.
Despite the share price decline, Citi feels that “demand for cruise travel appears to be on the rise, “while RCL’s brand, strategy, and execution are hitting on all cylinders.”
This story originally appeared on Investing
