Royal Caribbean's 2025 Upside May Be Limited, But 2026 Yield Growth Could Exceed Estimates

Royal Caribbean's shares are trading lower after the company's revised yield outlook tempered investor expectations for 2025. Goldman Sachs analyst Lizzie Dove reiterated the Buy rating, lowering the price forecast from $364 to $361. The setup for 2026 net yield growth could surpass current expectations, with contributions from new ships and a more stable macroeconomic environment.

Royal Caribbean Cruises Ltd. (RCL) shares are trading lower following the company's revised yield outlook, which has tempered investor expectations for 2025. Goldman Sachs analyst Lizzie Dove reiterated the Buy rating but lowered the price forecast from $364 to $361. The downward revision in the high end of 2025 net yield guidance, from 4.6% to 4.0%, suggests that earnings estimates may be more limited than anticipated [1].

Despite the downward revision, the setup for 2026 net yield growth could surpass current expectations, according to Dove. Contributions from new ships like Star, Excel, and Legend, as well as the incremental benefit from the Beach Club and a more stable macroeconomic environment, are expected to drive growth [1]. However, the company has slightly lowered 2026 EBITDA and EPS forecasts to account for pre-opening costs related to Costa Maya, the Beach Club, and Celebrity River [1].

The stock has shown remarkable strength with a 90% rally over the past three months, but expectations had risen sharply due to the company's strong performance. The downward revision in yield guidance has not met these elevated expectations, leading to a temporary slowdown in share prices [1]. The stock is currently trading at $331.06, down 1.01% from Wednesday's close [1].

Investors should also keep an eye on Norwegian Cruise Line’s (NCLH) update later in the week for more clarity on cruise trends. The shortening booking window, which has already narrowed by one week for 2026 last quarter, is not cause for alarm but may prompt investors to reassess their expectations [1].

Royal Caribbean maintains a "GREAT" Financial Health score with analysts’ price targets ranging from $200 to $420. The company reported second-quarter results that exceeded expectations for yield and EBITDA, but third-quarter yield growth guidance disappointed investors [2]. Bernstein reiterated its Outperform rating and $360.00 price target, projecting 19% earnings per share growth through 2026, with shares trading at 17 times 2027 earnings estimates [2].

In summary, Royal Caribbean's revised yield outlook has led to a temporary slowdown in share prices, but the company's long-term prospects remain strong. Investors should monitor the company's progress and the broader cruise industry trends for further insights.

References:
[1] https://www.benzinga.com/analyst-stock-ratings/analyst-color/25/07/46736279/royal-caribbean-upside-yield-growth-2026
[2] https://in.investing.com/news/analyst-ratings/royal-caribbean-stock-dips-as-bernstein-reiterates-outperform-rating-93CH-4935133