To say it hasn’t been a good year for cruise line operators would be underselling the disaster 2020 has been. Amongst a sea of hurting industries, the pain inflicted by the coronavirus on cruise lines has arguably been second to none.
RCL) shares popped by a handy 16%.” data-reactid=”13″>However, following the delivery of its quarterly results on Monday, Royal Caribbean (RCL) shares popped by a handy 16%.
Not that the surge came off the back of an estimate trouncing report. With no meaningful sailing to report in the quarter, revenue dropped year-over-year by a dispiriting 94% to $175 million, although the top line figure did manage to beat the estimates by $17.73 million. No surprise on the bottom line, with a non-GAAP EPS loss of $6.13 missing consensus by $1.58. With the way things stand, Q3 isn’t expected to fare much better, either.
However, the reason behind the uptick concerned the more long-term outlook laid out by the company. Management said 2021 bookings remain “within historical range” of which 60% are new bookings.
Benjamin Chaiken this is the key take away from the earnings call. The 5-star analyst remains buoyed by 2021’s bookings, with “cumulative pricing above 2019 levels excluding FCC (future cruise credits).”” data-reactid=”20″>For Credit Suisse analyst Benjamin Chaiken this is the key take away from the earnings call. The 5-star analyst remains buoyed by 2021’s bookings, with “cumulative pricing above 2019 levels excluding FCC (future cruise credits).”
Taking the long-term view, Chaiken believes the cost cutting measures will have a lasting and positive effect.
Chaiken said, “Like other companies in travel/leisure RCL, we believe, is in a unique position to exit a more efficient company, with potential room for SG&A to come down… From a sentiment standpoint, we think that cruise is well positioned. Following a few weeks of risk-off, as the market slowly digested the news of spiking COVID cases and its impact on leisure travel, we think expectations are in a much better place and positioning also reflects a more conservative and potentially bumpy road ahead, which is good for the cruise/travel/leisure set-up in our view.”
click here)” data-reactid=”23″>To this end, Chaiken rates RCL an Outperform (i.e. Buy) along with a $75 price target. This figure implies possible upside of 24%. (To watch Chaiken’s track record, click here)
See RCL stock analysis on TipRanks)” data-reactid=”24″>Among Chaiken’s colleagues, opinions are mixed, resulting in a conflicted outlook. 7 Buys, 8 Holds and 2 Sells add up to a Moderate Buy consensus rating. Meanwhile, the $54.38 average price target implies a 5% downside from current levels. (See RCL stock analysis on TipRanks)
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