Royal Caribbean Cruises
(RCL - Get Report)
shares soared Tuesday morning after the cruise ship operator said cost controls and new ships will help drive record earnings next year.
Royal Caribbean shares spiked 13.7% less than two hours into the day's session to trade at $39.98 amid heavy volume. Nearly 9 million shares were in play, compared with their average daily trading volume of 2.4 million share.
Royal Caribbean said 2010 earnings will grow to a range of $2.43 to $2.47 per share, up from its
previously announced forecast
for earnings between $2.25 and $2.35 per share. Net earnings in 2011 is expected to top its prior record of $3.26 per share, the company said.
"Profitability momentum moving into 2011 is also quite strong with our newest vessels performing exceptionally well and our management team controlling costs very effectively," said CEO Richard D. Fain. "The economy is still tough, but even facing such headwinds our outlook is remarkably encouraging."
Analysts from Barclays Capital issued an upgrade on Royal Caribbean shares to overweight, from equal weight, and raised their price target on the stock to $46, from $36. Barclays upgraded rival
(CCL - Get Report)
as well, to overweight from equal weight, and raised their price target to $52 from $43.
In the recent quarter Royal Caribbean booked earnings of $356.8 million, or $1.64 per share, a 35.4% increase over year-earlier income of $230.4 million, or $1.07 per share.
Quarterly revenue jumped 16.7% to $2.1 billion, attributed to capacity increases and yield improvements. Net yields increased 5.2% in the quarter.
Royal Caribbean's earnings results topped analysts' consensus call for EPS of $1.57. Sales were in line with expectations.
Passenger bookings are also up, thanks in part to lower ticket prices enacted last year in an effort by Fain to draw potential customers who were willing to travel but at lower rates. Fain said demand is now "steady and solid."