One Reason Why Royal Caribbean Cruises (RCL) Stock Is Down Today
NEW YORK (TheStreet) -- Shares of Royal Caribbean Cruises (RCL) - Get Report are declining by 2.69% to $75.05 in mid-afternoon trading on Thursday, after Morgan Stanley (MS) trimmed its estimates.
The firm cut its price target to $80 from $99 on the stock, noting that its China channel checks show steep drops in cruise prices, a pressured distribution system and risk from new entrants in 2017.
Ticket prices are down an average of 10% to 20% year-over-year, Morgan Stanley added. Agents also are concerned about the distribution system, where charter companies can lose money when prices fall.
Cruise operators are nonetheless optimistic on China, given its "vast untapped potential and the premium revenue yields and operating margins it has been generating," Morgan Stanley noted.
The firm trimmed its full-year per-share earnings forecast to $6.20 from $6.25 for 2016, to $6.80 from $7.20 for 2017 and to $7.50 from $8.20 for 2018.
Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B.
Royal Caribbean's strengths such as its increase in net income, revenue growth, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.
You can view the full analysis from the report here: RCL
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
