Royal Caribbean (RCL) Could Reach $53

NEW YORK (TheStreet) -- Royal Caribbean (RCL) could reach as high as $53 according to analyst firm Credit Suisse.

Royal Caribbean gained 2% to $49.02 Tuesday.

The firm also increased estimates for the cruise company, as it is seeing higher demand for cruises in both Europe and Asia. Thomson Rueters average estimates for Royal Caribbean call for $1.96 million in revenue and earnings of 45 cents a share for the quarter ending March 31.

Credit Suisse currently gives Royal Caribbean an "outperform" rating.

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Separately, TheStreet Ratings team rates ROYAL CARIBBEAN CRUISES LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ROYAL CARIBBEAN CRUISES LTD (RCL) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • RCL's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.90, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.11 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Compared to its closing price of one year ago, RCL's share price has jumped by 28.81%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • 38.71% is the gross profit margin for ROYAL CARIBBEAN CRUISES LTD which we consider to be strong. Regardless of RCL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RCL's net profit margin of 15.81% compares favorably to the industry average.
  • ROYAL CARIBBEAN CRUISES LTD' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ROYAL CARIBBEAN CRUISES LTD reported lower earnings of $0.07 versus $2.78 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus $0.07).

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