Will This Downgrade Hurt Royal Caribbean Cruises (RCL) Today? (Update)

 

Update (9:50 a.m.): Updated with Tuesday market open information.

NEW YORK (TheStreet) -- Jefferies raised its target price on Royal Caribbean Cruises  (RCL) to $58 and set a "buy" rating. The firm cited valuation and the company's superior operating performance and improving balance sheet as the reasons for the increase.

The stock was rising 1.02% to $51.36 at 9:46 a.m. on Tuesday.

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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 a number of 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, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins."

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

  • RCL's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 101.66% and other important driving factors, this stock has surged by 40.65% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • ROYAL CARIBBEAN CRUISES LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, ROYAL CARIBBEAN CRUISES LTD increased its bottom line by earning $2.14 versus $0.07 in the prior year. This year, the market expects an improvement in earnings ($3.31 versus $2.14).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 101.8% when compared to the same quarter one year prior, rising from -$392.80 million to $7.02 million.
  • You can view the full analysis from the report here: RCL Ratings Report

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