Cruise ship stocks fall, Citi says expectations for Royal Caribbean were ‘sky high’ By Investing.com

© Reuters. Cruise line stocks fall, Citi says expectations for Royal Caribbean were ‘sky high’

Cruise line stocks are on a slide for the first time in just one day, Friday. Royal Caribbean (NYSE:) recently reported its quarterly earnings, which gave the sector an early boost after providing an upbeat outlook.

As of this writing, RCL is down more than 4%, Carnival Corp. (NYSE:) is down more than 2%, and Norwegian Cruise Line (NYSE:) is down more than 1.2%.

Citi analysts maintained a Buy rating on the stock, raising their price target on RCL from $148 to $153 following the company’s quarterly release. They believe expectations were “as high as the sky.”

“RCL stock (somewhat surprisingly) underperformed in Thursday trading despite strength across the business (+1.25% vs. S&P).
“Perhaps it’s because of the sky-high expectations that lie ahead,” they wrote.

They believe investors are looking for something to differentiate themselves and will likely be focused on an implied deceleration in net returns during 2024.

“Correcting for the benefit of the share catch-up in the first quarter and increasingly difficult Y/Y comparisons after the second quarter, our net return guidance for 2019 remains fairly consistent throughout the year, while current trends indicate continued acceleration in pricing power,” he said. Analysts added:

Despite the share price decline, Citi feels that “demand for cruise travel appears to be growing, while RCL’s brand, strategy and execution are firing on all cylinders.”