Bank of America upgraded Royal Caribbean Cruises to buy from neutral with a $330 price target, implying 36 percent upside from Friday's close.
Analyst Andrew Didora said the stock's 26 percent decline from its early August peak of Aug. 5 is overdone. Travel spending has accelerated to mid-teens growth in cruise bookings since July, he noted, driven by mid- to high-single-digit gains in overall travel spending since February.
Royal Caribbean's management signaled confidence in 4 percent net yield growth in the fourth quarter of 2026—the strongest in the cruise industry—and guided toward its historical 2-3 percent net yield algorithm for 2027. That consistent trajectory anchors Didora's upgrade.
The catalyst: Royal Caribbean announced a 50 percent equity stake in Sandals, a Caribbean resort chain. Didora projects the deal could grow Royal Caribbean's EBITDA by low- to mid-teens, leveraging the cruise operator's scale and expertise.
Didora acknowledged macro headwinds as a downside risk but flagged that rising interest rates have not historically moved Royal Caribbean's stock. Current estimates appear reasonable given the company's ability to capture share in a resilient travel market, he said.
Royal Caribbean shares rose 1 percent on the upgrade. Deutsche Bank also upgraded the cruise operator to buy, reinforcing market optimism.
Bank of America cut its price target on rival Carnival Corp to $38 from $42, keeping a buy rating. Carnival shares have fallen 27 percent since August during concerns over surging oil prices and their impact on fuel costs.
