Cruise demand has been really booming and it should help
Royal Caribbean
stock overcome its recent dip.
The cruise operator was the third-best performing stock in the
S&P 500
in 2023—behind only
Nvidia
and
Meta Platforms
—as it soared 162% in a bumper year for the sector amid strong international travel. The shares haven’t been able to repeat the magic so far this year, down 11% in 2024 through Wednesday’s close.
But the company has given investors reason to be more optimistic, increasing its full-year earnings-per-share guidance by 40 cents to a range of $9.90 to $10.10. The stock rose 7% on Thursday.
It’s been less than three weeks since
Royal Caribbean
issued its previous guidance along with its fourth-quarter earnings.
CEO Jason Liberty said that since it issued earnings “robust demand for our vacation experiences has significantly exceeded our initial expectations.” The so-called Wave season, the period typically around the first quarter when cruise companies offer deals for voyages later in the year, has been very strong for Royal Caribbean.
The company said the first five weeks of the year have been the best Wave booking weeks in its history. Bookings are significantly higher than the same period last year and consumer spending onboard its ships is also running ahead of prior years, helped by higher prices.
Royal Caribbean’s previous guidance issued earlier this month beat Wall Street estimates at the time, and its hike has done the same. Analysts currently see profit of $9.77 a share, according to FactSet.
Other cruise stocks climbed in premarket trading,
Carnival
rose more than 5% and
Norwegian Cruise Line Holdings
was up 3%.
After such a strong rally last year, investors were apprehensive over whether the Royal Caribbean could go much higher in 2024. But its recent pullback, along with surging demand, means the shares have room to move higher again.
Write to Callum Keown at [email protected]
Read the full article here