Goldman Sachs began coverage on the stock on Wednesday. Royal Caribbean Cruises (NYSE:), giving the stock a Buy rating and a $162 price target. The firm highlighted the cruise operator’s superior execution and potential for cost advantages.
Royal Caribbean is currently focused on expanding its fleet and plans to introduce several new “megaships.” These vessels are expected to generate approximately twice the earnings before interest, taxes, depreciation and amortization (EBITDA) compared to older vessels, thereby improving the company’s return on equity.
Goldman Sachs estimates that the introduction of Icon of the Seas (NASDAQ:) will increase net returns by about 2% in 2024. Additionally, the expansion of CocoCay, the cruise line’s private island, is projected to further increase net income by 1%.
Goldman Sachs anticipates that these strategic steps will enable Royal Caribbean to achieve investment grade (IG) financial performance by the end of 2024. This progress, in turn, is expected to improve the company’s return on equity view, potentially catalyzing the stock in 2025.
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