J.P Morgan Gives Royal Caribbean Earnings Preview

Royal Caribbean RCL is set to report earnings next week on 1/27. J.P Morgan expects RCL to report solid 4Q10 results on strong demand and ticket prices in the quarter. While the price of crude and bunker fuel continued its upward trend, J.P Morgan believes the increased fuel expense in the quarter will be more than offset by the strong operating momentum of RCL's relatively young and innovative fleet. As a result, JPM is increasing its recurring 4Q10 EPS estimate to $0.13 (from $0.12), versus the company's $0.08-0.12 guidance and the Street's $0.13. J.P Morgan continues to remain positive on cruise fundamentals, as the general consumer environment continues to strengthen, and demand for RCL's new tonnage remains solid. JPM thinks RCL's solid fuel hedge position in 2011, will help soften the blow should fuel continue to increase. J.P Morgan reiterates its Overweight rating and raises its PT on RCL to $56 RCL closed Wednesday at $48.59