'Potential For Outperformance': Goldman Sachs Analyst Is Optimistic Ahead Of Royal Caribbean, Norweigan Cruise Earnings

After a successful third quarter, one analyst is optimistic about the cruise line industry heading into fourth-quarter earnings.

The Cruise Analyst: Goldman Sachs analyst Lizzie Dove published a note on the cruise line industry ahead of earnings. Here are her ratings and price targets:

• Royal Caribbean Cruises Ltd RCL, reiterating a Buy rating and lowering its price target from $275 to $270.
• Norwegian Cruise Line Holdings Ltd NCLH, reiterating a Buy rating and lowering its price target from $35 to $34.

Royal Caribbean Takeaways: Dove noted potential foreign exchange and crude oil headwinds for Royal Caribbean, causing a 30-cent reduction in their EPS forecasts. Still, the analyst is optimistic.

“Though our investor conversations around this headwind have increased in recent days, we are confident than RCL can still maintain its current guidance for 2025 to have a $14 handle,” Dove said. “On a constant currency basis, we expect RCL to guide to moderate net yield growth on a constant currency basis, with somewhere close to a high 3%/low 4% handle possible by our math.”

The analyst is most looking forward to Royal Caribbean’s Investor Day presentation and new long-term targets. Dove is interested in the company’s progress in its private island investments in Mexico and the Caribbean and a potential stock buyback program.

Dove estimates that Royal Caribbean can buy back around $15 billion in shares from 2025 to 2027.

Norweigan Cruise Line Takeaways: The analyst noted concerns among investors in the company’s yield growth and 2025 guidance. Dove thinks such concerns are already priced in and the company has the opportunity for overperformance.

“Still, we believe this is now priced into the stock and well understood by investors, and don't see this as a reason to not own NCLH. In fact, we think NCLH has sufficiently lowered the bar and see potential for outperformance on both yield and costs.”

The analyst also listed several cost-reduction measures by the Miami, Florida-based company including onboard initiatives and fuel and energy savings.

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Image Courtesy: Royal Caribbean Cruises