Although Royal Caribbean Cruises Ltd (NYSE:RCL) third-quarter results missed the consensus-estimated, the early phase of the cruise recovery has been as expected, according to BofA Securities.

The Royal Caribbean Analyst: Andrew Didora maintained an Underperform rating for Royal Caribbean while raising the price target from $65 to $75.

The Royal Caribbean Thesis: Management has indicated that 80% of the company’s fleet should be operational year-end, while the full fleet is likely to be back in operation by spring of 2022, Didora said in the note to clients.

He added Royal Caribbean’s fleet return to “normalized utilization” by the back half of 2022.

The analyst mentioned that the company has announced several positive data points around the demand recovery:

• Sequential growth in third-quarter bookings despite the slowdown in September due to the spread of the Delta variant
• Sequential growth in October bookings
• Bookings in the U.S. and the U.K. exceeded the 2019 levels
• Bookings for 2023 is not impacted by the COVID-19 Delta variant
• Booked load factors “are in line with historical levels at higher pricing”

RCL Price Action: Shares of Royal Caribbean had risen by 3.60% to $87.50 at the time of publication Monday afternoon.

Photo: Courtesy Royal Caribbean