Citi Research placed Royal Caribbean (RCL) on a downside 30-day short-term view ahead of the company’s fourth quarter results amid expectations that FY26 yield guidance will likely come in below expectations.
Analyst James Hardiman sees enough indications within the cruise industry—including pricing, promotions, and management commentary—that either the demand environment in the sector has decelerated or the supply environment in the crucial Caribbean market has become crowded enough to necessitate a downward revision to Q4 estimates.
“We are again tweaking our estimates to reflect what is likely to be a more conservative set of outlooks when Royal Caribbean (RCL) reports Q4 earnings, with Q1 in particular likely a pain point across the industry given a glut of Caribbean capacity,” Hardiman said in a note to clients.
The capacity issues in the Caribbean have been noted by several Wall Street firms, including Goldman Sachs, which sees net yields in the first half of the year pressured by oversaturation, and Jefferies’ David Katz, who anticipates more pronounced pricing pressures to achieve occupancy targets.
Accordingly, Hardiman lowered his Q4 EPS estimate by just $0.06 to $17.95, coupled with a cut to his yield assumption to 2.65% (vs. 3.0% street estimate) that is largely offset by better cost controls.
Royal Caribbean (RCL) releases fourth quarter results before the open on January 30, expected to show an unadjusted profit of $2.82 on $4.28B in sales, an increase of 73% and 13%, respectively, from the same quarter last year.
Royal Caribbean (RCL) shares closed lower again on Wednesday, extending their three-day decline to 10% with another 4% drop.