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    Royal Caribbean Group operates four global cruise brands and had a fleet of 61 ships as of December 2020. The analyst recommends buying the stock with a 12-month price target of $114.40, citing catalysts such as widespread sailing resuming in June 2021 without further delays and pent-up consumer demand for travel expanding in late 2021 and early 2022. While Royal Caribbean has sufficient cash to withstand losses for over a year without sailing, risks include potential delays in vaccine distribution or ambiguity from health regulators regarding COVID safety guidelines.

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    Royal Caribbean Group operates four global cruise brands and had a fleet of 61 ships as of December 2020. The analyst recommends buying the stock with a 12-month price target of $114.40, citing catalysts such as widespread sailing resuming in June 2021 without further delays and pent-up consumer demand for travel expanding in late 2021 and early 2022. While Royal Caribbean has sufficient cash to withstand losses for over a year without sailing, risks include potential delays in vaccine distribution or ambiguity from health regulators regarding COVID safety guidelines.

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    249 views1 page

    RCL Stock Pitch

    Uploaded by

    api-545367999
    Royal Caribbean Group operates four global cruise brands and had a fleet of 61 ships as of December 2020. The analyst recommends buying the stock with a 12-month price target of $114.40, citing catalysts such as widespread sailing resuming in June 2021 without further delays and pent-up consumer demand for travel expanding in late 2021 and early 2022. While Royal Caribbean has sufficient cash to withstand losses for over a year without sailing, risks include potential delays in vaccine distribution or ambiguity from health regulators regarding COVID safety guidelines.

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    of 1

    Royal Caribbean Group (NYSE: RCL) –

    $90.22 (as of 3/13/21)


    Isaac Walshaw

    Consumer Discretionary – Travel Services


    Recommendation: BUY
    Time Horizon: 12 months Market Capitalization: 22.966B
    Price Target: $114.40 Beta: 2.92

    Business Overview:
    Royal Caribbean Group operates four global cruise brands including Royal Caribbean
    International, Celebrity Cruises, Silversea Cruises, and Azamara. As of Dec. 31, 2020, Royal
    Caribbean Group operated a fleet of 61 ships reaching over 1000 destinations. The most recent
    delay adopted by Royal Caribbean Group and competitors places the restart date for sailing on
    April 30, 2021.

    Catalysts:
    • Widespread sailing resumes as early as June 2021 without delaying the start date
    • Continued rise of bond yields would support rotation out of Tech into Consumer
    Discretionary
    • Pent up consumer demand for travel set to expand in late 2021 and early 2022

    Competitive Advantage:
    With a restructuring aimed at lowering costs and increasing margins, Royal Caribbean will be
    able to operate as a price maker in the cruising oligopoly. Their wide margins come from
    operating and fuel efficiencies, as well as upgrades to technology. Ultimately, in the event of
    sustained sailing halts or loss of demand, Royal Caribbean group has sufficient cash and
    equivalents to withstand a zero-sale cash burn for a 16-month period.

    Competitors and Valuation Metrics:

    Royal Caribbean Group Carnival Corporation Norwegian Cruise Line


    (RCL) (CCL) Holdings (NCLH)
    Stock Price $90.22 $28.46 $30.73
    Market Cap 22.966B 32.922B 11.165B
    BF P/E 20.0 13.9 27.6
    Total Debt 20.14B 28.39B 12.02B
    Beta 2.92 2.37 2.90

    Risks:
    • Delays of vaccine distribution could lead to lag time on initial forecast of company’s
    recovery and sailing timeline
    • CDC could continue to be ambiguous in regard to their post-COVID cruising
    requirements to meet health and safety guidelines

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