Shares shifted sharply higher Tuesday as Royal Caribbean jumped 6.9% to $259.36, fueled by a rare double upgrade from two of Wall Street's biggest banks. The rally marks a reversal after a bruising 26% decline from the stock's early-August peak — but the question for shareholders is whether the bulls are catching a bargain or a falling knife.
Two Major Banks Say the Selloff Went Too Far
Bank of America analyst Andrew Didora upgraded Royal Caribbean from Neutral to Buy, keeping a $330 price target — implying nearly 36% upside from Friday's close.
Deutsche Bank's Chris Woronka simultaneously moved to Buy from Hold, maintaining a $299 target.
Didora's summary: "A high quality business has gone on sale." The combined signal is meaningful because neither bank had been in the bull camp recently, giving the upgrades extra weight with institutional investors.
Cruise Spending Is Holding Up Better Than Feared
BofA noted that "travel spend has grown mid- to high-single digits since February and cruise spend reaccelerated to mid-teens growth in July and August."
That gave the firm confidence in at least 4% net yield growth — essentially revenue per passenger — in Q4 2026, which it called the strongest in the industry. If those numbers hold, they undercut the bear thesis that consumers will cut vacations as the economy slows.
The $3 Billion Sandals Gamble Divides Opinion
Royal Caribbean is paying roughly $3 billion for a 50% stake in Sandals and Beaches Resorts at about 10 times forward EBITDA (operating profit before accounting charges).
BofA projects the deal could add $900 million in EBITDA by decade's end.
But the stock initially fell on the news, touching an intraday low of $222.22 on September 23 — a sign investors are skeptical about a cruise company taking on debt-financed resort risk.
Carnival's Earnings Today Add a Sector Catalyst
Carnival reported Q3 earnings this morning, beating estimates with adjusted EPS of $1.43 versus the $1.35 consensus, on revenue of $8.43 billion, up 3.4% year-over-year.
Deutsche Bank had flagged that a positive Carnival print would likely lift Royal Caribbean, too — and that read-through appears to be playing out in today's rally.
The bottom line: two credible upgrades and a Carnival earnings beat give Royal Caribbean a short-term floor, but rising fuel costs and $3 billion in new debt mean the stock's recovery hinges on whether vacation spending stays resilient through 2027.