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Royal Caribbean Cruises (NYSE:RCL) stock is down nearly 3.5% today after JPMorgan analysts lowered the rating to Underweight. The price target is cut to $47 per share from the prior $106.
The analysts prefer Norwegian Cruise Line (NYSE:NCLH) to RCL and Carnival Corporation (NYSE:CCL) as the latter two are “more vulnerable to near-term ebbs and flows of financial market conditions given the magnitude and timing of future capital commitments.”
“Despite roughly $10b of capital raises so far this year and FCF generation that should cover most (but not all) future commitments, our analysis suggests that RCL could face a ~$400m funding shortfall by the end of next year,” the analysts said in a client note.
JPMorgan assumed research coverage on NCLH and CCL at Overweight and Neutral, respectively. The analysts prefer NCLH after the latest checks showed the company “has the most forward pricing momentum of the three publicly traded players.”
“Norwegian’s latest addition, the Prima, appears to be garnering the biggest premium relative to its existing fleet,” they concluded.
