Shares closed down 54 cents, at $126.96 — albeit, William Blair analyst Sharon Zackfia noted, after increasing more than 50% over the past three months.
History of conservative guidance
'We suspect part of the downtick in the stock relates to implied yields for the remainder of the year after an impressive guide of 15.7% for the first quarter (constant currency), although the inferred net yields are still in the mid-single-digit range and management has a history of guiding conservatively on forward yield trends (as illustrated by a 13.5% yield relative to 2019 last year versus original guidance of 2.5% to 4.5%),' Zackfia said in her note.
(During Royal Caribbean's earnings call, other analysts queried the 'moderate' net yield guidance.)
As a result, William Blair is 'comfortably' going to the high end of 2024 net yield guidance and above guidance on earnings per share. The brokerage raised its net yield forecast (constant currency) one point, to 7.2%, and its EPS forecast to $10.10 from $9.08, and ahead of Royal Caribbean's $9.50 to $9.70 guidance.
Zackfia noted each yield point equates to more than 40 cents in annual EPS, translating to EPS of more than $10.
Hitting the 'Trifecta' this year?
Double-digit EPS also would result in Royal Caribbean hitting all of its 'Trifecta' goals one year early, instead of just the two the company forecast it likely would in reporting earnings today.
'All signs point to ongoing momentum this year, with a continued acceleration in both demand and pricing alongside no signs of consumer softness,' Zackfia said. Visiblity is further enhanced by earlier bookings and 70% of customers pre-booking at least one on-board activity; those who do so typically spend 2.5 times as much as others who only make purchases on board, Royal Caribbean said today.
William Blair reiterated its 'outperform' (buy) rating for RCL at 13 times its upwardly revised 2024 EPS estimate.
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