Analysts See Royal Caribbean Beating Its 2027 $20 EPS Target

Royal Caribbean Group’s 2027 target of adjusted earnings per share with a “$20 handle” could prove conservative, according to analysts reviewing its third-quarter 2026 results. Jefferies raised its share-price target to $350 from $330 and retained a buy rating, citing strong bookings and growth opportunities beyond the company’s existing cruise business.

The earnings objective covers the final year of Royal Caribbean’s Perfecta program, which calls for 20% compound annual growth in adjusted EPS from 2024 through 2027. Management reaffirmed that goal despite higher fuel costs and without including earnings from its planned investment in Sandals and Beaches Resorts.

Jefferies analyst David Katz set his 2027 adjusted EPS forecast at $20.90. He pointed to bookings for next year rising in the high teens over the preceding 90 days, alongside continued strength in onboard spending. Greater technology adoption, gaming and beverage sales were supporting that spending, he said.

Katz also cited the resort investment and additional land-based assets as sources of growth in 2028 and beyond, along with new ship capacity. In his view, those opportunities and the company’s operating momentum supported Royal Caribbean’s premium valuation relative to cruise peers.

William Blair analyst Sharon Zackfia retained an outperform rating and raised her 2027 earnings estimate to $20.48 from $20.04, with $23.39 forecast for 2028. She noted that Royal Caribbean remained positioned to increase earnings by about 15% this year and meet its original January guidance, even with full-year fuel expenses running 15% above the initial forecast.

Xian Siew of BNP Paribas kept a $392 price target. He said the results addressed concerns among some investors over the past two quarters about whether Royal Caribbean could deliver the fourth-quarter yield acceleration embedded in its guidance. Siew also pointed to the company’s tendency to outperform its forecasts.

“The underlying business is performing well ahead of our initial expectations,” said Royal Caribbean Group Chairman and Chief Executive Officer Jason Liberty. He said earnings would exceed the Perfecta target by about $1 per share if fuel remained at the spot price used when the program was announced. Royal Caribbean has already surpassed the program’s return-on-invested-capital threshold of at least 16%.

Earnings strength includes a cost-timing benefit

Third-quarter adjusted EPS reached $6.57, compared with $5.75 a year earlier and an analyst consensus estimate of $6.38. Revenue increased 9% to $5.6 billion. The company carried 2.7 million guests, also up 9%, while capacity grew 8% and the load factor reached 112%.

Net yields increased 0.6% in constant currency, exceeding management’s expectations because of stronger close-in demand in Europe and the Caribbean. Net cruise costs excluding fuel per available passenger cruise day fell 1.8% on the same basis, although that improvement benefited from expenses moving into the fourth quarter.

Royal Caribbean raised its full-year adjusted EPS outlook to $17.85–$17.95. The stronger third quarter was partly offset by higher projected fuel costs and unfavorable currency movements. Chief Financial Officer Naftali Holtz put expected annual fuel expense at approximately $1.35 billion and said 58% of fourth-quarter consumption was hedged.

For the fourth quarter, management maintained its constant-currency net yield growth forecast of 4.2%–4.7%, supported by demand, an easier comparison with the prior year, deployment mix and dry-dock timing. Adjusted EPS is expected to range from $3.48 to $3.58.

New ships lead 2027, with resort earnings to follow

Royal Caribbean expects capacity to increase 4.5% in 2027, supported by new ships and fewer capacity days lost to dry docks. Hero of the Seas is scheduled to enter the seven-night Miami program, allowing Icon of the Seas to move to Galveston. Celebrity’s river operation is also due to begin service, with five European river ships scheduled for the year.

Holtz said yield growth would be weighted toward the second half of 2027. The first quarter faces approximately 200 basis points of structural headwinds, including dry-dock timing.

The approximately $3 billion agreement to acquire a 50% interest in Sandals and Beaches Resorts would add exposure to a portfolio of 18 Caribbean resorts, with another three under development. Liberty said the reiterated earnings objective also excluded potential benefits from share repurchases and debt refinancing.

Management expects the resort investment to be immediately accretive, but Holtz said its 2027 earnings contribution would be immaterial and depend on the closing date. Royal Caribbean plans to account for the stake under the equity method, recording its share of results one quarter in arrears.

The transaction is expected to close in early 2027, subject to regulatory approvals and customary closing conditions. Royal Caribbean will incorporate the resort earnings contribution into its financial guidance after closing.