Royal Caribbean Cruises Ltd (NYSE:RCL): Royal Caribbean is the second largest cruise ship company, with 44 ships operating mostly under the brands of Royal Caribbean International and Celebrity Brands.
Until yesterday, Standard & Poor’s rated RCL stock as “High Risk,” but S&P Global Ratings has issued a revised rating outlook to “Positive” from “Stable” because of management’s intention to sustain adjusted leverage at below 3.5X.
To meet this goal, there will be no new ship deliveries in 2017.
S&P (Global Ratings) expects RCL to use most of its discretionary cash flow to repay debt with the focus to achieve an investment grade rating.
On Nov. 1, S&P reiterated its four-star “Buy” opinion, maintaining a 12-month target of $95.
In that report, they raised their 2016 EPS estimate to $6.10 per share (up 5 cents) and cut 2017’s by 9 cents to $6.91. The new report could, in my opinion, result in a positive revision of 2017’s earnings estimate and price target.
RCL topped at over $103 in January 2016 but fell through its 200-day moving average before establishing a low at about $65. That low evolved into a triple bottom that served as a base for the current rally that began in September. The bottom was confirmed by a breakaway gap in October and a golden cross in November.
Since the breakaway gap, RCL stock has traced a narrow bull channel with a spread of just three to four points from support to resistance.
Since RCL closed yesterday near the support line, buy under $85 for a trading target of $100 for a proposed gain of over 17%.
– Sam Collins, Trade of the Day
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Source: Investor Place