Royal Caribbean Soars After Boosting Full-Year Profit Forecast

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(Bloomberg) — Royal Caribbean Cruises Ltd. rose Thursday after raising its full year profit forecast to a level that significantly beat expectations, with investors betting that increased demand for its cruises is signaling the worst may be over for the battered industry.

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The cruise operator now expects adjusted earnings per share of $6.00 to $6.20 this year, up from its prior forecast of $4.40 to $4.80. That eclipsed the average analyst estimate of $4.73, sending Royal Caribbean shares up as much as 8.6% at the open on Thursday. Rivals Carnival Corp. and Norwegian Cruise Line Holdings also jumped as much as 6.6% and 6.3% respectively.

The gains add to an already stellar year for the three major cruise companies — all have more than doubled their share prices — and suggest a faster than expected recovery for what was one of the most visibly hurt industries in the early days of the Covid-19 pandemic, when outbreaks left customers trapped on cruises as people contracted the virus.

“Demand for cruising and our brands is exceptionally strong and we have seen another step change in booking volumes and pricing, leading us to now expect double-digit net yield growth for the full year,” Royal Caribbean Chief Executive Officer Jason Liberty said in a statement.

Bookings for sailings next year are “up significantly versus all prior years at record prices,” the company said in its earnings statement Thursday, while European demand is accelerating. Consumer spending onboard, as well as pre-cruise purchases, are also up.

An S&P index of hotels, resorts and cruise lines is up more than 40% this year, its highest level since February 28, 2022. The S&P 500 Index is up 19% over that time.

–With assistance from Lynn Doan.

(Updates with more information throughout.)

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