Barclays Analyst Bashes RCCL Stock

[RLM77]

Summary below. Seems too pessimistic to me, but I don't have a good sense of their current cash flows and standby borrowing agreements. If nothing else, the quarterly earnings release and conference call tomorrow should be interesting.

 

OSLO, Jan 28 (Reuters) - Barclays Capital cut its share price target for Royal Caribbean Cruises Ltd (RCL.N)(RCL.OL), the world's second largest cruise operator, to $1 from $20 and its rating on the stock to "underweight" from "equal-weight".

"While it is well known that cruise demand has been declining precipitously since last fall, we do not believe the magnitude of the decline is appreciated," Barclays said in a note to clients on Wednesday.

"While we believe RCL will stay solvent, we estimate the company would become precariously close to facing liquidity issues," Barclays added.

A spokesman for Royal Caribbean Cruises told Reuters the company was in its "quiet period" ahead of publishing fourth-quarter results on Jan. 29 and would not comment on liquidity issues or any research reports.

Barclays lowered its earnings per share estimate for 2009 to a negative $0.92 from $1.98 and initiated a 2010 EPS estimate of minus $1.22.

It said it expected Royal Caribbean to miss fourth-quarter consensus estimates and report a 10 cents per share loss for the quarter.

[jeffkauf]

Frankly, I am surprised that RCL has not dropped below $6.00 over the last 3 months. The reality of discretionary spending in the most challenging economic enviornment in

75+ years, should spell caution not only for RCL but many other non-essentials. If this stock moves down toward $5.00-$6.00 and the 100 share OBC stays in place (can't believe it will by the way), then this will be the only reason to buy this company. With all the really attractive beaten down companies, why would one choose to own this over many, many others with much better short term appreciation.