© Reuters. Is the Royal Caribbean Group a winning stock in the travel services industry?
Shares of cruise operator Royal Caribbean (RCL) surged last week after Pfizer shared positive results for its oral antiviral treatment candidate COVID-19, which was found to reduce the risk of hospitalization or death by 89%. However, the stock has fallen 8.2% in the past five days. Also, given that RCL is currently trading at a high valuation, is the stock worth betting now? Read on. The second largest cruise line in the world, Royal Caribbean Cruises Ltd. (NYSE :), which is based in Miami, Florida, owns three global brands of vacation cruises, including Royal Caribbean International, Celebrity Cruises, and Silversea Cruises. Its brands operate around 58 ships and 15 more on order. Its stock has gained 20.4% current over the past year and 18.8% year-to-date to close yesterday’s trading session at $ 86.30. However, stocks are currently trading below their 50-day moving average. And in the past five days, RCL has fallen 8.2%.
The company suffered massive losses last year due to travel restrictions linked to the pandemic. But recently announced positive data from Pfizer Inc. (NYSE 🙂 for its oral antiviral treatment candidate COVID-19, which has been shown to reduce the risk of hospitalization or death by 89%, has bolstered investor optimism. as to the recovery of the cruise industry. RCL shares rose following the press release. Additionally, if the breakthrough drug reduces the number of deaths, travel demand should rebound and allow cruise lines, including RCL, to turn the tide.
The company expects to generate positive cash flow by the spring and be profitable for the full year 2022. However, operational challenges persist and the rebound in demand is uncertain as the possibility of new ones emerging. variants of the virus cannot be ruled out. In addition, the drug Pfizer is expected to take some time to market. Additionally, RCL appears to be significantly overvalued at its current price point, given its underlying fundamentals, and with a beta of 2.62 the stock appears to be very volatile.
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