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Is Royal Caribbean Cruises a Buy Under $75?

Stock MarketsDec 02, 2021 10:31AM ET
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© Reuters. Is Royal Caribbean Cruises a Buy Under $75?

The shares of the world's second-largest cruise company, Royal Caribbean Cruises (NYSE:RCL), hit their 52-week price low of $64.20 in yesterday’s trading session. Cruise industry investors are concerned about the newly identified COVID-19 variant. Furthermore, the CEO of Moderna (NASDAQ:MRNA) has voiced concerns over the effectiveness of existing vaccines against the new strain, which has increased investors’ anxiety. So, given RCL’s high volatility, is it wise to bet on the stock now? Read on to learn our view.Miami-based Royal Caribbean Cruises Ltd. (RCL) owns three global cruise vacation brands that include Royal Caribbean International, Celebrity Cruises, and Silversea Cruises. Its stock has declined 33.2% in price over the past six months and 27.2% over the past month. RCL plunged to its 52-week low yesterday, falling as much as 8% intraday to close the trading session at $64.27. The stock has a 2.62 beta, indicating high volatility.

The newly identified omicron strain of COVID-19 is prompting fears of renewed lockdowns. The World Health Organization presented the new variant as a ‘variant of concern,’ advising countries to consider imposing new restrictions and banning international travel. This threatens the cruise line’s recovery. Also, it is not yet clear whether the current vaccines will be effective against the variant. Recently, Moderna Inc. (MRNA) CEO expressed concerns about the possibility of a ‘material drop’ in the effectiveness of existing vaccines against the new variant. If the omicron variant drives another COVID-19 wave, or the vaccines fail against the strain, it could adversely affect RCL and the cruise industry’s recovery.

Even though Emer Cooke, executive director of the European Medicines Agency, has attempted to reassure the world, stating that “even if the new variant becomes more widespread, the vaccines we have will continue to provide protection,” uncertainty persists.

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Is Royal Caribbean Cruises a Buy Under $75?
 

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