Analyst Sees Limited Fallout From Royal Caribbean (RCL) Grandeur Fire

May 28, 2013 3:41 PM EDT Send to a Friend
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Price: $81.52 +1.41%

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On Monday it was learned that a fire broke out on Royal Caribbean Cruises' (NYSE: RCL) Grandeur of the Seas. In response, shares of Royal Caribbean traded lower. The news is troubling, especially in light of a recent fire aboard Carnival Corporation's (NYSE: CCL) Triumph. However, despite negative PR, Wells Fargo analyst Timothy Conder sees limited fallout.

"We would note (1) Grandeur's fire was not an engine fire (it was in an aft crew lounge deck/mechanical space) and the ship never lost propulsion or on-board services, (2) RCL has been very proactive from the media perspective in dealing with the incident, (3) similar to Triumph, passengers were very complementary of the crew's actions. We believe these factors will mitigate the degree of any negative fallout for RCL bookings," said Conder.

Wells Faro sees limited downside risk in RCL, but admits near-term upside potential may also be limited until management updates guidance and Grandeur costs.

Wells Fargo has an Outperform rating on Royal Caribbean Cruises.

For an analyst ratings summary and ratings history on Royal Caribbean Cruises (NYSE: RCL)click here. For more ratings news on Royal Caribbean Cruises click here.

Shares of Royal Caribbean Cruises closed at $36.13 yesterday.

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