Investing.com -- BMO Capital Markets has started coverage of Royal Caribbean Cruises with an Outperform rating and a $370 price target, implying approximately 30% total return, calling it the firm's top pick in the cruise sector.

Analyst Tristan Thomas-Martin told clients in a note that Royal Caribbean is "a machine," describing a business model built around attracting new cruisers through targeted marketing, a refreshed itinerary offering and consistent new ship launches, while retaining customers through its rewards program and multi-brand portfolio spanning the price-point spectrum.

Thomas-Martin drew a clear distinction between Royal Caribbean and its peers.

"RCL is not a turnaround, rather it is focused on the next leg of industry growth," he said, pointing to destination experiences such as Perfect Day at Coco Cay and the Royal Beach Club Collection as examples of how the company is driving onboard spending and differentiation.

On financials, BMO Capital said Royal Caribbean generates higher returns on invested capital than competitors Norwegian Cruise Line Holdings and Carnival, and has demonstrated "consistently strong free cash flow conversion and ROE over time."

On valuation, Thomas-Martin said shares are "not unreasonable" despite a 12% gain since 24 May 2026, trading at approximately 12 times 2027 EV/EBITDA and 14.5 times 2027 price-to-earnings.

While Carnival recently flagged softer European demand trends, BMO Capital said Royal Caribbean is "better equipped to navigate given a more affluent customer base and a dominant position in the Caribbean."