Investing.com -- Deutsche Bank upgraded Royal Caribbean to Buy from Hold in a note Monday, stating that the cruise operator's recent share price slump offers an attractive entry point for a high-quality stock.

Analyst Chris Woronka kept a $299 price target on the stock, implying 23% upside from the Sept. 25 close of $242.70.

"We believe the stock's 26% decline since August 5 (with the SPX being flat) provides considerably more favorable risk/reward from current levels," Woronka wrote.

He blamed the drop on rising oil prices and concerns about how long cruise pricing can keep growing, noting that Norwegian Cruise Line is trying to fill more of its 2027 cabins early, at a time when Caribbean capacity is set to grow by double digits in the fourth quarter.

Royal Caribbean also said this week it would invest $3 billion in a joint venture that will own 50% of Sandals Resorts. Deutsche Bank acknowledged the market was initially skeptical, but it likes the deal and believes the numbers add up.

Furthermore, Woronka highlighted that fuel costs have risen since war broke out in the Middle East, but they make up only about 7% of revenue even at current prices. He called the fall in Royal Caribbean's valuation "overly punitive based on RCL's growth profile ex-fuel."

Carnival reports fiscal third-quarter results on Tuesday. Deutsche Bank expects Carnival to beat forecasts modestly and possibly trim its fourth-quarter pricing outlook, which the market already largely expects. If Carnival shares react well, the bank expects Royal Caribbean to benefit too.

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