Royal Caribbean customers are spending more on cruises than they did a year ago. Yet the stock has lost a quarter of its value in less than two months.

Bank of America thinks that gap is now an opportunity.

On Monday, the bank's analyst Andrew Didora upgraded Royal Caribbean Cruises Ltd. (RCL) from Neutral to Buy and kept its $330 price target.

"A high quality business has gone on sale," he said.

How Royal Caribbean Stock Lost 26% Since Late July

At the end of July, Royal Caribbean traded exactly where Bank of America's price objective currently sits.

Since then, the shares had dropped nearly 26%.

The slide deepened last week. On Sept. 23, the day the company announced a joint venture with Sandals Resorts, the stock touched an intraday low of $222.22, its lowest level since May 2025.

According to Didora, three forces drove the decline.

Fuel costs weighed on the outlook. Investors worried about new cruise capacity in the Caribbean. The broader economy added pressure.

As a result, Royal Caribbean trades below 10 times BofA's 2027 EBITDA estimate, against a recent average of about 12 times. EBITDA, or earnings before interest, taxes, depreciation and amortization, measures operating cash earnings.

Meanwhile, the business itself looks healthy. Returns on invested capital are in the high teens and EBITDA margins are close to 40%.

Is the Cruise Customer Still Spending?

Bank of America's own card data suggests demand is holding up. Cruise spending by its customers rose 17% year over year in July and 14.1% in August.

By comparison, total card spending grew 4.5% in August.

In addition, Didora said management comments at a recent BofA conference gave the bank comfort in at least 4% net yield growth in the fourth quarter, the strongest in the industry.

Net yield is the revenue a cruise line earns per passenger day after costs such as travel-agent commissions.

For 2027, Royal Caribbean could guide toward its historical net yield growth of 2% to 3%, according to the note. The company is also more than 50% hedged on 2027 fuel, which limits the damage from an oil spike.

Rising Bond Yields Have Not Sunk Royal Caribbean Before

The 10-year Treasury yield rose from 3.9% on Feb. 27 to 5.2% on Sept. 28.

Over that stretch, Royal Caribbean shares fell nearly 25%.

Still, Bank of America found no clear link between the stock and rising rates.

Across 20 periods since 2016 in which the 10-year yield climbed more than a quarter of a percentage point, the shares posted gains in 16 of them.

The risks sit elsewhere.

Competing cruise capacity in the Caribbean is set to grow by a high-single-digit percentage in 2027, which could pressure prices. Moreover, resorts cannot sail away from a hurricane the way ships can.

RCL Stock Price Activity: Royal Caribbean shares are trading higher by 0.08% at $242.91 at the time of publication on Monday, according to market data.