Royal Caribbean assumed with Underweight from Overweight at JPMorgan

JPMorgan analyst Daniel Adam double downgraded Royal Caribbean (RCL) to Underweight from Overweight with a price target of $47, down from $106, after assuming coverage of the name. Despite roughly $10B of capital raises so far this year and free cash flow generation that should cover most, but not all, of its future commitments, Royal could face a $400M funding shortfall by the end of next year, Adam tells investors in a research note. Additionally, in order to achieve its investment grade credit rating target by 2025, Royal likely needs to raise an additional $3.5B, via either equity or asset sales, says the analyst. He says that at current levels, a $3.5B equity deal would be 20% dilutive to shareholders. Adam prefers Norwegian Cruise Line (NCLH) to Royal Caribbean, as he sees near-term funding requirements for the former as "less onerous."