Royal Caribbean’s revised 2026 earnings and yield guidance came in better than Wall Street had feared, according to a note from Sharon Zackfia, analyst at William Blair, who said the softness triggered by geopolitical uncertainty has already begun to ease.

Zackfia noted that bookings for Mediterranean and West Coast of Mexico itineraries softened in March and early April but have since rebounded and are now running ahead of the same period last year.

The disruption will weigh disproportionately on the second and third quarters given Mediterranean seasonality.

Because of the seasonal concentration of softer itineraries, Royal Caribbean is projecting what Zackfia described as a “smiley face” yield curve for 2026, a term used on the company’s earnings call by President and CEO Jason Liberty, with yields weakest in the second and third quarters before improving in the fourth.

Full-year net yield guidance was revised to a range of 1.5% to 2.5%, down from the original range of 1.5% to 3.5%.

New hardware continues to generate consumer excitement. Pricing for the Legend of the Seas, set to launch this summer, is outpacing what was achieved by its predecessors the Icon of the Seas and Star of the Seas at comparable points in the booking cycle.

Full-year 2026 EPS guidance was lowered by $0.60, reflecting higher fuel costs ($0.62 penalty versus original expectations based on current spot rates), lower net yields, and a $0.12 headwind from a lower anticipated contribution from TUI Cruises. Those factors were partially offset by lower net cruise costs excluding fuel, which are now expected to come in approximately flat.

Despite the revisions, Zackfia said Royal Caribbean remains on track to grow EPS by approximately 11% at the midpoint of guidance. She reiterated an Outperform rating on the stock, citing what she characterized as a reasonable valuation of 15 times her 2026 estimate, and pointing to structural growth drivers including favorable demographic trends, broadening consumer consideration of cruising, and the company’s expanding competitive moat from investments in new ships and private destinations.