Royal Caribbean (RCL) is facing a downward revision for 2026 financial estimates as geopolitical tensions dampen demand for European cruises among North American travelers, UBS Securities said in a report Tuesday.

The firm reduced the company's 2026 full-year yield growth estimate to 1.5% from 3%, which is below consensus, and cut Q2 and Q3 projections due to weaker pricing and bookings for near-term "European sailings." Q1 and Q4 estimates were "unchanged," supported by limited Europe exposure and stronger Caribbean demand, respectively, according to the report.

Channel checks showed some cruise lines lowering prices for European itineraries, with cancellations affecting bookings, while Alaska demand has "firmed up in recent weeks" and Caribbean demand is "holding up." The firm noted that longer-term bookings for 2027 European travel seem "very strong."

The analyst also said Royal Caribbean Group may find it difficult to "trim expenses" in line with weaker yields, though cuts to "non-core expenses" could help keep net cruise costs "roughly flat," UBS said.

UBS has a buy rating on Royal Caribbean and lowered its price target to $321 from $350.

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