Royal Caribbean (RCL) is facing a reduction in earnings for 2028 and beyond following Mexico's decision to deny an environmental permit to the company's Perfect Day Mexico project, Morgan Stanley said in a Friday note.

Morgan Stanley said it reduced its 2028 EPS growth estimate to 12% from 20%, and its 2025 to 2030 EPS compound annual growth rate to 13% from 15%.

The company was expecting significant earnings gains beginning in 2028 from the proposed 200-acre Perfect Day development at Costa Maya in Quintana Roo, Morgan Stanley said, adding it had assumed 3 million passengers in 2028 rising to 5 million by 2030, each spending around $100 and boosting fleet ticket prices in the high single digits.

Looking ahead, the company has two plausible paths to recovery, namely a revised environmental application that satisfies the government's concerns or finding an alternative less ecologically sensitive location, according to the note. Either would mean significant delays, the analysts said.

Morgan Stanley lowered its Royal Caribbean price target to $280 from $310 and maintained its equal-weight rating.

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