Royal Caribbean (RCL) is on track for a solid Q2, but Q3 bookings face downside risk, while Perfect Day Mexico is delayed but still expected to proceed, UBS said in a note Thursday.

The analysts said the company is expected to report a fairly booked Q2, as its previous guidance likely did not account for a prolonged geopolitical conflict or its impact on bookings. They added that they continue to forecast flat Q3 yields in constant currency, compared with consensus expectations for nearly 1% growth, which they believe face downside risk.

Royal Caribbean has increased its reliance on European demand after March, but recent geopolitical uncertainty has impacted European bookings more heavily than in the past, the analysts said, adding that they maintain their 1.6% full-year yield forecast, which is below consensus and may not fully reflect the latest booking trends.

The analysts said the company's Perfect Day Mexico project is likely delayed to late 2027, with ramp-up in early 2028, but they believe it will still move forward.

UBS has a buy rating and a $309 price target on Royal Caribbean.

Price: 295.99, Change: -10.32, Percent Change: -3.37