When Royal Caribbean first said it would acquire a 50% ownership stake in Sandals, investors initially raised their eyebrows. But Wall Street has taken a bullish view on the deal in the weeks since.

Jefferies is the latest Wall Street firm to become increasingly bullish on Royal Caribbean stock, citing strong conviction that the $3 billion deal will fuel growth.

Analysts led by David Katz upgraded Royal Caribbean stock to Buy from Hold and raised their price target to $330 from $305 on Thursday. Jefferies wrote that the stock is the "best buy" ahead of fiscal-third-quarter earnings, which the company will release Oct. 27.

Jefferies predicts "high-conviction growth" in Sandals, and says that could push Sandals' contribution to Royal Caribbean's equity income beyond its current estimate of about $159 million in fiscal year 2027.

When Royal Caribbean first unveiled its acquisition plans on Sept. 23, the stock dropped 1.9%. Analysts have said the initial investor skepticism driving the stock down might have stemmed from a demographic mismatch and concerns that cruise growth in the Caribbean have reached a limit. Stifel, for instance, questioned last month whether cooling cruise demand in 2027 and beyond prompted a risky pivot.

But investors have grown more optimistic since the announcement, sending shares shares up 22%

Wall Street has warmed up to the deal, too. J.P. Morgan, the day after the announcement, raised its price target on Royal Caribbean stock to $394 from $345 while maintaining an Overweight rating, saying the Sandals acquisition could expand the company's ecosystem to land-based resorts.

Similarly, last week, Bank of America analyst Andrew Didora upgraded the stock to Buy from Neutral while maintaining a $330 price target. He anticipates Royal Caribbean's recent investment in Sandals Resorts could generate $900 million of earnings before interest, taxes, depreciation, and amortization, or Ebitda, growth in 2030.

Of the 32 analysts polled by FactSet, 75% rate Royal Caribbean stock an equivalent to Buy, while 25% rate it at Hold.

The upgrade from Jefferies, however, didn't seem to nudge investors as higher oil prices pressured equities Thursday. Royal Caribbean stock dipped 0.1% to $282.09 Thursday. Shares of Carnival Corp. and Viking Holdings also fell by 0.1%.

Volatility in energy costs typically impact cruise operators. The recent climb in crude oil prices have reignited worries that these companies will see their profits drop later this year.