OSLO, Norway (Reuters): "While it is well known that cruise demand has been declining precipitously since last fall, we do not believe the magnitude of the decline is appreciated," Barclays Capital said in a note to clients on Wednesday.

Barclays cut its share price target for Royal Caribbean Cruises Ltd, the world's second largest cruise operator, to $1 from $20 and its rating on the stock to "underweight" from "equal-weight".

"While we believe RCL will stay solvent, we estimate the company would become precariously close to facing liquidity issues," Barclays added.

A spokesman for Royal Caribbean Cruises told Reuters the company was in its "quiet period" ahead of publishing fourth-quarter results on Jan. 29 and would not comment on liquidity issues or any research reports.

Barclays lowered its earnings per share estimate for 2009 to a negative $0.92 from $1.98 and initiated a 2010 EPS estimate of minus $1.22.

It said it expected Royal Caribbean to miss fourth-quarter consensus estimates and report a 10 cents per share loss for the quarter.

Royal Caribbean shares dropped 8.9 percent in Oslo and 7.7 percent in New York trade at 1540 GMT.