Is SABR Stock A Buy?

Sabre Corp (NASDAQ:SABR) is a Southlake, Texas-based travel technology corporation and the largest global distributions systems provider for North American air bookings. This places it firmly in the airline travel industry as a third-party vendor and hinges its success on the return of air travel.

With that already happening and expected to heat up, is SABR stock a buy?

The company was hit hard by the coronavirus pandemic, which temporarily shut down airports around the world. A lot of airlines went out of business in the year following the initial epidemic outbreak, and that means they couldn’t pay their suppliers and partners like Sabre.

Fewer people were booking flights overall, and that crippled the overall business outlook. Over a year into the pandemic, the company still hasn’t reached its regular cruising altitude on the stock market. Share prices are a far cry from the $30.00 range investors are used to from the decade leading into the pandemic.

SABR Revenues Forecasts Look Good

Sabre Corporation has a broad range of technology solutions for the travel industry. This includes Software as a Service (SaaS) solutions, distribution, business intelligence, mobile, and more tools used by professionals and businesses within the travel industry.

They’re a B2B supplier that typically means steady revenue streams with long-term contracts – albeit longer term sales cycles. Its IT solutions is a fast-growing segment, as wireless, GPS, and other technologies are key ingredients in modern travel.

Autopilot features had been in use in the airline industry long before autonomous vehicles were being researched by companies like Tesla (TSLA), Uber (UBER), and Apple (AAPL). And the company also provides technology services to the hotel industry, giving it multiple revenue streams while connecting with booking platforms and other travel-related services.

Of course, the pandemic proved the company’s top line wasn’t as diversified as investors thought, and that sent the price diving in 2020.

Is SABR Stock A Buy?

At its lowest point, the Sabre Corporation shares were trading under $5.00 per share. That put it at risk of being delisted if it couldn’t recover, which the company took steps toward in the aftermath. By the middle of 2021, SABR share price had recovered and that translated to a $4 billion+ market capitalization.

The company generated $327 million in the first quarter of 2021, but still reported a -$266 million net loss for the period. All of its metrics were still being negatively impacted by the pandemic, but there’s still plenty of hope for it to provide handsome returns to investors and return to normality.

Travel is beginning to pick up heading toward 2022, and it’s likely to continue expanding for the rest of the decade. Many localities are lifting COVID-related restrictions, and people have more of a want to travel after over a year of being stuck at home.

Once major events like business conferences and festivals reopen, travel will rise In earnest, and investors buying in today could be in for a quick ride to profitability. 

Will The Travel Industry Bounce Back?

The pandemic highlighted the biggest risks to Sabre’s profitability. When travel was halted, its business model ran aground, and its fastest-growing revenue streams slowed to a trickle. Even with long-term B2B contracts, a company can still hit hard times. SABR saw both revenues and earnings plummet during this period. And it wasn’t alone.

Rolls Royce, GE, Boeing (BA), and others suffered for over a year due to the pandemic. Each of these companies has stockholders and a board to answer to, and they’ve taken drastic measure to remain in business.

While the negative effects hit downstream immediately, it could take longer for the recovery effects to head that way. That’s because the airlines have their own problems to deal with, as does the entire travel and tourism industry.

Hotels, airports, and everyone in between is still struggling to survive, and we could be facing a much tighter decade than previously anticipated. And there’s the competition to consider.

Sabre Holds A Significant Market Share

Although it’s a market leader with 35% share, Sabre isn’t alone in the travel software business. Companies like Traxo, Travelport, and Amadeus also develop competitive solutions. These rivals were hurt just as badly, and the SaaS revenue streams need to be reinforced.

Whichever company relieves the strain on the overall travel industry first has the best odds of expanding their operations. Vertical and horizontal integration is the key to growth, as $4 billion is a drop in the ocean compared to the trillion-dollar tech giants who could muscle their way in if they chose.

Is SABR Stock A Buy? The Bottom Line

Sabre Corporation is an American technology company that services the travel industry. It has a strong B2B SaaS model that helps it to generate revenue by offering IT support and other technology-based solutions to their customer base, which includes airlines, airports, and hotels.

The company and industry were hit hard by the pandemic as travel grinded to a halt and revenue streams dried up.

But things could be looking up as vaccines roll out and development continues on more advanced strains. The economy hasn’t recovered yet, and when it does, the money will eventually trickle its way back to Sabre. It’s just a matter of how long investors want to wait.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.