Sabre SABR shares have gained 28.8% in the past six months, outperforming the Zacks Internet - Software and Services industry, Zacks Computer and Technology sector and the S&P 500 index’s growth of 8.9%, 11.1% and 13.5%, respectively. This reflects investors’ confidence in Sabre’s robust product portfolio and increasing customer base.
Recently, Sabre signed a contract with Thai Airways, which is built upon their long relationship. SABR's advanced Fares Manager and Fares Optimizer solutions have been selected by Thai Airways to improve the latter's fare price management, optimize pricing strategy, enhance response to the market dynamics and increase analyst productivity.
With Sabre’s advanced Fares Manager and Fares Optimizer solutions, Thai Airlines will also be able to perfect fare structures that will further boost its profitability. So far this year, multiple airlines have collaborated with Sabre to improve their airline services.
Growing Customer Base Aids Sabre
In 2024, Sabre’s products and services, including new distribution agreement content (NDC), global distribution system (GDS), SynXis central reservation system, SabreMosaic and Sabre PRISM, have been adopted by several customers.
Companies like World Travel Inc., InterparkTriple and many more adopted Sabre GDS. SABR also helped LOTTE Hotels to migrate to Sabre SynXis central reservation system, and Riyadh Air and Virgin Australia adopted SabreMosaic. Companies like Malaysia Airlines, American Airlines and Aeromexico have either entered into new agreements for Sabre PRISM or renewed their deals.
Sabre 6 Month Price Performance Chart
Image Source: Zacks Investment Research
Sabre has added airlines, including Qantas, EVA Air, Air India, TAP Air Portugal, Air Serbia, Delta Airlines DAL, WestJet, Hawaiian Airlines, Air Canada, Etihad Airways and Malaysia Airlines, to its NDC client list in 2024.
At present, more than a dozen airlines all over the world, including United Airlines UAL and American Airlines AAL, have partnered with SABR to offer their NDC content in the Sabre Global Distribution System.
United Airlines and American Airlines introduced their NDC offers on Sabre’s GDS to allow travel buyers to access their pricing content on multiple platforms like Sabre Red 360, Sabre APIs and GetThere. Delta Airlines concluded the renewal of their multi-year distribution agreement this year.
With the growing number of customers across its product line, Sabre is experiencing growth in multiple segments. SABR’s hospitality solutions segment is growing due to positive customer deployments. The rising number of customers is also opening new channels to grow the number of bookings. For instance, Sabre’s Travel Solutions and Distribution segments are performing well, driven by rising global hotel and other travel bookings.
Near-Term Challenges for Sabre
Although Sabre has experienced steady growth throughout the year, its prospects remain constricted in the near term. Sabre suffers from a seasonal business pattern where its revenues slow down in November and December.
Sabre experiences strong bookings and revenues in the first and third quarters but a significant drop in the fourth quarter as holiday travel is booked earlier in the year and business travel declines during the holidays. These factors impact both the fourth-quarter top line and first-quarter cash flow from operations.
The market in which Sabre operates is highly competitive. Travel distribution space requires SABR to continuously innovate and inject its offerings into other products to expand its market reach causing costs to rise. Competition also affects the top line with pricing pressure. These factors are persistent and further exacerbated by the seasonal nature of the business.
Conclusion
Although Sabre has a consistent flow of customers signing up for its solutions, the company is facing headwinds related to seasonality, rising costs and pricing pressure. SABR also carries a Zacks Value Score of D, indicating that its shares are overvalued at present.
Considering all these factors, we suggest investors to retain this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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