Sabre Corporation (SABR), mcap=$1.8bn, price $5.42 vs $7.88

$SABR pitch:
– A bet on a recovery in the global travel industry to 2019 levels.
– The second largest GDS with 35% market share.
– GDS – booking software, essentially operates as a middle man between travel agents and hotels and airline reservation systems.
– The business was decimated by COVID travel restrictions and stock is down 66% since 2019.
– Now we are at the turning point with enough outlook as things continue to open up.
– Management stays strong in its long-term outlook and walks down the path to recovery with confidence.
– Oligopolistic industry structure with 3 players commanding 80% share.
– The company is extremely entrenched in the US travel market.

$SABR valuation:
– Currently producing negative FCF but projecting to turn positive by the end of FY22.
– On FY2025 FCF forecast of $700m trades at 9x FCF/EV.
– At 15x multiple equities would be boosted to $20.5/share.

Exp. gain: +160% to $20.5/share by 2025.

Full SABR write-up (free guest account required):

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