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The first quarter yielded soft gross margin profits for global distribution services (GDS), but one analyst remains hopeful for an accelerated gross profit growth rate.
The Ratings
Bank of America Merrill Lynch analyst John King upgraded Sabre Corp (NASDAQ:SABR) to Buy and raised his price target from $18 to $29.
King downgraded Travelport Worldwide Ltd (NYSE:TVPT) to Neutral and maintained a $19 price target.
The Theses
Bank of America expects catalysts and earnings momentum to drive the discounted GDS stocks, and considering near-term conditions, Sabre is seen superior to Travelport.
“We see early signs of progress in Sabre’s technology refresh, while for Travelport strong commission inflation partially offsets upside risks from activism and momentum in payments (eNett),” King wrote in a Tuesday note.
Travelport’s eNett is outperforming amid the launch of a major customer’s private channel, but the value is negated by “underwhelming” GDS gross-margin trends driving commission inflation.
“So the strong YTD performance following the [activist] investment from Elliott suggests the story relies somewhat on activism for material further upside, in our view,” King wrote.
Meanwhile, Sabre demonstrated improved competitive positioning in the most recent quarter and converted King through its strategic shift to cloud and micro-services.
Price Action
Travelport traded down marginally to close at $17.07, while Sabre traded up 1.6 percent at $23.99.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.
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