Market Overview

A Travel Pair Trade: Sabre And Travelport

Share:
A Travel Pair Trade: Sabre And Travelport

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.

Related Links:

Deutsche Bank: What To Expect From Online Travel Agency Earnings

Sabre Expands Relationship With Amazon's AWS, Reports Q1 Beat

 

Related Articles (SABR + TVPT)

View Comments and Join the Discussion!

Posted-In: Analyst Color Upgrades Downgrades Price Target Travel Analyst Ratings Trading Ideas General Best of Benzinga

Latest Ratings

StockFirmActionPT
PMTB of A SecuritiesMaintains18.5
IVRB of A SecuritiesMaintains3.0
EFCB of A SecuritiesMaintains15.5
NYMTB of A SecuritiesMaintains3.5
NLYB of A SecuritiesMaintains8.5
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com