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Amadeus: Eyeing A Rebound Opportunity

Jun. 05, 2020 10:02 AM ETAmadeus IT Group, S.A. (AMADY)
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Tech and Growth


  • Amadeus is a global market leader in high-barrier and mission-critical airline GDS and IT sectors. Most world major airlines are customers.
  • It generated a €3.1 billion of revenue from its airline GDS business in 2019, having processed over 646 million of air bookings globally.
  • The COVID-19 impact on the travel industry has temporarily weakened its fundamentals and shares price, which creates a good entry point.


Amadeus (OTCMKTS: AMADY) (BME: AMS) is a global leader in the travel and tourism Global Distribution System/GDS space. The GDS is a computer reservation system that sources real-time travel inventory data such as flights or room availability from travel providers (airlines, hotels, and others), which will then be consumed by the travel sellers (online/offline travel agents, metasearch, and others). The company has a strong moat and fundamentals. Almost all of the major online travel and hospitality players around the world are Amadeus' clients, and given the ~ €10 billion of TAM opportunity, the company's latest +€5.6 billion of revenue means it has secured over 50% of the market. Profitability has been strong as earnings, EPS (Earnings Per Share), and DPS (Dividend Per Share) growth have been consistent.

(Source: google)

Recently, COVID-19 has severely impacted the business. Shares price is currently down over 38% from its YTD-high of ~€78 to reflect the temporarily weakened fundamentals. Given the lack of visibility for the full year despite the attractive entry point opportunity, we will set a neutral rating for the stock in the meantime, with a strong likelihood to establish an overweight position in the second half as more travel-related businesses reopen.


Being founded by a group of airlines such as Air France, Lufthansa, Scandinavian Airlines, and Iberia in 1987, the company has established a very deep moat in the airline IT industry. As a market leader in the high-barrier airline GDS/Distribution business, Amadeus has a very defensible business.

(Source: company's financial 2019 IR presentation)

As of 2019, 55% of Amadeus' revenue has come from the airline GDS business. The €3.1 billion of revenue from its GDS segment last year represented a staggering 646 million of air booking volume flowing through the system globally. As of today, it has over 40% market share, meaning that almost all of the major

This article was written by

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Former tech operator, entrepreneur, and venture capitalist with over a decade of experience starting, investing, and building companies in Asia and US. Long-only manager seeking multi-asset technology / growth opportunities driving disruptive innovation globally.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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