The small-cap value travel management and software company saw its stock price give up its 40% YTD gains after reporting Q121 results that missed analysts estimates by wide margins. Compounding the stock’s weakness was that the results were during the rotation out of technology stocks that began in May.
The missed analyst estimates were largely the result of lack of company guidance on the mix of domestic/ international and leisure/corporate mix that would enable the analysts' firms to make more accurate estimates. The domestic leisure GDS per booking fee is approximately $2.50 whereas fees for the other three combinations can be twice as much. Sabre’s (NASDAQ:SABR) domestic leisure mix was 50% in 1Q21 which resulted in a $3.90 per booking fee whereas analysts were modeling a fee in the $4 range.
Sabre management has ensured that this does not recur by providing metrics that would help to properly model the company, taking into account analysts own estimates for continued domestic leisure and international recovery and timing of a corporate travel recovery. Analysts now have TSA data, airline capacity data, and the monthly reports from Sabre that should help with more accurate predictions, so we are unlikely to see the wide variances we saw in 1Q21. With that, as domestic and international leisure travel continues to recover and corporate travel start to come back, we believe in 2H21, the pullback in the stock creates an attractive opportunity for investors. We see the stock exiting 2022 at $26.50, which is 2x the current share price.
1. Airline Travel Is Rebounding In Most Regions
As you can see in the graph below, U.S. airline travel has rebounded sharply in the U.S. and the trend line points to a continuation. In the month of January, airport checkpoints averaged 40% of January 2019 levels. In May thus far, that average has jumped more
