Software and technology company Sabre Corporation (SABR) powers the global travel industry and has several strategic alliances with companies that include Delta Air Lines, Inc. (DAL), JetBlue Airways Corporation (JBLU), and Singapore Airlines Limited (SINGY). SABR was severely impacted last year when the global airline and travel industry was handcuffed by  COVID-19 restrictions.

The stock has declined 12.6% since May 4 when SABR reported a wider-than-expected loss for the last quarter (ended March 31, 2021). Because international travel continues to be impacted by the COVID-19 pandemic, with a rising number of cases in several parts of the world, the company has not been able to provide guidance for its coming quarters. So, its near-term prospects are uncertain.

Here are the factors that we think could influence SABR’s performance in the coming months:

Global Airline and Travel Industry Continues to be Impacted by the COVID-19 Pandemic

The U.S. travel industry has been gradually recovering thanks to an extensive vaccination drive, but until vaccines are made widely available globally, restrictions on international travel and tourism are expected to continue. The launch of the Singapore-Hong Kong air travel bubble is again deferred, for the second time. And with a  rising number of COVID-19 cases in India, President  Biden restricted travel from India, effective May 4.

According to the Global Business Travel Association (GBTA), a full recovery in travel to pre-pandemic levels is expected by 2025. SABR is expected to be impacted by travel restrictions in the near-term because  it connects travel suppliers, such as airlines, hotels and tour operators, with travel buyers.

Revenue Decline Across All Segments

SABR’s revenues from its travel solutions segment declined 52.5% year-over-year to $288.88 million for its fiscal first quarter, ended March 31, due primarily to the unprecedented disruption in travel caused by the COVID-19 pandemic. Its total bookings declined 54.6% year-over-year to 38.94 million in the quarter. The company’s revenue from its  hospitality solutions segment decreased 28.7% year-over-year to $42.22 million. Its adjusted net loss increased 185.4% year-over-year to $228.27 million, and its loss per share for the quarter came in at $0.72 compared to $0.29 in the prior-year period.

Selling Secured Notes to Repay Debt

Last August, SABR’s  wholly owned subsidiary Sabre GLBL Inc, upsized and priced  a senior secured notes offering, due 2025. The company was  expected to use the net proceeds to repay roughly $300 million  of debt under its Term Loan A, among others.

POWR Ratings Reflect Bleak Prospects

SABR has an overall D rating which equates to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight different categories. Of these categories, SABR has a F grade for Sentiment, which is in sync with unfavorable analyst sentiment. It also has a D grade for Stability.

The stock has a D grade for Growth, which is consistent with analysts’ expectations that its EPS will remain negative for the current quarter, ending June 30,  and in its fiscal year 2021.

The stock is ranked #64 of 71 stocks in the Internet industry. Beyond what we’ve stated above, we’ve also given SABR grades for Value, Quality and Momentum. Get all the SABR ratings here.

If you’re looking for top-rated stocks in the Internet industry with an Overall POWR Rating of A or B, you can access them here.

Bottom Line

SABR’s stock fell sharply following disappointing financial results for its  fiscal first quarter ended March 31. It is not expected to rebound any time soon because  international travel continues to be impacted by COVID-19 related restrictions. Also, analysts expect its EPS to remain negative in the coming quarters. So, it’s wise to avoid the stock now. 

SABR shares were trading at $12.86 per share on Wednesday morning, down $0.39 (-2.94%). Year-to-date, SABR has gained 6.99%, versus a 9.44% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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