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Sabre's (SABR) Q2 Guidance Reflects Improving Travel Scenario

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Sabre Corp. SABR recently announced its guidance for the second quarter of 2021. The company expects revenues within $400-$420 million.

The Zacks Consensus Estimate for revenues is projected at $403 million, suggesting 385.3% year-over-year growth. Moreover, the consensus mark for loss in the second quarter stands at 48 cents per share, indicating a 63% narrower year-over-year loss.

The company had refrained from providing a guidance during its last earnings call due to the uncertain environment of the travel industry amid the pandemic. However, a number of countries are gradually reopening their economies, fueling travel demand, which is encouraging for Sabre.

Sabre Corporation Revenue (TTM)

Sabre Corporation Revenue (TTM)
Sabre Corporation Revenue (TTM)

Sabre Corporation revenue-ttm | Sabre Corporation Quote

Buoyed by the improving scenario of the travel industry, Sabre expects strong sequential top-line growth on the back of higher bookings, a greater number of passengers boarded and increased CRS transactions.

However, bookings for domestic leisure, which is a low average unit revenue and a low-profit segment, are expected to be higher.

Additionally, negative adjusted EBITDA of $75-$90 million is expected to remain an overhang during the quarter. Higher travel and shopping activities are expected to shoot up technology costs. Moreover, SG&A expenses are expected to remain inflated, primarily due to wage inflation and investments in the business.

Nonetheless, Sabre’s steady announcements of partnerships and other technological enhancements reflect that global tour and travel agencies are preparing for the post-pandemic era.

Notably, Sabre renewed its long-standing partnership with Australian airline company, Virgin Australia. Earlier this month, Sabre announced its partnership with travel risk management firm — GOPASS Global — in a move to provide pandemic-related biosecurity risk analytics capabilities to the travel industry.

Moreover, this April, Sabre inked an agreement with JetBlue Airways Corporation JBLU, wherein the former will assist in the latter’s successful technology migration to the former’s Revenue Optimizer solution.

In the same month, Sabre announced that its 25-year partnership with Kanoo Travel has been extended with a new multi-year deal, per which the latter will leverage the technology and solutions of the former to support its operations.

Further, in March, the company expanded its partnership with Singapore Airlines, in a bid to enable select Sabre-connected travel agents in Singapore to book unique NDC (New Distribution Capability) content through the KrisConnect program, under Sabre’s global distribution system (GDS).

The rising traction of Sabre’s travel network solutions among airlines and travel-related services providing companies is likely to help it stay afloat amid the current uncertain environment.

Zacks Rank & Stocks to Consider

Sabre carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the broader technology sector include Silicon Motion Technology Corporation SIMO and Zoom Video Communications ZM, both sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Silicon Motion and Zoom is currently pegged at 8% and 15.6%, respectively.

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