Sabre Corporation: Initiation of Research Coverage

Wednesday, May 28, 2014

William Blair & Company initiated research coverage of Sabre Corporation (SABR $17.08), a leader in the global travel and tourism technology market, with an Outperform rating and Core Growth company profile.

Analyst Bhavan Suri estimated the company would generate revenue of $3.0 billion in 2014 and $3.2 billion in 2015, and adjusted EBITDA of $854 million in 2014 and $942 million in 2015.

“Sabre is a leading provider of software solutions to the global travel industry with a product set that addresses a greater portion of the solution stack than any other vendor to which we are aware,” Suri said. “The company provides key products and services to a broad cross-section of travel suppliers and travel buyers, including airlines, hotels, car rental brands, rail carriers, cruise lines, and tour operators; we therefore believe the company is well positioned to benefit from its leadership role in this growing segment of the market. The global travel industry generates about $7 trillion in annual spending, with travel technology making up roughly $60 billion of overall expenditure. We believe technology will play an integral role in the travel industry’s growth, by facilitating the effective and efficient operation of the next-generation travel ecosystem. Through its continuing focus on innovation and significant investment in the development, marketing, and operation of its vast product set, in our view, Sabre has attained the scale and deep domain expertise necessary to be a key beneficiary of this trend.”

Suri continued, “Sabre has multiple growth drivers that we believe should enable the company to sustain 7%-plus adjusted EBITDA growth for the next few years. First, the company should benefit from the continuing transition from internally developed to outsourced solutions. Second, Sabre can expand its travel marketplace content by adding new travel suppliers and increasing participation from current travel suppliers. Lastly, the company has room to expand its international presence by targeting high-growth geographies, such as Europe, the Middle East, and Africa, where Sabre Travel Network has only 13% share.”

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