Sabre Corporation ( SABR Quick Quote SABR - Free Report) recently inked an agreement with the Lufthansa Group airlines to continue to distribute the latter’s content to travel agencies and corporate travel departments through its global distribution system (GDS). The deal covers the Austrian Airlines, Lufthansa, SWISS, Air Dolomiti and Brussels Airlines of the Lufthansa Group.
Additionally, Sabre will distribute the airlines’ content through the New Distribution Capability (NDC) standard globally to all its partnered travel agencies. The company expects to launch the NDC program next year. Further, it will disclose its go-live plan to bring the airlines' offer live on NDC solutions in the first half of 2021.
Moreover, with the help of Sabre’s NDC technology solution, Lufthansa Group airlines will have distribution flexibility. The airlines can enable personalized retailing by providing personalized price offers to travel buyers.
Sabre Corporation Price and Consensus Coronavirus-Led Disruptions Weaken Growth Prospects
Sabre’s shares have declined 49.2% year to date against the Zacks
Internet - Software and Services industry’s growth of 44.5%.
Notably, coronavirus-induced global lockdowns have compelled people to lay off their travel plans and stay at home to contain the spread of the virus. This has heavily dampened the growth prospects of the global travel industry, including travel network companies like Sabre.
Moreover, a large part of the company’s business is linked with air traffic, which directly exposes it to the current crisis. The company’s September-end quarterly results were adversely impacted due to the coronavirus outbreak.
The company’s travel network revenues declined 74% year over year and distribution revenues plunged 84% during third-quarter fiscal 2020. Its total bookings slumped 86% to 19.92 million due to lower air, lodging, ground and sea bookings. Moreover, the number of boarded airline passengers, a key revenue metric for its IT Solutions division, declined 70% year over year.
New Deal Wins to Aid Recovery
Growing traction of Sabre’s travel network solutions among airlines globally is expected to help the company stay afloat in the current uncertain environment. The agreement with Lufthansa Group airlines adds to the string of agreements entered by the company in the past few months.
Earlier this month, LATAM Airlines, South America's longest-serving airline, implemented its Select Shopping solutions on the carrier's website and call center. Additionally, Gulf Air, the national carrier of the Kingdom of Bahrain, introduced new fares using Sabre’s branded fares technology.
Moreover, in November, Sabre's Revenue Optimizer solution was implemented by Croatia Airlines and GOL Airlines, Brazil’s leading domestic airline. Further, the company extended its partnership with Qantas to provide information to the agents about the airline’s fares, products and services.
However, Sabre’s near-term prospects are expected to remain gloomy and the uncertainty in the travel industry due to the global pandemic is likely to hurt the top line.
Zacks Rank & Stocks to Consider
Sabre currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader technology sector are
NVIDIA Corporation ( NVDA Quick Quote NVDA - Free Report) Cadence Design Systems ( CDNS Quick Quote CDNS - Free Report) and Dell Technologies ( DELL Quick Quote DELL - Free Report) . NVIDIA sports a Zacks Rank #1 (Strong Buy), while Cadence Designs and Dell carry a Zacks Rank #2 (Buy), at present. You can see . the complete list of today’s Zacks #1 Rank stocks here
Long-term earnings growth rate for NVIDIA, Cadence Designs and Dell is pegged at 18.3%, 15.4% and 12%, respectively.
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