Insights

Why Sabre Stock Is Climbing Today

What happened

Shares of Sabre (NASDAQ: SABR) are climbing today, up by 8.7% as of 3:03 p.m. ET., after the company posted a smaller-than-expected quarterly loss.

So what

Sabre, a one-time subsidiary of American Airlines Group, provides software and related tech to airlines, hotels, and travel agencies. The company was hit hard by the pandemic, but it’s seeing a nice recovery this year thanks to a surge in vacation travel.

Sabre lost $0.25 per share in the second quarter on revenue of $657.5 million, beating analyst expectations for a $0.31-per-share loss on sales of $650 million. The company saw air bookings accelerate globally, and there are early signs of a recovery in corporate and international travel as well.

Sabre is seeing more demand than the airlines can handle. CEO Sean Menke in a statement said that some airlines and airports have “struggled with the pace of the recovery,” which has led to some airlines cutting growth forecasts, but the overall trend is positive.

“As global travel and testing restrictions lifted, a robust travel recovery ensued and we were ready for it,” Menke said in a statement. “Overall, we firmly believe the travel recovery remains on a long-term upward trajectory, and passengers both corporate and leisure continue to show a strong desire to fly.”

Now what

Sabre also raised its full-year guidance for revenue, and said it expects adjusted EBITDA for the year to turn positive should 2022 bookings come in at 60% of 2019 volume.

The company during the pandemic has been transitioning itself away from legacy mainframes toward cloud-based systems, and is slowly building its business managing reservations for discounters to complement its work with old-line airlines like American.

Sabre shares tend to be tied to the cyclical travel industry, and they have had a tough few years as a result. But momentum is growing, and investors are buying into the idea that momentum is sustainable.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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