- B of A Securities analyst Victor Cheng downgraded Sabre Corp (NASDAQ:SABR) from Buy to Underperform and lowered the price target from $11 to $7.
- The analyst became less bullish on the 2023 recovery, leading to more downside potential on the stock, given its high leverage and rising interest rates.
- While Cheng expects the wider airline IT market to grow double digits in FY23 as volumes continue to recover, he estimates SABR’s airline IT solutions to increase by 3% in FY23 amid multiple headwinds, including the migration of Russian carriers, notably Aeroflot and Rossiya, and sale of AirCentre.
- The analyst found it challenging for Sabre to remain competitive given its liquidity concern, deeper cost cuts, and ongoing IT transformation.
- The price target reflects lower growth near-term and a higher WACC of 10.4% (from 9.5%). The Q4 recovery is relatively muted overall.
- In the U.S., recovery has somewhat stagnated, with Winter Storm Elliott leading to canceled flights in the last ten days of December.
- EMEA bookings were sluggish due to lower intra-Europe bookings.
- APAC recovery gained momentum, with many regions improving but partially offset by operational cutbacks in Australia.
- The BofA economists now expect a very likely recession in the U.S. and Europe. Nonetheless, the reopening of Asia and a still-nascent corporate travel recovery are likely to offset the impact of a downturn partially.
- In 2023, Cheng expects Etihad Airways, Hawaiian Airlines, and ITA Airways to migrate away from Sabre.
- However, the planned merger of Spirit Airlines, Inc (NYSE:SAVE) (Amadeus customer) with JetBlue Airways Corp (NASDAQ:JBLU) (Sabre customer) can more than offset these losses if Spirit migrates to Sabre.
- Price Action: SABR shares traded lower by 7.93% at $6.39 on the last check Wednesday.
‘Israel’s Netanyahu Delays Defense Minister’s Dismissal; Yoav Gallant Was Fired After He Called For A Delay To The Government’s Controversial Judicial Overhaul Plan’ – WSJ
https://www.wsj.com/articles/israels-netanyahu-delays-defense-ministers-dismissal-644b0cf0
Israeli Prime Minister Benjamin Netanyahu has temporarily suspended his decision to fire Defense Minister Yoav Gallant
