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Stock Strategist

Travelport's Investments Support a Narrow Moat

The firm aims to keep its technology lead over peers.

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We see  Travelport Worldwide (TVPT) as undervalued, trading at around 10 times the midpoint of management’s 2017 adjusted earnings guidance of $1.29-$1.37 per share, and we believe long-term investors should have the stock on their radar.

We expect Travelport’s global distribution system revenue share to remain stable at around 30%, aided driven by the firm’s leading position in fast-growing areas (payment, hotel, air merchandising, mobile, international traffic) that is fostered by a leading technology platform. The company is not focused on providing IT services like inventory and reservation management, which are more capital intensive than the distribution business but also offer higher margins and growth opportunities in addition to switching cost barriers.

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Dan Wasiolek does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.