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Sabre's Competitive Edge Remains Sharp

The travel IT firm is not fully appreciated by the market today, creating a buying opportunity.

Dan Wasiolek: Sabre is one of only two operators with a dominant position providing both IT solutions for travel suppliers and a global distribution system platform, which is the engine allowing flight of airline bookings at traditional travel agents or websites like Expedia.

Sabre's shares have trailed the S&P the past year on concern the company's technology lags that of key peer Amadeus. But we see three main points that defend the company's competitive positioning and support its intact network, efficient scale, and switching cost advantages. 

First, the market is not fully appreciating that Sabre already has several industry leading products in its portfolio. Second, we believe that the company's technology road map--which includes a more efficient cloud infrastructure that will support a streamlined shared-platform upon which more advanced applications will be developed--will allow innovation to continue. And third, the new executive management team has vast experience that will allow this technology evolution to occur.

With shares trading at a meaningful discount to our $26 fair value estimate, we view Sabre shares as attractive.

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