Analyst Note
| Dan Wasiolek |With the shares down more than 10% after Sabre's first-quarter results, we think any disappointment regarding the pace of the company’s demand rebound is too extreme. In fact, we still think Sabre’s air bookings could reach half of 2019 levels this year, given that the metric has trended up to 24% of 2019 levels in the first quarter from 20% last quarter, with April improving to 34% of prepandemic marks, and assuming the rest of the year averages around 60% of 2019. Demand in North American offers hope of reaching this target, with regional air volume improving to 32% of 2019 levels in the first quarter, up from 25% last quarter, with April showing a further lift to 46% of prepandemic marks as vaccination uptake in the region increases. We expect U.S. demand to continue to improve this year, with Europe a few months behind. That said, the relative near-term strength seen in the lower-yielding U.S. market could temper our 2021 revenue estimate while having little bearing on our out-year forecast. Overall, we don’t expect a meaningful change to our $17.30 fair value estimate. We see an attractive margin of safety for investors interested in a later-cycle travel recovery play tied to air and corporate travel, despite anticipated near-term volatility.