THIS IS HOW WE ARE THINKING THROUGH SABR:
Our 3Q topline is ahead 5% / our 4Q topline is below -3% and 1Q19 is -7% below as we are inflecting from cyclical beat + raise to beat + miss (and maybe miss + miss after that).
PROBLEMS WITH THE STOCK ARE CYCLICAL:
- Deflating Y/Y comps on core TN business are cyclical, have a chance to buy in ~Jan post re-set
- Post 3Q18 comping quarters absent Y/Y improvement in OCF driven by August 2017 RIF
- End of multiple quarters of lower capex to sales, comps get tougher from here
BULLISH PART IS SECULAR:
- New technologies and architectures give SABR a shot at equalizing the winning in the airline technology category against large rival Amadeus
- FCF growth is new, real, and has many avenues for growth from the 2018 ~$450MM towards $750MM in 2022. The change makes acquisitions, acceleration, and balance sheet recovery all possible
We are on the sidelines waiting for a ~January ‘free look’ at this stock which we think materializes after two consecutive revenue resets (on guidance). After that we think it will be off to the races.
Please call or e-mail with any questions.