Southwest Airlines Co. and Sabre Corp. have finally reached an agreement after two years of discussions that will allow the companies to continue offering clients access to low fares and improved customer service in 2021.
Southwest Airlines Co. (LUV), which will celebrate its 50th anniversary this year has itself a goal to offer exemplary customer service by its 58,000 employees.
Sabre (SABR) is a software and technology company that serves a wide range of travel companies including airlines, hotels, and travel agencies. Sabre connects travel suppliers with buyers from around the globe and its technology platform manages more than $260 billion worth of global travel spend annually.
As part of the agreement, Southwest Airlines flights and services will be distributed through Sabre’s travel marketplace, promoting the airline's offerings to Sabre-connected agencies and other travel buyers.
Southwest Airilines Chief Commercial Officer, Andrew Watterson, said in a statement, "Providing our content in Sabre GDS with industry-standard capabilities has continued to be a top priority of our Customers. He added, “We are thrilled to come to terms that are mutually beneficial for our Customers and continue our long-standing partnership with Sabre.”
Southwest stock hit a multi-year low in May 2020, but improved investor sentiment and positive Covid-19 developments helped the stock recover much of its losses. However, shares still ended 2020 with a 15% decline. (See LUV stock analysis on TipRanks)
Last month, Deutsche Bank analyst Michael Linenberg downgraded the stock from a Buy to a Hold but raised his price target from $48 to $50 (7% upside potential).
Linenberg believes that airline stocks are at or near fair value based on 2022 valuations, suggesting that investors have already paid for two years of earnings growth. Meanwhile, the analyst remains bullish on the sector in the long-term.
Consensus among analysts is a Moderate Buy based on 9 Buys, 3 Holds and 1 Sell. The average price target of $53.08 suggests upside potential of around 14% over the next 12 months.
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Daimler said Thursday that it agreed to pay a $30 million penalty for failing to recall its vehicles in a timely manner and not complying with reporting requirements.
The US National Highway Traffic Safety Administration (NHTSA) released a consent order that includes both monetary and non-monetary provisions designed to improve Daimler’s (DDAIF) compliance and safety practices.
The terms of the consent order require Daimler to make an upfront payment of $10 million, an additional $5 million will be spent on specific safety enhancing projects and the remaining $15 million will be deferred and may become payable under specified circumstances.
Furthermore, Daimler will need to develop and implement an advanced data analytics program to improve its ability to detect and investigate potential safety defects.
IT systems will need to be improved and employees will need to be properly trained on the recall and reporting requirements of the Vehicle Safety Act, so that regular reporting of safety issues to the NHTSA is conducted accurately.
“Safety is NHTSA’s top priority,” said NHTSA Deputy Administrator James Owens. “It’s critical that manufacturers appropriately recognize the urgency of their safety recall responsibilities and provide timely and candid information to the agency about all safety issues.” (See DDAIF stock analysis on TipRanks)
Morgan Stanley analyst Harald Hendrikse this week reiterated a Buy rating on the stock and set a price target of $73.85. This implies upside potential of around 5% from current levels.
Hendrikse believes that a fundamental business recovery in the automotive sector has already been priced in, but that an expected surge in sales will be an individual driver for Daimler.
Overall, consensus among analysts is a Moderate Buy based on 12 Buys, 8 Holds and 1 Sell. The average price target of $73.22 suggests upside potential of around 4% over the next 12 months.
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Shares of Tribune Publishing surged more than 7% after its largest shareholder Alden Global Capital made an offer to take full control of the newspaper chain.
According to an SEC filing on Dec. 31, Tribune Publishing’s (TBCO) board of directors on Dec. 14 received a non-binding proposal & inquiry letter from hedge fund Alden Global to buy the company at a price of $14.25 per share. The purchase price, which values Tribune Publishing at about $520.6 million, represents an 11% premium to the stock's closing price on Wednesday of $12.79. Shares closed at $13.70 on Dec. 31. Tribune added that Alden did not propose any specific structure for the transaction.
The hedge fund took a 31.6% stake in Tribune Publishing in 2019, making it the publisher’s largest shareholder. Headquartered in Chicago, the publisher operates a number of media outlets, including The Chicago Tribune, The New York Daily News and The Baltimore Sun.
Following the proposal letter, Tribune announced that it has appointed a special committee of its board of directors to act on behalf of the company to deal with the acquisition proposal made by Alden Global. The special committee consists of three independent board members. The committee has hired Lazard as its financial advisor.
Separately, Tribune Publishing announced the closure of the sale of its majority stake in BestReviews to Nexstar Media Group for a gross purchase price of $160 million in cash, plus a working capital adjustment of $9.4 million. BestReviews was owned 60% by Tribune and 40% by its founders, BR Holding Company, Inc.
Noble Financial analyst Michael Kupinski on Dec. 17 put out a review on TBCO, rating the stock with a Buy rating and a price target of $17.50 (28% upside potential).
“We believe that upside revenue and cash flow surprises and increasing contributions from its Digital businesses would be among the key catalysts toward higher stock valuations,” Kupinski wrote in a note to investors. “We would not rule out, however, other transformative acquisitions or return of capital strategies.” (See TBCO stock analysis on TipRanks)
The analyst said that combined with the proceeds from the BestReviews sale and Tribune’s $121.3 million in cash as of September 30, the company would have $210 million in cash, or $5.75 per share.
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