Maintain Buy: Weak 2Q26 volumes, but unit revenue and cost control support earnings

Overview

This report is Goldman Sachs' estimate update ahead of Amadeus' 2Q26 earnings release. In the short term, weaker IATA passenger traffic data and a softer full-year outlook lead Goldman Sachs to lower its 2Q26 volume and revenue/EBITDA assumptions; however, the company’s recent commentary on unit revenue growth and cost management was more positive, supporting upgrades to full-year earnings forecasts. Over the medium to long term, Goldman Sachs remains positive on Amadeus' structural growth opportunities in Air IT, PSS, Nevio, and Hospitality, and maintains its Buy rating.

Core views

The core view is that short-term revenue is pressured by airline traffic, but earnings are more resilient than revenue. Goldman Sachs expects 2Q26 revenue and EBITDA to be about 1%-2% below Visible Alpha consensus, mainly driven by lower volume assumptions; at the same time, it expects FY26 constant-currency revenue growth of +6.2%, but raises EBITDA, EBIT, and EPS forecasts by about 1%-2% due to lower fixed-cost growth. On valuation, the target price remains €77 because the earnings upgrade is offset by a reduction in the target P/E multiple from 17.0x to 16.5x and an increase in DCF WACC from 8.7% to 8.9%.

Analysis framework

The report updates short-term earnings, long-term growth, and target price using airline passenger traffic data, recent management commentary, comparison with Visible Alpha consensus, an Air IT contract database, bottom-up product models, and a weighted valuation framework of P/E, DCF, and M&A.

Methodology notes

• Fundamental deep-dive researchAirline IT contract database and bottom-up model

  Estimate penetration, renewals, and upsell opportunities for PSS, Nevio, and other Air IT products through a contract database covering more than 180 airlines.

  This framework is used to quantify Amadeus' remaining market share opportunity in Air IT, room to increase revenue per passenger, and medium-term contribution growth.

• Valuation methodsP/E, DCF, and M&A weighted valuation

  The target price consists of 85% fundamental valuation and 15% M&A valuation, with the fundamental valuation split equally between P/E and DCF.

  The P/E component uses 16.5x NTM+1 P/E, the DCF component uses an approximately 2% terminal growth rate and 8.9% WACC, and the M&A component uses 16.0x 12-month forward EV/EBITDA.

• Factor analysisGS Factor Profile

  Compare the stock with the market and industry peers across growth, financial returns, valuation multiples, and composite score dimensions.

  This framework uses Goldman Sachs forecasts for sales, EBITDA, EPS, ROE, ROCE, CROCI, and multiple valuation metrics to calculate percentiles, providing background on the stock’s style and relative positioning.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Amadeus IT Group (AMA.MC)

  Covered stock; Goldman Sachs maintains Buy rating and €77 target price

  Strengths

  A global leading travel technology provider; the Air IT contract database shows substantial room for PSS share gains and upselling, strong cash generation capability, and expected medium-term EPS CAGR of about 14%.

  Weaknesses

  Short-term weakness in airline traffic reduces 2Q26 revenue and EBITDA expectations, and the FY26 revenue growth assumption is below company guidance of high-single-digit percentages.

  Comparison

  Valuation at about 13x 12-month forward P/E; Goldman Sachs considers this attractive relative to an approximately 14% EPS CAGR over the next five years.

  Risks

  Macro deterioration, slower airline traffic growth, loss of distribution content contracts, intensifying Air Distribution competition, weaker-than-expected PSS contract wins, weaker-than-expected Hospitality growth and margins, and M&A execution risk.

• Air IT / PSS business

  Core long-term growth driver

  Strengths

  PSS contracts typically last 10-20 years, remaining PSS opportunity exceeds 1.7bn PAX, and Amadeus still has significant upsell potential within its existing PSS customer base.

  Weaknesses

  Contract conversion cycles are long, customer migration is complex, and some large airlines use in-house systems.

  Comparison

  In the global PSS market excluding mainland China, Amadeus has about 54% share, Sabre about 19%, and internal or small vendors about 28%.

  Risks

  New contract wins, module upselling, Nevio adoption speed, and airline IT budgets could all come in below expectations.

Key data

• 2Q26 revenue/EBITDA forecastAbout 1%-2% below Visible Alpha consensusMainly due to lower volume growth assumptions.
• IATA April global RPK-3.4% YoYWeaker than Goldman Sachs' previous expectations for 2Q26.
• FY26 constant-currency revenue growth assumption+6.2%Below company guidance of high-single-digit percentages, but stronger unit revenue partially offsets weaker volumes.
• FY26 constant-currency EPS growth expectationAbout +13.5%Goldman Sachs says this is above company guidance of low-double-digit percentages, driven by lower fixed-cost growth.
• 12-month target price€77Maintained unchanged.
• Current price reference€51.76Used to estimate upside versus the target price.
• Valuation multipleAbout 13x 12-month forward P/EGoldman Sachs considers this attractive relative to an approximately 14% EPS CAGR over the next five years.
• Air IT database coverageMore than 180 airlines, covering more than 3.5bn airline passengers in 2019Equivalent to about 80% of global airline passenger volume.
• Estimated global PSS market shareAmadeus about 54%, Sabre about 19%, internal or small vendors about 28%Measured as the global PSS market excluding mainland China.
• Remaining PSS market opportunityMore than 1.7bn PAXGoldman Sachs estimates Amadeus still has significant addressable market room.
• Shareholder returnsOrdinary dividend yield of about 3%-4%, and a €500mn buyback already announced for 2026Goldman Sachs also estimates that by 2030 there could be €5.7bn-€7.6bn of excess cash available for shareholder returns or M&A.

Impact & implications

The investment implication of the report is that the market may be overly focused on short-term weakness in airline traffic while underestimating the support to earnings from unit revenue, cost control, and structural growth in Air IT. If Amadeus can continue winning Air IT contracts, drive PSS and Nevio penetration, and execute shareholder returns, valuation should find support; however, if airline demand, contract renewals, or M&A execution fall short of expectations, the earnings and target price thesis would come under pressure.

Risks

• Macro conditions weaker than expected.
• Airline traffic growth slower than expected.
• Loss of distribution content contracts or deterioration in renewal terms.
• Intensifying Air Distribution competition.
• PSS contract wins below expectations.
• Airline IT module upselling results below expectations.
• Hospitality growth and margins weaker than expected.
• Geopolitical risk.
• M&A execution and integration risk.

What to watch

• Amadeus 2Q26 earnings release date: July 31, 2026.
• Whether subsequent IATA RPK and FY26 passenger growth outlook continue to be revised downward.
• Whether unit revenue growth can continue to offset volume pressure.
• Whether fixed-cost growth and cost management measures are delivered.
• Progress in Air IT, PSS, and Nevio contract wins and upselling.
• Hospitality business growth and margins.
• Whether the Idemia Public Security acquisition is completed and the integration path.
• Pace of dividends, buybacks, and potential additional cash returns.