Our target price for Amadeus is €85/share. Our valuation approach references Amadeus' pre-pandemic average EV/EBITA and PE multiples. We calculate a long-run average EV/EBITA multiple of 16x and PE of 21.7x. We believe that Amadeus can be valued at a 10-20% premium relative to those average multiples to reflect the phasing out of its cloud migration costs and the growth and margin prospects of its Hospitality business. Accordingly, we derive our target price using 19.2x FY’26E EV/EBITA and 24.7x FY’26E PE (weighted equally). We cross-check our target price with DCF analysis, assuming 4% perpetuity growth and 8% WACC.

Key risks to our Amadeus investment case and to our target price include:

- Increasing competition from GDS peers.

- Sustained fee declines in GDS and IT Solutions.

- IT Solutions business is operationally geared, which means earnings can be significantly affected by volume gains or losses.

- Given recently announced new airline pricing strategies, we feel that the dynamics of the GDS market could potentially be disrupted, but at this stage industry adoption is not certain.

If the impact from any of these factors proves to be more negative than we anticipate, the stock will likely have difficulty achieving our financial and price targets. However, if any of these factors proves to have less of an effect than we anticipate, the stock could materially outperform our target price.