- Needham analyst Joshua Reilly reiterates Clear Secure YOU with a Buy and a $40 price target.
- Reilly recently received results from Needham's Freedom of Information Act Request regarding the number of Trusted Travelers, including those enrolled in TSA PreCheck.
- The growth in PreCheck for 2022 was strong at 27% to 14.3 million individuals.
- Reilly believes Clear Secure will gain market share net new customer sign-ups for PreCheck, given its prominent position in the airport.
- The analyst expects a mix of customers will always prefer the off-site sign-up offerings of these other vendors versus the in-airport offered by Clear.
- Reilly believes the market for TSA PreCheck is larger than Clear's core TAM of 35 million Americans who take five or more trips per year.
- He views the penetration for Trusted Travelers as PreCheck 14.9 million, Global Entry ~8 million, DoD 3.1 million, TWIC 2.3 million, Hazard 1 million, or 29.3 million Americans, versus an opportunity of 129 million, or 23% penetration. Given the relatively low penetration still, ten years after program inception, the analyst views the opportunity for Clear to accelerate PreCheck adoption as significant.
- Reilly noted at the time of his initiation on February 23 that TSA Boarded Passengers were up 30% Y/Y YTD, and the YTD figure now stands at 20.4%.
- He believes investors are trying to understand the normalized TSA passenger growth in 2024 and the subsequent impact on Clear's bookings growth rate.
- Reilly expects a strong demand base for renewals and net new sign-ups in PreCheck to support the upcoming launch of Clear's combined offering.
- Reilly thinks Clear is on track to launch the TSA PreCheck sign-up and renewal offering in Q2 FY23 and heard some airports may begin in early May.
- Finally, as expected, growth in boarded passengers has slowed over the last month, and Reilly's assumptions for 25% bookings growth still look achievable in FY23.
- The analyst believes the more excellent value will come from cross-sales of Clear Plus Memberships.
- Price Action: YOU shares traded higher by 6.53% at $25.02 on the last check Monday.
- Photo Via Company
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