Clarivate Is Oversold Stock Brimming with Turnaround Potential, Analyst Predicts

Oppenheimer analyst Owen Lau initiates coverage on Clarivate Plc CLVT with an Outperform rating and price target of $11.

The analyst believes the stock is oversold and has an opportunity to turn around, given that a new management team with deep experience has recently arrived.

The analyst remains particularly upbeat on the company's resilient business model, which has organic growth and margins. 

The analyst notes that the company's three key business segments have healthy secular growth trends with large TAMs.

The analyst believes Clarivate operates in an economically insulated market, achieving positive growth even during sustained economic downturns. 

The analyst adds that CLVT has several growth initiatives embedded in its scalable model, making it well-positioned for further expansion of margin in the medium to long term.

Management expects organic growth to accelerate from 2.6% in 2022 to 6% in 2025 and revenue to reach $3 billion. The company expects adj. EBITDA to increase from $1.1 billion in 2022 to $1.3 billion in 2025, driving margin from 41.8% to ~43%, an ~50 bps expansion annually.

Price Action: CLVT shares are trading higher by 8.15% to $8.95 on the last check Tuesday.