Needham analyst Joshua Reilly initiated coverage on Clear Secure Inc (NYSE:YOU) with a Buy rating and a price target of $40.
- The analyst believed the company could grow its biometric identity platform well beyond its current enrollment of 14 million-plus individuals.
- The analyst said Clear’s competitive strength derived from its platform construction, backed by best-of-breed biometric capture technology and the network effects inherent in securing an unmatched footprint in 50 of the top 100 U.S. airports.
- Reilly thought the company could sustain a 25%+ revenue CAGR for the next several years while maintaining attractive unit economics in a Thursday note titled “CLEARd for Takeoff.”
- The growth forecast was supported by the company’s large, immediately addressable TAM and a strong recovery already underway in travel.
- The analyst noted travel opportunity was under-penetrated despite a snap-back in boarded passengers.
- Clear Plus membership additions were correlated to boarded passenger growth, which was 30% YTD.
- The analyst believed Clear’s partnership with American Express Company (NYSE:AXP) had been a significant driver of member growth since inception in the third quarter of 2021 and expected the TSA PreCheck opportunity to begin ramping in early 2023.
- The analyst noted recent price increases were likely to be accretive to growth, although they could also push churn to a historically high level.
- YOU Price Action: Clear shares traded higher by 3.09% at $29.04 on the last check Thursday.
