Benzinga - by Anusuya Lahiri, Benzinga Editor.
Needham analyst Joshua Reilly maintained a Buy rating on Clear Secure, Inc. (NYSE: YOU) with a price target of $40.
The analyst made Clear Secure his "Top Pick" for 2024 and added it to Needham's Conviction List.
Investors have not adequately modeled the impact of the Family price increases enacted late in 2023, in the analyst's view.
Also Read: Clear Secure Poised for ARPU Growth with Pricing Strategy, Analyst Says
Importantly, he expects the final price increase of $70 to $99 per year to be highly accretive, even assuming an elevated level of churn.
Separately, the analyst noted that operating leverage and cash flow growth in 2024 will exceed investor expectations as the company sees benefits from its recent investment cycle, which peaked in 2023.
Also, Reilly expects the PreCheck offering and bundle to launch imminently and provide additional upside to consensus expectations in FY24.
The analyst views shares trading at 12x EV/FCF on his FY24 estimate as too cheap, given his expectations for 20%+ bookings growth.
Reilly notes the company can sustain a 25%+ revenue CAGR for the next several years while maintaining attractive unit economics and value the stock at an EV/FCF multiple of 40x FY23 estimate. The analyst's growth forecast is supported by the company's large, immediately addressable TAM and a strong recovery already underway in travel.
The analyst projected Q4 revenue and EPS of $166.09 million (consensus $166.65 million) and $0.17 (consensus $0.15).
Price Action: YOU shares traded higher by 0.05% at $20.45 on the last check Wednesday.
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Latest Ratings for YOU
| Aug 2021 | Telsey Advisory Group | Maintains | Outperform | |
| Aug 2021 | JP Morgan | Downgrades | Overweight | Neutral |
| Jul 2021 | Loop Capital | Initiates Coverage On | Hold |
View the Latest Analyst Ratings
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