Why Clarivate Stock Is Skyrocketing Today
Key Points
Clarivate beat sales and earnings expectations in Q4.
Guidance for this year was also stronger than anticipated.
The company is in talks to sell its life sciences and healthcare business.
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Clarivate (NYSE: CLVT) stock is surging higher in Tuesday's trading. The company's share price was up 31.4% as of 1 p.m. ET. Meanwhile, the S&P 500 was up 0.7%, and the Nasdaq Composite was up 1%.
In addition to bullish momentum for the broader market lifting tech valuations, the stock is getting a big boost from the company's recent earnings report. The analytics specialist published its fourth-quarter results after the market closed yesterday, posting sales and earnings beats and issuing better-than-expected forward guidance.
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Clarivate's Q4 report delivered wins on multiple fronts
Clarivate recorded non-GAAP (adjusted) earnings of $0.20 per share on sales of $617 million, beating the average analyst estimate's target for a per-share profit of $0.16 on sales of $604.8 million. Revenue was still down roughly 7% year over year, but the decline was much softer than anticipated. Subscription revenues declined to $405.8 million from $407 million but were actually up 1% on an organic basis.
What's next for Clarivate?
Clarivate is targeting free cash flow growth of 10% this year, and it's also forecasting growth between 2% and 3% for annual contract value. Meanwhile, recurring organic revenue is projected to be up between 1% and 2%.
In conjunction with the Q4 report, Clarivate also announced that it was in active discussions to sell its life sciences and healthcare business. The company plans to use the sale of the unit to reduce debt, improve its balance sheet, and pursue expansion in its academia-and-government and intellectual-property categories. Along with better-than-expected guidance for this year, investors seem to be very bullish on the move
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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