Company Reports

No-moat Clarivate’s first-quarter results were broadly in line with FactSet consensus and management guidance. Nevertheless, shares fell 11% on the day. We surmise the market was hoping for better near-term indications of a revenue growth inflection. While performance remains challenged, this was in our expectations so we don’t expect to make a material change to our $7.80 per share fair value estimate. At current levels, the shares now look undervalued.

We’re initiating coverage of RELX, Wolters Kluwer, and Clarivate; three companies in the business information industry that provide curated data, analytics, and software solutions to a variety of professionals in academia, health, law, finance, government, and others. RELX has a wide moat, fair value estimate of GBX 3,650, and 4-star rating. Wolters Kluwer has a wide moat, a fair value estimate of EUR 137, and 2-star rating. Clarivate has no moat, fair value estimate of EUR 137, and 3-star rating.

Clarivate is an information, analytics, and workflow solutions company based in the United Kingdom. It generates revenue by selling information and analytics services, which provide access to its proprietary databases and software tools. Around 80% of sales are recurring (subscription or reccuring) while the remaining 20% are one-off transaction sales of data. Clarivate’s customer base is concentrated in academia, who utilize the company’s flagship Web of Science and ProQuest One products. Other key end markets are intellectual property where Clarivate provides information on patents and trademarks, and life sciences where the company’s products assist clients with clinical trial information, regulatory approval, and commercialization.