Covid-19 Shines Spotlight on Clarivate
A London-based company has thrown some cold water on projections that there could be a vaccine for Covid-19 in 12 to 18 months. But that's its job. And based on the performance of the company's stock, investors have confidence the company knows what it is talking about.
Clarivate Analytics PLC's (NYSE:CCC) shares are up more than 35% this year, to more than $23. The spotlight on the company's work has grown brighter due to the pandemic. It provides structured information and analytics for discovery, protection and commercialization of scientific research, innovations and brands.
Clarivate has studied the vaccines that are in clinical trials--one from Moderna Inc. (NASDAQ:MRNA) and the other from Inovio Pharmaceuticals (NASDAQ:INO)--and didn't sugarcoat its findings. The company concluded it will take at least five years to obtain regulatory approval. Even worse, it thinks neither vaccine is likely to work, according to an article in FiercePharma.
As far as drugs to treat Covid-19, Clarivate paints a more optimistic picture. The company has said the Gilead Sciences Inc.'s (NASDAQ:GILD) drug, remdesivir, has nearly a 90% chance of success. The treatment is now in phase 3 clinical trials and some evidence suggests it is effective, though a great deal more data is needed.
The demand for Clarivate's services are widespread. The company says it has served more than 40,000 organizations in more than 70 countries. Among its clients are the 30 top pharmaceutical companies.
RBC Capital Markets analyst Seth Weber initiated coverage on Clarivate in December, reported Investors Business Daily. At that time, he rated the stock an outperform with a price target of $25.
"We like Clarivate's leadership position, business model, and attractive growth strategy," Weber wrote in a note to clients in January. He expects Clarivate to show improvements in revenue, adjusted earnings and cash flow over the next several years.
According to CNN Money, the five analysts offering 12-month prices set a median target of $24, with a high estimate of $25 and a low estimate of $23.
Clarivate has a market capitalization of nearly $8.5 billion. Last year, the company's revenue was nearly $975 million, with a net loss of $211 million. It expects revenue to be more than $1.15 billion this year.
In early March, Clarivate completed a $950 million acquisition of Decision Resources Group, which provides data, analytics and other products and services to the health care industry. The addition doubled the size of Clarivate's life science analytics business.
A MarketsandMarkets report said the global drug discovery informatics market is projected to grow from $2.2 billion in 2020 to $3.5 billion in 2025, a compounded growth rate of more than 9%. The increase is being driven by such factors as rising research and development expenses and greater use of informatics in drug discovery.
The other major market players include Jubilant Life Sciences (NSE:JUBILANT) of India, Charles River Laboratories International Inc. (NYSE:CRL), International Business Machines Corp. (NYSE:IBM) and the Irish company Accenture (NYSE:ACN).
Disclosure: The author holds a position in Gilead Sciences.
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This article first appeared on GuruFocus.
