Loss-Making Clarivate Plc (NYSE:CLVT) Expected To Breakeven In The Medium-Term

With the business potentially at an important milestone, we thought we'd take a closer look at Clarivate Plc's (NYSE:CLVT) future prospects. Clarivate Plc, an information, analytics, and workflow company, provides structured information and analytics for discovery, development, protection, commercialization, and measurement of scientific research, innovations, and brands. The US$6.6b market-cap company announced a latest loss of US$4.0b on 31 December 2022 for its most recent financial year result. Many investors are wondering about the rate at which Clarivate will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Clarivate

Consensus from 9 of the American Professional Services analysts is that Clarivate is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$33m in 2024. Therefore, the company is expected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 124%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Clarivate given that this is a high-level summary, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Clarivate currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Clarivate's case is 73%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Clarivate which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Clarivate, take a look at Clarivate's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

1. Valuation: What is Clarivate worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Clarivate is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Clarivate’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.