The Innovation Gatekeeper

Based in London, Clarivate (NYSE: CLVT) is an information services and analytics company that helps scientific companies protect and commercialize research, innovations and brands. 

Its customers also include government agencies, university labs, nonprofits, publishers and even law firms. 

Clarivate currently serves more than 40,000 customers in over 170 countries. Its client base includes all 30 of the world’s top pharmaceutical companies by sales and 50 global patent offices. Many of its clients are customers on a recurring subscription basis. 

Clarivate’s primary mission is to help its customers reduce the time it takes to develop new drugs, therapies and other innovative solutions. 

Clarivate’s business operates in two segments – science and intellectual property – and the company holds either the No. 1 or No. 2 global position across all of its key offerings. 

One of the company’s flagship products is its Web of Science (WoS) platform, which provides publication records and other data from an index of more than 170 million trusted sources. 

The intellectual property segment consists of product lines that help customers manage their portfolios of patents, trademarks and website domains. 

Accelerated Growth

In addition to its organic growth, Clarivate is expanding through acquisitions. 

In November 2020, it acquired Hanlim IPS, a South Korea-based patent research and consulting service. In October 2020, it bought China-based incoPat, a global intellectual property data and services company. 

Domestically, Clarivate acquired CPA Global, a leader in intellectual property software and services. It also bought out Decision Resources Group, which provides data, analytics and other services to the healthcare industry. 

Concluding a recent investor call, CEO Jerre Stead noted that the company was only “warming up” in terms of mergers and acquisitions. 

The completion of future deals appear to be a question of when, not if. 

The pace and complexity of innovations are playing right into the hands of Clarivate. The need for highly reliable patent research and product trademarks is accelerating. 

Stead said he expects the company “to be impacted less by the negative trends that are impacting other industries at this unprecedented time.” 

In the second quarter of 2022, revenues increased to $686.6 million, up 54% year over year.  

Thanks to two stock offerings, cash and cash equivalents for the first six months of 2022 soared to $430.9 million, up 67% year over year. 

And net income increased from a loss of $187.5 million for the first six months of 2021 to a gain of $131.9 million for the first six months of 2022.  

Clarivate is the epitome of a rapidly growing and newly profitable company. Even better, this is a relatively low-risk opportunity.  

The speed of innovation is rapidly accelerating, and solutions are becoming increasingly complex. 

As we all know, being the first to make a life-changing discovery can potentially be worth billions of dollars. 

The world’s fast-paced search for successful treatments, inventions and innovations is filling Clarivate’s coffers. 

Action to Take: Buy Clarivate (NYSE: CLVT) at market. Use a 25% trailing stop to protect your principal and your profits.