finnCap Research Company Note - 23 January 2019

Jan 23, 2019 / News

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Sector: Technology & Telecoms

ClearStar (CLSU) : Corp

Direct sales focus leads to record H2 revenue

Key data                              

  • Share price (p)                  60.5
  • Target price (p)                90.0
  • Market cap (£m)                              22.0
  • Enterprise value (£m)                    21.0

Strong 28% YoY revenue growth from Direct Services will see the screening tech supplier beat our FY 2018 revenue forecast. As expected, EBITDA swings into positive territory from the loss LY and this lays foundations for accelerating growth through product development, integrations and a strengthened direct sales team. The underlying driver remains the strength of the US labour markets, particularly southern states where ClearStar’s client base is concentrated. As usual, the medical business (MIS) leads the way, its sales growing 25% YoY to over 40% of the total. We note the long-time CFO is stepping down to pursue other interests, and the company’s former Financial Controller will step in as Interim CFO. We lift our FY 2018 sales forecast from $19.9m to $20.1m, maintaining earnings and FY 2019 expectations, as well as our 90p target price.

Lorne Daniel |

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