Clear Secure Likely For Market Share Gains From PreCheck Backed By Prominent Position In Airport, Analyst Says - Clear Secure (NYSE:YOU)

Needham analyst Joshua Reilly reiterates Clear Secure YOU with a Buy and a $40 price target.
Reilly recently received results from Needham's Freedom of Information Act Request regarding the number of Trusted Travelers, including those enrolled in TSA PreCheck.
The growth in PreCheck for 2022 was strong at 27% to 14.3 million individuals.
Reilly believes Clear Secure will gain market share net new customer sign-ups for PreCheck, given its prominent position in the airport.
The analyst expects a mix of customers will always prefer the off-site sign-up offerings of these other vendors versus the in-airport offered by Clear.
Reilly believes the market for TSA PreCheck is larger than Clear's core TAM of 35 million Americans who take five or more trips per year.
He views the penetration for Trusted Travelers as PreCheck 14.9 million, Global Entry ~8 million, DoD 3.1 million, TWIC 2.3 million, Hazard 1 million, or 29.3 million Americans, versus an opportunity of 129 million, or 23% penetration. Given the relatively low penetration still, ten years after program inception, the analyst views the opportunity for Clear to accelerate PreCheck adoption as significant.
Reilly noted at the time of his initiation on February 23 that TSA Boarded Passengers were up 30% Y/Y YTD, and the YTD figure now stands at 20.4%.
He believes investors are trying to understand the normalized TSA passenger growth in 2024 and the subsequent impact on Clear's bookings growth rate.
Reilly expects a strong demand base for renewals and net new sign-ups in PreCheck to support the upcoming launch of Clear's combined offering.
Reilly thinks Clear is on track to launch the TSA PreCheck sign-up and renewal offering in Q2 FY23 and heard some airports may begin in early May.
Finally, as expected, growth in boarded passengers has slowed over the last month, and Reilly's assumptions for 25% bookings growth still look achievable in FY23.
The analyst believes the more excellent value will come from cross-sales of Clear Plus Memberships.
Price Action: YOU shares traded higher by 6.53% at $25.02 on the last check Monday.
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