ClearStar Inc
Ticker: CLSU Exchange: AIM

ClearStar, Inc. is a leading and trusted background check technology, strategic services, and decision-making information provider to employers and background screening companies.

Bouncing back quicker than anticipated

Ahead of ClearStar’s AGM, Chairman Barney Quinn today reported : “While it remains too early to estimate the impact of COVID-19 on full year 2020, we are increasingly optimistic that it will not be as bad as we once feared.’’

Although America lost 20.7m jobs in April, equivalent to 15.5% of the workforce, the good news is that green shoots are already starting to appear. Not least with May’s non-farm payrolls figure coming in at +2.5m gain (13.3% unemployment rate) vs an estimated decline of 8m. The Federal Reserve see a rebound in economic activity (+5.0% in 2021). Such an outcome should provide a supportive backdrop for US background screening & medical testing expert ClearStar, as a net 10m+ jobs are created over the next 2.5 years (average 330k/month).

In terms of employee CV19 testing we understand the US Government has temporarily delayed the start of all new operations of this type, in order to ensure there is consistency nationwide. When the industry gets Federal authorisations, ClearStar has already been awarded 5 deals, which should provide a further lift to the top line.

With regards to valuation, the shares (at 38p) trade on a modest 2019 EV/revs of 0.8x vs peers (pre coronavirus) at 2.5x – 3.5x

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