After a big week, it looks like the IPO market is slowing down ahead of the summer doldrums
The summer is often fairly light for initial public offerings, but things are different this time around. The market for new stocks remains robust, as seven companies pulled off IPOs last week.
And, at an average of about 25%, the returns were solid. The cybersecurity operator Rapid7 (RPD), for instance, saw its deal soar 58%, and ProNAi Therapeutics (DNAI), a developer of cancer drugs, posted a sizzling 81% return. In fact, there was only one bad deal among last week’s new stocks: Ooma (OOMA), a provider of cloud-based communications services, plunged a grueling 16%.
Still, we’ve got four new stocks to watch for this week. Here’s a look at each:As for the upcoming week, do not expect as many fireworks. The market for new stocks will mostly come to an end within a couple weeks, as it typically does every year in late summer.
New Stocks to Watch: Blue Buffalo Pet Products (BUFF)
Expected Offering Date: Wednesday
Blue Buffalo Pet Products sells pet food that has quality ingredients, such as whole meats, fruits and vegetables (the founders named the company after their family dog, Blue, which succumbed to cancer at an early age). And growth has been particularly strong. From 2010 to 2014, revenues soared from $190 million to $918 million, representing a compound annual rate of 48%. During this period, operating income went from $15 million to $179 million.
Yet the company is still in the early stages; after all, the size of the U.S. pet food market is about $26 billion.
Blue Buffalo expects to sell 29.5 million shares on the Nasdaq at a price range of $16 to $18. Lead underwriters include JPMorgan Chase (JPM), Citigroup (C), Barclays (BCS), Deutsche Bank (DB) and Morgan Stanley (MS).
New Stocks to Watch: Neos Therapeutics (NEOS)
Expected Offering Date: Thursday
And the market opportunity is about $10.7 billion.
Neos Therapeutics plans to offer 4 million shares on the Nasdaq at a range of $14 to $16. Lead underwriters include UBS Investment Bank (UBS), BMO Capital Markets (BMO) and RBC Capital Markets (RY).
New Stocks to Watch: ETRE REIT (ESSF)
Expected Offering Date: Thursday
ETRE REIT is focused on the purchase and management of commercial real estate properties. Right now, ETRE’s main asset is downtown Boston’s State Street Financial Center building, a 36-story office tower estimated at about $1.11 billion.
The Boston market has been pretty strong from recent data. According to a report from REIS, Boston’s unemployment rate is currently below 4% as its workforce continues growing. Interestingly enough, the city is the home to the largest proportion of young adults (ages 20 to 34) for any major U.S. city.
ETRE expects to sell 11.5 million shares on the Nasdaq at a price of $15. Lead underwriters includeSandler O’Neill, Evercore Partners (EVR) and Nomura Securities.
New Stocks to Watch: Live Oak Bancshares (LOB)
Expected Offering Date: Thursday
Live Oak Bancshares is an online platform for lending to small businesses, focusing on short- and medium-term commercial and construction loans that are partially guaranteed by the U.S. Small Business Administration. All in all, the bank has a good track record with its underwriting considering that the default rate is only about 1.52%.
Since 2011, the bank’s assets have grown at a compound annual rate of 29% to $723 million. And as for last year, the new stock grew net interest income by 36% to $15 million.
Live Oak Bancshares expects to sell 4 million shares on the Nasdaq at a range of $16 to $18. Lead underwriters include Sandler O’Neill, Keefe Bruyette Woods and Suntrust Robinson Humphrey(STI).
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