The IPO market is looking forward to November 15, 2013. Twitter
will no doubt be a hot stock and should also provide the mass media
with lots to talk about. The NYSE even performed a test over the
weekend to see if it could handle the expected intense volume.
Twitter is one thing... but the health of the IPO market is
another. So how has that market been? What are the top performers?
Let's take a look!
IPOs This Year
A simple Google search for IPO stories in the media will result in
several links to stories of stocks that have doubled on their first
day of offering. To avoid duplication of efforts, here are those
names that have more than doubled in their first day of trading.
The stocks listed above, all had a huge pop on the first day and
three are currently Zacks Rank #3 (Hold) rated stocks. PBPB is not
yet ranked as analyst reports have not yet come out. Having a rank
of #3 (Hold) soon after an IPO is pretty common as underwriting
banks have to wait a period of time before they can initiate
coverage. The Zacks Rank tends to move up when there is a positive
revision to estimates and that could take some time.
It is clear that if we have four stocks that have doubled on the
first day of trading, the market is pretty strong.
Recent IPO's With High Zacks Rank
- is a Zacks Rank #2 (Buy) and has been public since late May. That
time horizon has allowed analysts a few chances to increase their
The internet marketing company has had two earnings reports since
going public. The first was on July 30, and the company missed that
quarter with a wider loss than expected. This has been fairly
common on new companies as they have not been able to get the full
story to analysts or there is some noise in the first reporting
Investors easily forgave the company for the 12.7% negative
earnings surprise and bid the stock higher by 21.5% in the session
following its first report.
The next report was much better. A two cent beat of a 6.9% positive
earnings surprise helped the stock move higher in the session
following the report.
) is also a Zacks Rank #2 (Buy) stock that IPO'ed this year. The
stock zoomed higher by a healthy 60% on its first day of trading.
The online international money transfer service has been public
since February 15 and had an offering price of $16 per share.
Since that time, estimates have soared. When the first research
reports were out in March, the Zacks Consensus Estimate for 2013
was calling of a loss of $0.24 per share. By July, the estimate had
turned the corner to a gain of $0.01 and follow a recent report,
the consensus is now looking at $0.11.
A very similar trend exists for 2014, with estimates moving from a
loss of $0.06 to a gain of $0.08 over the same time horizon above
for the first two estimates. The 2014 Zacks Consensus is now
calling for a gain of $0.18 and that translates to an implied
earnings growth rate of 63%.
As Twitter (
) comes to the market there should be a lot of fanfare. This will
be the hottest issue of the year and will continuously be compared
) and its IPO.
Needless to say, the FB IPO was a disaster and caused a great many
retail investors to take substantial losses. Over time, the stock
recovered and is now well above the IPO price and first trade.
It might be of interest to learn that Facebook is a Zacks Rank #2
(Buy). TheFacebook as it used to be called (at least that is what I
learned from the movie "The Social Network") has seen 2 straight
positive earnings surprises.
The most recent one came on July 24th and it propelled the stock
higher by 31% after investors saw a 44% positive earnings surprise.
They also saw a glimpse of how the company plans to monetize the
$1B+ investment in Instagram as well.
Buy what will Twitter's Rank Be? As we have seen from other IPO's,
it will take some time to get research reports from covering
analysts in. Then it will take some more time before they have an
opportunity to increase estimates... so don't be surprised if the
company has no Zacks Rank its first day of trading, or even no Rank
a month or more after its public.
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FACEBOOK INC-A (FB): Free Stock Analysis Report
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SPROUTS FMR MKT (SFM): Free Stock Analysis
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