Covisint Corp started trading under the symbol COVS on Sep 26,
2013. The initial public offering of 6.4 million shares priced at
$10.00 per share raised $64.0 million, which Covisint is expected
to use for working capital and general corporate purpose. Shares
surged 23.0% ($2.31) to close at $12.31.
Detroit-based Covisint provides cloud-based software that helps
an organization to connect, engage and collaborate with external
audience. Currently, Covisint's solution is being used by more
than 3,000 customers globally across different industries, with
General Motors (
being its largest core platform customer. General Motors has a
Zacks Rank #3 (Hold).
According to the S1 filed in May this year, Covisint reported
revenues of $90.7 million, up 37.8% year over year in the year
ended Mar 31, 2012. In the nine months period ending Dec 2012,
Covisint reported revenues of $65.0 million. However, for both
the periods, the company reported loss of $3.3 million and $2.4
Credit Suisse Securities LLC acted as lead book-running manager,
while Pacific Crest Securities LLC acted as joint book-running
manager for the offering. Evercore acted as a co-manager.
Covisint's erstwhile holding company
Compuware Corp (
continues to remain the controlling shareholder with
approximately 82.0% stake. Compuware offered approximately 18% of
its stake in the IPO, as a part of its restructuring efforts.
Compuware, which has a Zacks Rank #3 (Hold), will distribute its
remaining shares directly to shareholders after the completion of
the IPO (within one year).
Covisint products are offered as Platform- as-a-Service (PaaS),
which is projected to attain a 41.0% compound annual growth rate
(CAGR) through 2016, generating 24.0% of total cloud revenues.
According to 451 Research, 71% of PaaS revenues will be generated
by vendors with over $75.0 million in sales.
As per data available from market research firm Gartner, PaaS is
expected to achieve 27.7% CAGR through 2016. We believe that
Covisint, based on its innovative product portfolio, is well
positioned to benefit from this massive growth of PaaS over the
long term. Covisint's IPO will provide it greater flexibility to
pursue strategic growth opportunities going forward.
However, the company faces significant competition from well
established players such as
International Business Machines (
. Both IBM and Salesforce have a Zacks Rank #3 (Hold). Moreover,
Covisint's overdependence on automotive and healthcare industries
is a major concern going forward.
COMPUWARE CORP (CPWR): Free Stock Analysis
SALESFORCE.COM (CRM): Free Stock Analysis
GENERAL MOTORS (GM): Free Stock Analysis
INTL BUS MACH (IBM): Free Stock Analysis
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