Business is business, and business waits for no man – or virus. Even during the corona crisis, companies were conducting IPOs, moving from the fully private sector to the public trading sphere. And Wall Street’s best analysts have wasted no time getting the word out on which of these companies are worth an investor’s second look – and which are too risky.
Making stock selections from the recent IPOs can take a little more homework than investors may be used to. The established companies have a history and a track record that can guide investors. The newer IPOs have yet to build that up, and so the professional analysts’ opinions take on added importance.
With this in mind, we’ve delved into three newly public names – two that the analysts say are worth the risk, and one they tag as best left alone. Using TipRanks’ Stock Comparison tool, we lined up the three alongside each other to get the lowdown on what the near-term holds for these rookies.
IBEX, Ltd. (IBEX)
Is the first stock our list a mountain goat from the Spanish stock index? Not at all – IBEX is an elite name in the customer experience world, working with its clients to improve their own brand engagement. With brand management, customer lifestyle and experience solutions, and digital marketing services, IBEX brings all the necessities for effective end-user engagement into one package.
The company, based in Washington DC, premiered on the trading floor on August 7, with shares priced at $19. One month later, the stock is down 48% despite upbeat forecasts for 2020 growth.
Those projections include revenue growth of 9%, to $402 million for this year, and a switch from an annual net loss to a full-year profit between $6.1 million and $7.6 million.
Seth Weber, 5-star analyst with RBC Capital, believes that IBEX will live up to its forecast potential, writing, “We view revenue outperformance as evidence that IBEX's solutions/services are differentiated, including a portfolio of proprietary technology toolsets and third party integrations driving value-added insights and quantifiable benefits to customers. With evidence of sustained HSD/LDD organic revenue growth and continued EBITDA margin expansion, we expect shares to rise/valuation gap to close.”
Weber’s optimism supports an Outperform (i.e. Buy) rating on the stock, and his $23 price target suggests a powerful upside potential of 137%. (To watch Weber’s track record, click here)
Overall, it’s clear that Wall Street’s analysts agree with Weber. IBEX shares have a Strong Buy consensus rating, based on a unanimous 5 Buy reviews. Share are selling for $9.70 and the average price target of $21.80 implies a 124% potential upside. (See IBEX stock analysis on TipRanks)
NetSTREIT Corp. (NTST)
Based in Texas, NetSTREIT is a real estate investment trust focused on retail properties. The company’s portfolio includes 163 properties across 34 states. The company stock started trading on August 13 priced at $18. The initial public offering included 12.5 million shares, and after four weeks on the market, the trading remained range bound.
In the week after the IPO, the company announced its first quarterly dividend as a public firm. The dividend is set for payment on September 25, with a record date of the 15. At the current rate, NTST’s payment annualizes to 40 cents and gives a yield of 2.2%, slightly higher than the average found among S&P-listed companies.
BTIG analyst Michael Gorman likes the fundamental of this newly public REIT, writing of the company, “NETSTREIT's existing portfolio includes 163 properties with 64% exposure to investment grade tenants, but we expect the asset base to expand materially in the coming years. We think the combination of the company's potential for external growth and the quality of its inplace portfolio augur well for the shares. The company's portfolio quality has shown through during the COVID-19 pandemic where collections have been strong.”
To this end, Gorman rates the stock a Buy along with a $21 price target. This figure implies a 16% upside going forward. (To watch Gorman’s track record, click here)
The Strong Buy analyst consensus rating on NTST shares is based on 7 reviews, including 6 Buys and 1 Hold. The stock has an average price target of $21.21, suggesting an 18% one-year upside from the current share price of $17.94. (See NTST stock analysis on TipRanks)
BigCommerce Holdings (BIGC)
Last on our list is an e-commerce company that rivals Shopify in the online retailer space. BigCommerce offers customers a SaaS platform for cloud-based retail operations and cross-channel commerce, scalable to fit with business growth.
BigCommerce is a big deal in e-commerce, and the lead-up to the IPO reflected that. The company originally was set to offer 6.85 million shares priced between $18 and $20 – but the IPO closed at nearly 10.4 million shares of common stock, sold at $24 per share. The offering raised well over $164 million.
The stock has been volatile since it opened, more than tripling to its peak value and then sliding back down to a net gain of 15% in its first month of trading.
Covering the stock for Raymond James, 5-star analyst Brian Peterson advises caution. While there is nothing fundamentally wrong with BIGC, the sees the surge in value after the IPO as overvaluing the stock.
“While we believe that the company has a number of fundamental tailwinds and is well positioned to gain share, we're also in an uncertain macroeconomic period, while software multiples are at all time highs. Given this dynamic, we would encourage investors to wait for a more attractive entry point,” Peterson opined.
Peterson is ranked among the best of Wall Street’s analysts; when he talks, investors listen. And in his caution on BIGC, he rates the stock a Market Perform (i.e. Hold), without suggesting a price target. (To watch Peterson’s track record, click here)
Wall Street agrees with Peterson, that investors should approach BigCommerce with caution. The stock has 8 recent reviews, including 1 Buy, 6 Holds, and 1 Sell, making the analyst consensus rating a Hold. The shares sell for $83.16, and the $100 average price target implies an upside of 20% for the coming year. (See BIGC stock analysis on TipRanks)
To find good ideas for IPO stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.