USATODAY
Four IPOs are to make their debut this week, adding fuel to
what's already been a sizzling comeback in new issues this year.
Even before this week's expected foursome, there have been
30 initial public offerings this year, a 650% improvement from
the same point last year, says Renaissance Capital. The year's
IPOs have raised $7.1 billion, up dramatically from the $1 billion
raised at the same point last year and already roughly half of
what was raised during all of 2003.
"It's been amazing," says Ben Holmes, president of Morningnotes.com.
"We started the year well."
The pipeline looks just as impressive. So far in March, 44 companies
have filed to go public, says Richard Peterson, market strategist at
Thomson Financial. That's the biggest month for filings since 45 were
filed in September 2000, and March isn't over yet.
The floodgates have opened largely because corporate earnings were
up 29% last year, the biggest jump since 1984, he says. "The economic
climate has turned the corner," he says. "Now's the time to go public."
But despite all the positive things going for IPOs, problems bubbling
beneath the surface vex some investors. For starters, the overall
performance hasn't exactly been stellar.
While the IPOs to begin trading this year have risen 6.1% above their
debut prices, they've fallen, on average, 4% below their closing prices
on their first day of trading, says IPO tracker Dealogic. That's worse
than the Standard & Poor's 0.3% decline this year.
Moreover, the 92 IPOs that began trading in the past 52 weeks are only
up 17.5%, on average, from their offering prices. That's good, but below
the 27% gain of the S&P 500 in the past year.
Most recently, a number of IPOs have had less-than-eye-popping debuts.
Friday, Hornbeck Offshore Services priced at just $13 a share, at the low
end of its $13-to-$15 range. Also Friday, Anadys Pharmaceuticals priced
at $7 a share, well below its initial range of $11 to $13.
When trading began, Anadys rose 6 cents to $7.06, and Hornbeck 25 cents
to $13.25. Several of the former darlings, Chinese IPOs, have also struggled.
These mixed signals make this week an interesting gauge of the IPO market's
health. While none of the week's deals is expected to be a barnburner, eyes
are focused especially on:
•Cutera. The winner of the "most interesting IPO of the week" award goes to
this company. The company makes the CoolGlide brand of handheld devices
used by plastic surgeons and other doctors to remove unsightly skin marks.
The company, which first attempted to go public in 2002 when known as Altus
Medical, is profitable. It earned $3.1 million last year, a 371% increase from 2002.
•Santarus. By filing to sell roughly $85 million worth of stock, this pharmaceutical
company is the week's biggest IPO. But the company lost $22.5 million last year,
an even steeper loss than the $14.7 million it bled in 2002.
Despite what happens with those, investors have shown they're hungry for the right
IPOs, says Francis Gaskins of IPOdesktop.com. "The party is not over."