5 Top-Performing New Tech Stocks
With the debut of public offerings from Demand Media and Nielsen already this year, analysts expect the tech industry to see a large number of new issuances in 2011.
While some late-stage Silicon Valley companies like Facebook and Zynga have raised massive amounts of capital in the private markets and are unlikely to go public this year, strong demand for LinkedIn and Pandora—both of which have filed in the last month—might trigger other high profile start-ups to take the plunge, say analysts.
Seven technology companies have gone public so far this year, more than any other industry, according to Renaissance Capital, an IPO research firm based in Greenwich, Conn. Tech has performed better than other sectors, too, with a 21.3% average total return.
Scott Sweet, a senior managing partner at IPO Boutique, an IPO advisory firm in Lutz, Fla., says the number of public offerings in the tech sector is estimated to double this year over last year, when 42 companies in the space priced.
Top IPO candidates for this year include smart-grid star Silver Springs Networks, local daily deals site Groupon and Brightcove, an online video company that recently hired a new CFO with public company experience.
There are also 31 tech companies in the IPO pipeline—companies like Internet calling service Skype that have filed an S-1 but have yet to price—that will likely be tracking the performance of recent public offerings to determine the right time to take the plunge.
Here's a look at five of the best performing newly public tech stocks, based on their prices' percentage increase and selected with help from Renaissance Capital.
What it Does: Provides voice-over-Internet (VoiP) services
BroadSoft, a communications software company based in Gaithersburg, Md., had a troubling start when it first launched its initial public offering in June 2010.
The company priced at $9, on the low end of its initial range of between $9 and $11, and shares sank on its first day of trading.
But despite this initial setback, shares of BroadSoft have skyrocketed more than 317% since going public, making it the best-performing tech stock to debut within the past year.
The company reported third-quarter 2010 revenue of $22.3 million, up 22% from the year-ago period. Going forward, BroadSoft anticipates fourth-quarter revenue $31.0 to $32.0 million when it reports earnings on March 7.
Tech watchers expect BroadSoft, which recently announced it was launching Web-based software designed for 4G smartphones and tablets, to continue to grow going into 2011.
"BroadSoft ranks as one of the fastest growing communications companies," Pacific Crest Securities analyst Brent Bracelin wrote in a research note. Bracelin places the company in the same fast-growing league as tech heavyweights Research In Motion and Riverbed .
BroadSoft's competitors include Alcatel-Lucent, Cisco and Nortel.
What it Does: Software and web development outsourcing
HiSoft raised $74 million in its June IPO as it priced below its expected range.
The Chinese software-development outsourcing service, however, has seen its shares jump 214% since pricing.
HiSoft announced a 70.8% year-over-year increase in third-quarter revenue, which rose to $38.9 million
Deutsche Bank analyst Tim Fox recently raised his 12-month price target on the company from $30 to $34.
HiSoft will report its fourth-quarter financial result on March 1, with analysts expecting EPS of 21 cents per share on revenue of $42 million.
What it Does: Makes optical telecommunications equipment
Fabrinet priced shares in its June IPO below its expected range and was forced to cut its offering by as much as 29%. The company, which provides manufacturing services for optical networking equipment, offered its shares for $12 to $14, but sold the stock for $10 a piece.
Fabrinet's luck has turned since then, as shares have risen more than 210% since initial pricing.
The Bangkok-based company reported second quarter revenue of $184.6 million, up from 61% in the same period last year, and GAAP EPS of 46 cents, which beat estimates by two cents.
Earlier this month, Zacks Investment Research upgraded shares of Fabrinet from neutral to outperform, and Stifel Nicolaus upped its price target to $24 from $20.
"Fabrinet remains one of our favorite stocks in 2011 based on its industry-leading margins and growth," said Deustche Bank analyst Sherri Scribner, who also raised her price target on the company.
What it Does: Makes property management software
RealPage priced shares of its August IPO at $11 a piece, below the expected range of $13 to $15 each.
The Carrollton, Tex., company, which makes software that streamlines the business processes of things like leasing, accounting and purchasing for the real estate industry, raised around $135 million from the offering.
Shares of RealPage, which closed Wednesday at $27.09, have increased more than 146% since their initial pricing. RealPage uses a software-as-a-service (SaaS) business model in which applications are deployed to customers over the Internet rather than traditional packaged software.
RealPage reported revenue of $48 million in the third quarter, up almost 35% year-over-year. In November, it acquired apartment leasing call center LevelOne for $62 million.
RealPage plans to announce its fourth-quarter earnings on Feb. 24. Analysts expect earnings of 6 cents per share on revenue of $53.4 million.
What it does: Provide business intelligence software for customers like Kraft Foods and Qualcomm
Qlik Technologies launched a successful public offering in July, when the markets were recovering after a sharp U.S. market plunge. Based in Radnor, Pa., the company priced above its range at $10 a share and rose 20% on its first day of trading.
Shares of QlikTech are up more than 158% since the IPO.
Last year, QlikTech generated revenue of $157.4 million and analysts expect full year sales of almost $214 million in 2010.
QlikTech was founded in Sweden in 1993, and backed by venture investors Accel Partners and Jerusalem Venture Partners.
The company's software competes with business software products created by IBM , Oracle , Microsoft and SAP .
In Sweden, police officers said this week that they had used QlikTech's software to analyze crime reports, enabling them to track down an alleged serial killer.
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