Do We Have a Hot IPO Market or Not?
So do we have a hot initial public offering market or not? After yesterday's stunning debut of Annie's Foods and Vocera Communications, everyone was watching to see if today's IPO crop would outperform.
So far, the picture is mixed:
1) Hit: Print-on-demand website Cafepress priced its IPO at $19 per share, above the expected range of $16 to $18 a share. Good showing!
2) Good: Mobile ad company Millennial Media debuts today on the New York Stock Exchange after pricing its IPO at $13 a share, at the top of the expected range of $11 to $13 a share (it was raised from a range of $9 to $11 a share). Good, not amazing.
3) Fair: Industrial manufacturer (think gear couplings) Rexnord priced 23.7 million shares at $18 a share, the low end of the $18 to $20 a share price range.
IPO Market: warm and getting warmer. Millennial Media opens at $25 after pricing at $13, Rexnord Corp opens at $19.05 after pricing at $18, and CafePress opens at $21.50.
One indication that it is at least a warm market: Merrimack Pharmaceuticals (think biotech) priced at $7 a share. It had tried to take itself public in January, at a price talk of $8 to $10 a share, but the company cancelled the deal. Now it cut the deal from 16.6 million shares to 14.3 million shares and floated the company at $7 a share. Apparently, the underwriters thought this was the right moment to get the deal done.
One ironic note: After Annie’s Foods went public, much was made that Whole Foods Market had paved the way by making it clear organic foods could be sold at a profit. Today Goldman Sachs downgraded Whole Foods to “neutral” from “buy” on a valuation basis. The stock has gone from $10 in 2009 to $85 today.
Elsewhere:
1) Another risk-off day: The Australian dollar is at a two-month low against the U.S. dollar, financials and many materials are weak in Europe; the Shanghai Index fell another 1.4 percent to the lowest level since mid-January.
Spain is down for its eighth-straight day. The center-right government will unveil its 2012 budget on Friday, as nationwide strikes take place today.
2) Best Buy shares rose more than 3 percent in pre-market trading then dropped after the world’s largest electronics chain reported better-than-expected fourth-quarter earnings per share, but warned it is scaling back its number of stores and employees. Best Buy announced earnings of $2.47 a share, compared to analysts’ $2.16 a share estimate. As part of restructuring efforts that are expected to save the retailer $800 million by 2015, the retailer said it has decided to shut down 50 big-box stores and slash 400 jobs in corporate and support areas. Even with markdowns, Best Buy suffered from weak demand in the holiday season with fourth-quarter same-store sales dipping 2.4 percent. The company's 2013 earnings per share guidance brackets the Street’s $3.70 view.
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