IPO Strength Continues Into February; Big Year Shaping Up

IPO strength continues into February; big year shaping up. While the Street is preoccupied with renewed violence in Egypt and commodity inflation, two successful launches today indicate strong demand for IPOs continue.

Neophotonics sold 7.5 m shares at $11...the high end of the $9 to $11 price talk..opened at $14 (!), and also sold more shares. The company makes equipment for high speed data transmission used by telecom companies...the optical sector is on fire right now: more bandwidth is desperately needed...think Netflix, social networking. There is competition (JDS Uniphase and Finisar )...but much of their sales goes to telecom equipment companies in China.

Epocrates makes hand held applications for doctors...think desk references for your smart phone...they priced 5.4 million shares at $16...well above the $13 to $15 price range...and opened at $20, yes $20...they make money because pharmaceutical companies pay them to deliver product news to physicians...more than one million of them. A targeted audience with a clear product.

The IPO market has been down for so long it's no surprise there is interest now that the economy is reviving.

Four healthcare companies price tonight.

So far, we have priced 10 IPOs in 2011, according to Renaissance Capital, with an average return of 9 percent above their offering price. Every single one is pricing above its initial price.

At this pace, we could do 200 IPOs this year, well above last year's 154.

Also, there are several billion dollar IPOs sitting out there, ready to follow Nielsen : HCA, Toys R Us, Skype, Kinder Morgan are on file. Also likely to come: Chrysler, Freescale, Ally Financial (the old GMAC), maybe even Dunkin' Donuts.

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