Busiest Week For IPO Pricings Since 2007

With twelve deals on the calendar, the rebound in IPO activity continues and this week is shaping up to be the busiest since November 2007.

Traders at the New York Stock Exchange.
Photo: Oliver Quillia for CNBC.com
Traders at the New York Stock Exchange.

Last week, five companies entered the public markets, including online real estate service Zillow, which saw its shares temporarily surge to as high as $60 in the first day of trading.

This week's menu offers a wide variety of IPO offerings with deal sizes ranging from $28 million to almost $400 million. The industries represented span everything from food services, biotech, energy, and defense to even farming in Uruguay.

The largest and most anticipated offering of the week, Dunkin Brands, is expected to price Tuesday after the bell and trade on the Nasdaq under the symbol, DNKN.

The parent of Dunkin' Donuts and Baskin-Robbins ice cream chains plans to raise $378 million by offering 22.25 million shares at a price range of $16 to $18.

Brian Sozzi, analyst at Wall Street Strategies, thinks the offering will do well. Sozzi likes Dunkin’s franchise model and 34 percent operating margins, calling the company “the pure profit center.”

“On the negative side, Dunkin’s business is not diversified and might be at the point of maturity,” says Sozzi.

Dunkin also does not provide the double-digit growth that investors are looking for in IPOs these days.

In the first quarter, its same-store sales grew only 2.8 percent. Revenue was up 9 percent, but the company booked a net loss due to a debt re-pricing transaction and higher interest rate expenses.

There are also concerns about its Baskin-Robbins business, which represents about 7.4 percent of the company’s total revenue. Its comparable store sales were down 6 percent in 2009 and 5.2 percent in 2010.

Barclays Capital, J.P. Morgan , and Morgan Stanley are the lead underwriters on the deal.

A small but hot deal this week is an IPO from premium tea retailer, Teavana. The deal is expected to price after the close Wednesday and is likely to get a warm reception from investors.

The Atlanta-based company plans to raise $100 million by offering 7.1 million shares at a price range of $13 to $15.

Sozzi says the company is exactly what retail investors like. “The market is ripe for new, publicly traded blood in the retail sector, specifically those concepts that sport an attractive growth profile,” says Sozzi.

Other deals to watch are C&J Energy Services and ADS Tactical.

C&J Energy, which provides fracturing services used in unconventional oil and gas drilling, plans to raise $305 million by offering 11.5 million shares at a price range of $25 to $28.

The Houston, TX-based has an attractive top and bottom line numbers. In the first quarter company’s revenue soared to $127.2 million from $32.6 million in the same period a year earlier. Net income was $29.1 million in the first quarter versus $2.2 million a year prior.

C&J Energy plans to list on the NYSE under the symbol CJES. Goldman Sachs, J.P. Morgan, and Citi are the lead underwriters on the deal.

A large U.S. defense contractor, ADS Tactical, is also seeking a listing on NYSE this week.

The Virginia Beach, Va.-based company hopes to raise $204 million by offering 12 million shares at a price range of $16 to $18, giving it a market value of $909 million.

Founded in 1997, ADS Tactical booked $1.3 billion in sales over the last 12 months, according to Renaissance Capital.

Among deals that are not expected to do particularly well is Orchid Island Capital.

The company, which invests in residential mortgage-backed securities, already had to lower the deal size last week.

The Vero Beach, FL-based company now plans to raise $42 million by offering 5.2 million at a price of $8. The company had previously filed to offer 7.5 million at a range of $10 to $12.

According to David Menlow, president of IPOfinancial.com, real estate and mortgages is not where investor interest is right now. “These deals may work well overtime, but right now they are not enticing investors,” says Menlow.

Horizon Pharma, money-losing biopharmaceutical company, plans to raise $61 million by offering 5.5 million shares at a price range of $10 to $12.

Founded in 2004, the company booked $4 million in sales over the last 12 months (pro forma for acquisitions), according to Renaissance Capital.

The Northbrook, IL-based company plans to list on the NASDAQ under the symbol HZNP.

Among other deals on the IPO calendar are: American Midstream Partners (AMID), owner of natural gas gathering systems, processing facilities and pipelines; Tangoe (TNGO), which offers on-demand communications expense management software to enterprises; specialty food products distributor The Chefs' Warehouse (CHEF); Uruguayan agricultural firm Union Agriculture Group (UAGR); Wesco Aircraft Holdings (WAIR); and WhiteGlove House Call Health (WGH).