July IPO Recap – Judging IPO Boutique’s Performance

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In July, the IPO Market saw 10 companies go public for a total cash raise of $1.014bn. This included just one offering that raised more that $150m — TPG RE Finance Trust, Inc. (NYSE: TRTX). Furthermore, in terms of cash raises, July’s total of $894.07m raised by the 10 offerings was the smallest amount in 2017 year-to-date.

Of the eight offerings that were underwritten by well known banks on the street, two deals priced below range (Akcea Therapeutics, Calyxt) and just one priced above range (Redfin Corporation).

The success of IPOs in July was much greater than that of June. The average gain at first trade was 16.6% above the offering price — an increase from the 3.3% above the offering price at first trade that was posted in the previous month. July’s best deals were PetIQ, Inc. (NASDAQ: PETQ) Redfin Corporation (NASDAQ: RDFN) with gains of 31.3% and 30.4%, respectively, at first trade. What stood out from July was the aftermarket activity of the IPOs as many deals with large percentage gains at the open went on to trade strong in its first days as a public company. The average first-week high (as defined as trading session from open to close Friday during its opening week) was 33.6% above the offering price with five of the ten deals trading 40%+ in their opening weeks.

Compared to 2016, the IPO market remains well-ahead of last year’s pace. There have been 86 deals that have come to the market in 2017 versus 48 that came to market in this same period in 2016.

This recap will allow us to post our results and emphasize the value of IPOBoutique’s senior managing partner Scott Sweet’s ratings. You can check out our entire track record at this link.

Five-Rating
We consider these IPOs to be the best of the best. In our nine years of keeping a track-record we have given just 14 ‘five-ratings’ and all 14 have hit their respective targets. However, in July 2017, we did not give a ‘five’ rating.

Four-Rating
We consider these IPOs to be very strong buys and we anticipate 1-to-2 points of premium or higher in the first week of trading. However, in July 2017, we did not give a ‘four’ rating.

Three-Rating
We consider these IPOs to be moderate buys and we anticipate 1/2 to 1 point premium or more likely in the cases of these new issues. This past month six deals debuted that we rated as a ‘three’ with an average return of 17.17% above the offering price. The best ‘3’ rated deal this month was PetIQ, Inc. (NASDAQ: PETQ) which opened $5.00 above its $16.00 offering price for a 31.3% gain at first trade. We have given 43 IPOs in 2017 a ‘3’ rating and those have produced, on average, a premium of $1.27 above the offering price at first trade.

Two-Rating
We consider these IPOs to be “neutral” and thus do not have a particular point threshold to hit in order for us to deem it as ‘hitting its target’. We gave two deals a ‘two-rating’ this past month and these deals had an average return of 8.4% above the offering price at first trade. So far in 2017 we have given a total of 31 IPOs a ‘2’ rating and they have produced, on average, just a $0.22 return above the offering price at first trade.

One-Rating
We advise our subscribers to avoid these IPOs as we consider them to be risky. In our nine years of keeping a track-record we have given just 49 ‘one’ ratings. In July, we did not give a ‘one’ rating.

IPOBoutique.com provides comprehensive research, ratings and daily advisories on new issues hitting the IPO market. To subscribe to IPOBoutique’s service: click here.