For Immediate Release
Chicago, IL- October 29, 2013 – Today, Zacks Investment Ideas feature highlights Features: Marketo ( MKTO- Free Report), Xoom ( XOOM- Free Report). Twitter ( TWTR- Free Report) and Facebook ( FB- Free Report).
Are These Recent IPOs Still Winners?
The IPO market is looking forward to November 15, 2013. Twitter will no doubt be a hot stock and should also provide the mass media with lots to talk about. The NYSE even performed a test over the weekend to see if it could handle the expected intense volume.
Twitter is one thing... but the health of the IPO market is another. So how has that market been? What are the top performers? Let's take a look!
IPOs This Year
A simple Google search for IPO stories in the media will result in several links to stories of stocks that have doubled on their first day of offering. To avoid duplication of efforts, here are those names that have more than doubled in their first day of trading.
The stocks listed above, all had a huge pop on the first day and three are currently Zacks Rank #3 (Hold) rated stocks. PBPB is not yet ranked as analyst reports have not yet come out. Having a rank of #3 (Hold) soon after an IPO is pretty common as underwriting banks have to wait a period of time before they can initiate coverage. The Zacks Rank tends to move up when there is a positive revision to estimates and that could take some time.
It is clear that if we have four stocks that have doubled on the first day of trading, the market is pretty strong.
Recent IPO's With High Zacks Rank
Marketo ( MKTO- Free Report) - is a Zacks Rank #2 (Buy) and has been public since late May. That time horizon has allowed analysts a few chances to increase their estimates.
The internet marketing company has had two earnings reports since going public. The first was on July 30, and the company missed that quarter with a wider loss than expected. This has been fairly common on new companies as they have not been able to get the full story to analysts or there is some noise in the first reporting quarter.
Investors easily forgave the company for the 12.7% negative earnings surprise and bid the stock higher by 21.5% in the session following its first report.
The next report was much better. A two cent beat of a 6.9% positive earnings surprise helped the stock move higher in the session following the report.
Xoom ( XOOM- Free Report) is also a Zacks Rank #2 (Buy) stock that IPO'ed this year. The stock zoomed higher by a healthy 60% on its first day of trading. The online international money transfer service has been public since February 15 and had an offering price of $16 per share.
Since that time, estimates have soared. When the first research reports were out in March, the Zacks Consensus Estimate for 2013 was calling of a loss of $0.24 per share. By July, the estimate had turned the corner to a gain of $0.01 and follow a recent report, the consensus is now looking at $0.11.
A very similar trend exists for 2014, with estimates moving from a loss of $0.06 to a gain of $0.08 over the same time horizon above for the first two estimates. The 2014 Zacks Consensus is now calling for a gain of $0.18 and that translates to an implied earnings growth rate of 63%.
As Twitter ( TWTR- Free Report) comes to the market there should be a lot of fanfare. This will be the hottest issue of the year and will continuously be compared to Facebook ( FB- Free Report) and its IPO.
Needless to say, the FB IPO was a disaster and caused a great many retail investors to take substantial losses. Over time, the stock recovered and is now well above the IPO price and first trade.
It might be of interest to learn that Facebook is a Zacks Rank #2 (Buy). TheFacebook as it used to be called (at least that is what I learned from the movie "The Social Network") has seen 2 straight positive earnings surprises.
The most recent one came on July 24th and it propelled the stock higher by 31% after investors saw a 44% positive earnings surprise. They also saw a glimpse of how the company plans to monetize the $1B+ investment in Instagram as well.
Buy what will Twitter's Rank Be? As we have seen from other IPO's, it will take some time to get research reports from covering analysts in. Then it will take some more time before they have an opportunity to increase estimates... so don't be surprised if the company has no Zacks Rank its first day of trading, or even no Rank a month or more after its public.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Get the full Report on MKTO – FREE
Get the full Report on XOOM – FREE
Get the full Report on TWTR – FREE
Get the full Report on FB – FREE
Follow us on Twitter: http://twitter.com/ZacksResearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
For Immediate Release