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Analysts Take Sizzle Out of FireEye and Rocket Fuel Hot IPOs

Jon C. Ogg

FireEye, Inc. (FEYE) and Rocket Fuel Inc. (FUEL) have now passed their analyst and underwriter IPO quiet periods. Both were smoking hot initial public offerings, and in fact were so hot that they made our "14 Hottest First Day IPOs of 2013" in a recent report. And now we have the brokerage firm research reports coming out from the underwriters who have initiated coverage on them.

It is our take after reviewing the price targets and research notes that new investors looking for an extra bump are probably going to be a bit disappointed. In fact, the underwriters may have just capped the potential for these hot IPOs over the near term.

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24/7 Wall St. has taken the IPO price, the current post-IPO trading range, and the analyst summary of each call (with price targets if found) to show which is the more well respected of the two companies by analysts. We have also shown the Bookrunners for each offering as they are likely to still have more shares parked with institutional clients.

FireEye, Inc. (FEYE) sold 15.175 million shares at $20.00, for more shares than the 14 million originally proposed and above the last price range of $15.00 and $17.00 per share. The data security provider, a virtual machine-based security platform, was the seventh hottest IPO of 2013 based upon first day trading. Shares were down 1.5% at $40.90 after the analysts covered the stock, with a post-IPO trading range of $35.25 to $44.89. Also note that Cowen & Co. issued a "Outperform" rating back on October 10 ahead of this date.

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Here are FireEye's ratings and target prices:

  • BofA Merrill Lynch - Buy and $50 target
  • Barclays (Bookrunner) - Equal Weight and $45 target
  • Goldman Sachs (Bookrunner) - Neutral and $35 target
  • J.P. Morgan (Bookrunner) - Overweight and $50 target
  • Macquarie - Buy, but target price not seen
  • Morgan Stanley (Bookrunner) - Equal Weight
  • Nomura - Buy and $51 target
  • UBS - Neutral and $45 target

Rocket Fuel Inc. (FUEL) sold 4 million shares priced at $29.00, at the top of the $27.00 to $29.00 price range. This hot advertising technology company was the sixth hottest IPO of 2013 based upon first day trading. Rocket Fuel was down 1.1% at $60.72 after the analyst calls were seen and the post-IPO range is $50.90 to $68.56.

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Here are Rocket Fuel's analyst ratings and price targets:

  • BMO Capital Markets - Market Perform and $65 target
  • Citi (Bookrunner) - Buy and $70 target
  • Credit Suisse (Bookrunner) - Neutral and $60 price target
  • Oppenheimer - Perform and $66 target
  • Piper Jaffray - Overweight and $70 target

We had two very hot IPOs here with FireEye and Rocket Fuel. Unfortunately, the upside price targets by analysts who work for the underwriting firms for both stocks do not exactly have stellar upside price targets. We would expect that this will cap the implied gains and demand in these shares from the investing public over the coming days.

Analysts are supposed to have opinions entirely outside and independent of underwriting departments. They are supposed to.

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