Shares of Pike Electric Corp. outpaced broader markets Friday, a day after an analyst covering the company billed a recent secondary offering of shares as a positive for the specialty contractor.
THE SPARK: The Mount Airy, N.C., company said Wednesday that a public offering of shares controlled by Lindsay Goldberg LLC was priced at $11.50 per share, and the offering had been increased to more than 6.9 million shares from 6.5 million.
Underwriters also have an option to buy up to 1 million more shares from the selling stockholder to cover excess demand.
Pike also said it has an agreement with Lindsay Goldberg to buy back more than 3.6 million shares for $40 million after the offering is completed. Pike will pay for that buyback with cash and its revolving credit line.
THE BIG PICTURE: Pike contracts with utilities to provide engineering, installation and maintenance work and facilities planning and siting.
THE ANALYSIS: The arrangement with Lindsay Goldberg increases the number of tradable shares on the market and removes some uncertainty over what the shareholder will do, Stifel analyst Noelle C. Dilts said in a research note.
The analyst added that some action regarding those shares was expected in the next year, and all the moves will leave Lindsay Goldberg with about a 4.5 percent stake in the company.
Dilts kept a "hold" rating on the stock.
SHARE ACTION: Up 6.1 percent, or 73 cents, to $12.61 in afternoon trading, while the Standard & Poor's 500 index climbed less than 1 percent. The stock has risen nearly 32 percent so far this year.