IPO Market Faces Pivotal Moment as Sell-Side Analysts Weigh In

2023-07-22 02:58

For the US IPO market looking to regain its footing, Monday could provide a much-needed boost. That’s when

For the US IPO market looking to regain its footing, Monday could provide a much-needed boost. That’s when a quiet period ends for analysts at the banks that underwrote newly public companies and investors get a first look at their projections.

Thrift store chain Savers Value Village Inc., among the year’s top IPOs for deals of more than $200 million, will likely be the most closely-watched firm to get a review from the sell-side. The stock has gained more than 30% gain since it raised $401 million including the exercise of the underwriters’ over-allotment option, marking the seventh-largest IPO on a US exchange in 2023.

Others that debuted at the end of last month include Kodiak Gas Services Inc. and Fidelis Insurance Holdings Ltd. as well as GEN Restaurant Group Inc., owner of GEN Korean BBQ. The group has had bright spots — Gen Restaurant is up 20% from a June 29 debut — and underwhelming performances — Kodiak Gas is higher by 7% and Fidelis is down 1.5%. That compares with a 7.2% gain in the Renaissance IPO ETF over the period.

Now, with analysts expected to weigh in on Monday, investors that are betting on a reawakening of the IPO market will get a peek at the different models and forecasts Wall Street is setting after a quiet period is lifted.

“The analysts know the ins and outs of the metrics of the IPO company versus the historical peers that are out there,” said Mike Bellin, US IPO co-leader at PricewaterhouseCoopers LLP. “So when the quiet period ends that can be a boost for a lot of these companies that have gone out or if there’s something in there that they question you may see some ups and downs.”

The market for IPOs has been gaining momentum in recent months with a range of consumer-oriented companies going public like Savers Value and fast-casual restaurant Cava Group Inc. Still, the $13.42 billion raised by IPOs on US exchanges is down from last year and marks a 94% plunge from 2021’s record year, data compiled by Bloomberg show.

In order for more companies to be confident in tapping the market, those that have made their debuts need to trade well to ease any investor concerns, analysts and bankers agree. For the four companies that have had mixed performances to date, a rosy reception from the sell-side could provide a needed boost.