Quintile Among 8 IPOs Coming Up This Week

PennyMac also should get the attention of investors

   

Despite fresh all-time highs for the equity markets, last week’s initial public offerings posted some mixed, lackluster performances:

Company Ticker IPO Price Return
Insys Therapeutics INSY $8 +25%
ING U.S. VOYA $19.50 +8%
GW Pharmaceuticals GWPH $8.90 +2%
QIWI QIWI $17 0%
Ellington Residential EARN $20 -3%

Still, Wall Street can’t sweat those figures too much with another eight deals expected to hit the markets this week. While many of the companies aren’t everyday brand names, there’s still some interesting prospects in the lot. Here’s a closer look at each:

American Residential Properties

American Residential Properties (NYSE:ARPI), which is organized as a real estate investment trust, owns and rents over 3,100 single-family homes in Arizona, California, Florida, Georgia, Illinois, Indiana, Nevada, North Carolina, South Carolina and Texas.

Co-founders Stephen Schmitz and Laurie Hawkes have more than 30 years experience in residential and commercial real estate. They have helped ARPI build a vertically integrated platform that scales the rentals business: property sourcing/analytics; underwriting; restoration and quality control; tenant screening; and ongoing management.

One thing to note is that monetization did not start until March 2012. During the year, revenues came to $2.9 million and resulted in a net loss of $6.2 million.

ARPI plans to issue 13.7 million shares at a range of $21 to $23. Lead underwriters include Morgan Stanley (NYSE:MS), BofA Merrill Lynch (NYSE:BAC) and FBR Capital Markets.

Armada Hoffler Properties

Armada Hoffler Properties (NYSE:AHH) is a REIT that focuses on high-quality, institutional-grade office, retail and multifamily properties in markets throughout the Mid-Atlantic United States, with business roots going back to 1979.

In 2012, revenues declined by 16.7% to $108.5 million; the weakness came primarily from the multifamily business segment, which had lower rents, as well as a drop in the general contracting business. Still, Armada was able to increase operating income by 3% to $24.7 million.

AHH plans to issue 14.6 million shares at a range of $11 to $13. Lead underwriters include Raymond James and Stifel Nicolaus.

Cyan

Cyan (NYSE:CYNI) develops carrier-grade networking equipment, which relies heavily on software technology. Some of the applications include business Ethernet and wireless/broadband support.

From 2010 to 2012, revenues soared from $23.5 million to $95.9 million, though the net loss slightly grew from $16.3 million to $16.6 million.

CYNI plans to issue 8 million shares at a range of $10 to $12. Lead underwriters include Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Jefferies & Co. (NYSE:JEF).

Emerge Energy Services

Emerge Energy Services (NYSE:EMES) operates three frac sand production facilities in New Auburn and Barron County, Wis,. and Kosse, Texas. Basically, EMES is one of a few operators that can offer commercial amounts of 16/30 mesh sand — the coarsest grade of widely used frac sand on the market. EMES sells its products primarily through long-term supply agreements, which provides stable cash flows.

Because the company is the result of a merger of two large companies, it is tough to get a sense of the growth rates. But on a combined basis, the entity generated $956.9 in revenues and $39 million in operating income in 2012.

EMES plans to issue 7.5 million shares at a range of $19 to $21. Lead underwriters include Citi (NYSE:C), BofA Merrill Lynch, JPMorgan and Wells Fargo (NYSE:WFC).

PennyMac Financial Services

Stanford Kurland, the former president of Countrywide Financial, created residential loan provider PennyMac Financial Services (NYSE:PFSI) in 2008.

Last year, PFSI produced about $22 billion in mortgage loans, ranking the company as the No. 4 player in the correspondent lenders market. It also serviced 123,000 loans. PennyMac has posted a profit every year except 2008, with net income surging by 705% to $118.3 million last year.

The firm also has the financial backing of BlackRock (NYSE:BLK) and private equity firm Highfields.

PFSI plans to issue 11.1 million shares at a range of $17 to $19. Lead underwriters include Citi, BofA Merrill Lynch, Credit Suisse (NYSE:CS) and Goldman Sachs.

Quintiles Transnational Holdings

Quintiles Transnational Holdings (NYSE:Q) is the largest provider of clinical trial services for the pharma and biotech industries.

Back in 2008, TPG and Bain Capital took Quintiles private in a $3.8 billion transaction. Since then, the company has undergone a restructuring, especially with a reduction in the cost structure. But Quintiles also has been investing heavily in building out its global platform. To this end, it now has strong operations in the “BRIC” emerging markets of Brazil, Russia, India and China.

In 2012, Quintiles posted a 12% increase in revenues to $4.87 billion and a 27% jump in net income to $176.6 million.

Q plans to issue 19.7 million shares at a range of $36 to $40. Lead underwriters Morgan Stanley, Barclays (NYSE:BCS), JPMorgan, Citi, Goldman Sachs, Wells Fargo, BofA Merrill Lynch and Deutsche Bank (NYSE:DB).

Receptos

Receptos (NYSE:RCPT) is a biotech company that develops therapeutics for immune disorders, such as relapsing multiple sclerosis, eosinophilic esophagitis and inflammatory bowel disease.

So far, the drugs have yet to get approval. But Receptos’ management team — which includes CEO Faheem Hasnain, the former head of Facet Biotech, which he sold to Abbott Laboratories (NYSE:ABT) for $450 million in 2010 — is top-notch and knows how to get traction. For example, the

RCPT plans to issue 4.7 million shares at a range of $14 to $16. Lead underwriters include Credit Suisse, Leerink Swann and BMO Capital Markets.

TriState Capital Holdings

TriState Capital Holdings (NASDAQ:TSC) is a bank that focuses on middle-market businesses primarily in Pennsylvania, Ohio, New Jersey and New York. The firm also provides wealth management services through its private banking channel.

Last year, TSC’s loan portfolio grew by 16.7% to $1.6 billion, and net income grew by 60.5% to $9.1 million. The quality of the portfolio is also strong, in light of small 1.1% nonperforming assets ratio.

TSC plans to issue 5.7 million shares at a range of $10.50 to $12.50. Lead underwriters include Stephens, Keefe Bruyette & Woods and Baird.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


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