The IPO market is on fire right now. We are only halfway through the year and yet we have enough IPO stocks to last at least until 2020. However not all the newly public companies make for promising investing opportunities to say the least.
With its meteoric rise now in the rear view mirror, Beyond Meat (NASDAQ:BYND) looks extremely overvalued. And that’s not the only stock that’s seems destined for a pullback. I’m thinking of Rattler Midstream (NASDAQ:RTLR) and Tradeweb Markets (NASDAQ:TW) as two other new stocks, that although compelling, look fully valued at current levels.
So here I turned to the Street’s wisdom to pinpoint five new stocks that look attractive right now. All these stocks score very highly on the Street’s radar. And so, without further ado, here are the top 5 IPO stocks to buy now:
One of the most highly-anticipated IPOs of 2019 was also one of the biggest failures. Uber Technologies Inc (NYSE:UBER) shares are still trading below the IPO price of $45. That’s after the IPO stock opened for trading on May 10 at just $42. But don’t let that put you off. Uber is actually a top stock to buy now, or so the Street says.
“Uber is a transformational company that should benefit from secular shifts to the sharing economy (Rides), time saving services (Eats), and a move to more efficient marketplaces (Freight)” cheers top KeyBanc analyst Justin Post.
“We are constructive on fundamentals given massive TAM [total addressable market] and technology advances that likely lower driver dependency and improve margins. We think the stock should trade at a premium to direct peers given share leadership and potential network effects” he says.
As for concerns over new rival services starting in London, Morgan Stanley’s Brian Nowak tells investors not to panic. “We note that Uber’s share of downloads dropped modestly [in the UK] following Bolt’s launch, but has since recovered. This, in our view, speaks to Uber’s brand and market leadership even through new entrants.”
However, he does add a word of warning about India’s Ola. “Ola is arguably a greater threat if media reports of Ola’s entry into London at the end of the year prove accurate”. Based on media reports, Bolt has only raised $190-$280mn to date vs. Ola’s $3.8bn.
Overall, UBER has scored 21 recent buy ratings, with just 7 analysts staying sidelines. This gives Uber its ‘Strong Buy’ consensus. Plus the average analyst price target of $53 indicates 24% upside lies ahead. Interested in Uber stock? Get the free UBER Stock Research Report.
Precision Biosciences (DTIL)
Precision BioSciences (NASDAQ:DTIL) is an exciting genome editing company. Scientists can now precisely edit the DNA of living organisms to correct genetic problems at the source. For Precision, this involves using a proprietary genome editing method called ARCUS. The company wants to use ARCUS to overcome cancers, cure genetic diseases, and enable the development of safer, more productive food sources.
Following its successful IPO in late March, four analysts initiated coverage of DTIL– all with buy ratings. That includes positive calls from all of Goldman Sachs, JP Morgan and Barclays.
Barclays’ Gena Wang has a $24 price target on the stock (81% upside potential). This top-rated analyst writes: “We believe DTIL proprietary ARCUS genome-editing platform has its unique advantages with its editing efficiency largely comparable to other gene editing technologies.”
Precision uses ARCUS to develop cell-based cancer immunotherapies (allogenic CAR-T) from healthy donors instead of the patient. This enables consistent, scalable manufacturing.
“Strategic focus on allogenic-CAR-T against well validated targets has positioned the company as one of the leading players in the field” writes Wang, adding that the company’s unique food program offers significant long-term potential. Get the DTIL Stock Research Report.
The world-famous jeans giant is also looking like a compelling investing opportunity right now. That’s according to top-performing analysts. If you look at the overall analyst consensus, Levi Strauss (NYSE:LEVI) shows a cautiously optimistic Moderate Buy rating. But if you focus on only the analysts with the strongest track record, this consensus shifts to Strong Buy.
Shares of this IPO stock surged 30% when the company made its return to the market late March. Levi raised $623 million from the sale, with shares priced above the expected range at $17/ share. I say return because Levi was already a public company in the 1970s and 80s, before the Haas family regained control in 1985.
One analyst singing the stock’s praises is Guggenheim’s Robert Drbul. This top-rated analyst has a $26 price target on Levi’s (25% upside potential). “We are attracted to the company’s strong balance sheet, cash flow generation, and commitment to a healthy dividend rate and growth, supported by Levi’s global growth and market share opportunities” writes Drbul.
“While Levi’s already enjoys the highest brand awareness in Denim Bottoms, globally, we believe expansion in underdeveloped segments, including Women’s and Tops, DTC, and markets like China, provide a long runway for growth ahead” he told investors.
Oh and did you know that NYSE encouraged traders to wear blue jeans to mark Levi’s first trading day? Get the LEVI Stock Research Report.
Cloud-computing services provider Fastly Inc (NYSE:FSLY) hit the markets in mid-May. According to Fastly, its edge cloud platform delivers faster, safer, and more scalable sites and apps to customers. That means, for example, helping BuzzFeed get 50% faster page loads. Or enabling the New York Times to manage 2 million concurrent viewers on election night.
Encouragingly, Fastly’s IPO was a great success. The company sold 11.25 million shares for $16 each, at the high-end of guidance. Shares of the IPO stock started trading at $21.50 and surged to $23.99 on the first day.
Looking ahead analysts are also optimistic. Five-star Stifel Nicolaus analyst Brad Reback has just initiated coverage on Fastly. He rates the stock a Buy and published a $25 price target. That indicates sizable upside potential of 46%.
The analyst comments: “In the coming years, we believe Fastly can leverage its superior technological approach to drive continued strong net new customer additions and expand its wallet share among its existing installed base. Combined with a large market opportunity and the ability to further penetrate international markets, we believe Fastly can sustain at least a 30% top-line growth profile.”
Reback adds, “Profitability should also improve going forward as the company’s market leading technology platform gains scale and management drives additional operational efficiencies.” Get the FSLY Stock Research Report.
TransMedics Group (TMDX)
TransMedics Group Inc (NASDAQ:TMDX) offers a revolutionary solution for organ transport. It has created a portable device, the TransMedics OCS, that mirrors the human body. “Warm, oxygenated blood perfusion allows us to maintain organs in a living, functional state. As a result, the lung breathes, the heart beats, and the liver produces bile” explains the company.
As a result, physicians can maximize the potential of donor hearts, lungs, and livers while monitoring and optimizing each organ throughout the entire process. And this matters because there is a large and growing clinical demand. Plus the current cold transportation method means that only 2-3 out of 10 donated thoracic organs can be used for transplant.
So it’s not surprising that TransMedics earns a ‘Strong Buy’ consensus from the Street. The company, which IPO’d in early May, reaped $105 million from the float. Shares opened on the first trading day at $20.25, a 27% gain from its IPO price, and have since soared a further 25%.
Cowen & Co’s Josh Jennings initiated coverage of TransMedics with a Street high price target of $40. From current levels that indicates further upside potential of 43%. The analyst explains his bullish call here:
“TMDX’s Organ Care System (OCS) is revolutionizing the organ preservation market from cold storage to warm ex-vivo perfusion. We believe TransMedics is filling a unique white space in transplant medicine and creating an $8B market. With multiple clinical and operational catalysts on the horizon, we expect OCS adoption and utilization trends to soon hit an inflection point.” Get the TMDX Stock Research Report.
See what the experts are saying about your stocks now at TipRanks.com. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.