The IPO Buzz: IPO Clouds With Silver Linings

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 |  Includes: GWRE, PEER, VSTM
by: IPOScoop

You might want to bookmark the evening of Tuesday, Jan. 24. That's when Guidewire Software (NYSE:GWRE) looks to price its IPO. It will be the first cloud-computing company to go public this year. The industrial sector has been hot.

Guidewire Software plans to price 7.5 million shares at $10 to $12 each on Tuesday evening. The IPO is expected to start trading Wednesday morning on the New York Stock Exchange under the proposed symbol "GWRE." The joint-lead managers are J.P. Morgan, Deutsche Bank Securities and Citigroup, and the co-managers are Stifel Nicolaus Weisel and Pacific Crest Securities.

Guidewire Software is a provider of core system software to the property and casualty insurance industry. The company's solutions offer applications for underwriting and policy administration, claims management and billings. Guidewire has developed an integrated suite of applications that are delivered through a Web-based interface and can be deployed either on premise or in cloud environments.

For the three months ending Oct. 31, 2011, Guidewire reported net income of $4.8 million on revenues of $52.4 million, compared with net income of $1.9 million on revenues of $36.7 million for the same period a year ago.

Founded in 2001, Guidewire has about 684 employees. The company, headquartered in San Mateo, California, has offices in Europe, Asia, Australia and Canada.

The company is selling all the 7.5 million shares and expects to have about 47.5 million shares outstanding after the offering.

A Winning Sector

Since June 1, 2011, five companies from the cloud computing sector have gone public, according to the U.S. Securities and Exchange Commission filings. As of Friday's close, on Jan. 20, 2012, all were in the winner's circle and had an average gain of 47.5 percent.

Consider the following: Since June 1, 2011, 55 companies have gone public. Excluding the five from the cloud computing sector, the remaining 50 IPOs had mixed results.

There were 23 winners, 26 losers, one unchanged and the average gain was 1.82 percent. Still that was better than the underlying stock market.

The Nasdaq Composite Index posted a 1.75 percent loss over the same period of time. It closed on Jan. 20, 2012, at 2,786.70, DOWN from 2,836.30 on May 31, 2011. And the S&P 500 was even worse. It posted a 2.22 percent loss. It closed on Jan. 20, 2012, at 1,315.38, DOWN from 1,345.20 on May 31, 2011.

Clouds and Drugs

Now back to the present.

This week's calendar rounds out with another cloud computer IPO and a biopharmaceutical company. They are IntelePeer (PEER) and Verastem (NASDAQ:VSTM).

IntelePeer is a provider of on-demand, cloud-based communications services to service providers and enterprises. The San Mateo-based company was founded in 2003. It has about 128 employees.

For the three months ending Sept. 30, 2011, IntelePeer reported a net loss of $171,000 on revenues of $40.6 million, compared with a net loss of $2.8 million on revenues of $29.3 million for the same period a year ago.

IntelePeer plans to price 7.5 million shares at $9 to $11 each on Wednesday evening. The IPO is expected to start trading Thursday morning on the NASDAQ Global Market under the proposed symbol "PEER." The joint lead managers are J.P. Morgan, Deutsche Bank Securities and Barclays Capital, and the co-managers are RBC Capital Markets and William Blair & Company.

The company is selling all 7.5 million shares and expects to have about 34.4 million shares outstanding after the offering.

Verastem is biopharmaceutical company focused on discovering and developing proprietary small molecule drugs targeting cancer stem cells along with proprietary companion diagnostics. The Cambridge, Massachusetts-based company was founded in 2010. It has about 18 employees.

The company plans to price 4.5 million shares at $9 to $11 each on Thursday evening. The IPO is expected to start trading Friday morning on the NASDAQ Global Market under the proposed symbol "VSTM." The joint lead managers are UBS Investment Bank and Leerink Swann, and the co-managers are Lazard Capital Markets, Oppenheimer and Rodman & Renshaw.

Next week is lining up to be a busy one. At press time, there were six IPOs on the calendar looking to raise $938 million.

Stay tuned.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.