Kis, I have 10k allotted shares of Dscm. I still think I'll spin 50-75% of them after the triple in the morning.
If the SEC calls me, I'll tell them that I got the lead from you.
NEW YORK, July 27 (Reuters) - Online pharmacy drugstore.com inc.'s <DSCM.O> initial public offering is expected to produce a healthy dose of enthusiasm, as its strong relationships with industry giants attract investors.
Online retail giant Amazon.com Inc.<AMZN.O> is a majority stakeholder in the Bellevue, Wash.-based firm, which offers prescriptions and health and beauty products online.
Paul Allen's Vulcan Ventures has invested $40 million in the company.
"Amazon is a huge plus for them," said Peony Kao, an analyst at Renaissance Capital Corp.'s IPO Plus Aftermarket Fund <IPOSX.O>, about Amazon.com's stake in the firm.
She noted that e-tailer eToys Inc.'s<ETYS.O> stock price faced some pressure because Amazon.com emerged as a competitor. Drugstore.com will not have to worry about competition from Amazon.com because of their relationship. One of drugstore.com's most visible competitors is PlanetRx, which is also slated to go public soon, Kao added.
The company has a series of other alliances on its side, including its distribution deal with Rite Aid Corp. <RAD.N> and General Nutrition Cos. Inc. <GNCI.O>
From the 10-year deal, drugstore.com gets advertising through Rite Aid stores and most importantly, they get access to pharmacy benefit coverage via Rite Aid's pharmacy billing management unit PCS Health Systems, analysts said.
Access is one of the biggest risks for players in this industry, they added.
"They address the access issue with their Rite Aid deal," said Richard Lee, e-health analyst at Wit Capital. "It is certainly well-positioned because they are early; they have a strong banker and strong partners."
On Monday, the estimated price range for the company's IPO was raised to $15 to $17 from $9 to $11, reflecting the strong demand for the offering of five million shares. Morgan Stanley is the lead underwriter on the deal, which is slated to raise as much as $85 million by offering about 11.7 percent of the company.
"I would highlight that they don't have an exclusive partnership with Rite Aid, so I wouldn't say the game is over, but they do look like the front-runner in the space," said Evie Black Dykema, an analyst at Forrester,
The research firm sees online sales of health and beauty growing to $6.3 billion by 2003 from $213 million in 1998.
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