Takn from DBC Businessroom today:
"Shares of newly public LHS Group have risen by more than 60 percent in a week on Nasdaq, puzzling analysts and leaving some investors pointing to the stock's listing in Germany.
On May 16, LHS Group offered 4.8 million U.S. shares at $16 each. Atlanta's LHS, which provides billing services and customer-care solutions for telecommunication companies, opened on Nasdaq at 20 and fell to 19 1/4 by the close of its first day of trading. On May 21, LHS shares rose to 23 5/8. The stock never looked back, closing Friday at 30 3/8 and selling Tuesday for 34 1/4. The company's stock market value exceeds $820 million.
Jerry Braxton, chief financial officer of LHS Group, said the price rise was probably due to the company's listing last Wednesday on the Frankfurt Stock Exchange. LHS is one of three companies listed on the 2-month old New Markets section of the German exchange and the only one in the section to have a dual listing on an American exchange. "There was a lot of interest in Germany," Braxton said. "Quite high volume, high demand." More than 260,000 shares traded a week ago
Wednesday in Frankfurt, according to the company. The company began its operations in Germany in 1990 and continues to conduct a substantial portion of its business outside of the U.S. In 1996, the company's sales outside the Americas represented 68 percent of its total revenues, down from 97 percent in 1995.
The sudden rise of LHS Group had several analysts and traders perplexed. A trader at Robertson Stephens, one of the company's underwriters, said the rise may be due to the company's relationship with a unit of Southwestern Bell, whose parent SBC Communications was named Monday as a possible AT&T merger candidate. Still, the stock price of SBC was falling last week at the same time LHS stock was soaring. "It's acting very unlike any stock I've ever traded," the
Robertson Stephens trader said.
Ryan Jacob, an analyst at IPO Value Monitor, said he had no clue why the stock only started moving a couple days after its initial public offering in the U.S. "It's kind of had an interesting run,"
Jacob said, noting that the company originally filed to price its shares between $14 to $16 each and raised the range to $15 to $17 a share, only to then cut it to $12 to $14 before setting the $16 offer
price.
Jacob said he was neutral on the stock, while Renaissance Capital, another IPO research firm, was more bullish on LHS's chances. "Revenue growth has been huge. In the first quarter, it was up by over 200 percent over last year," said Ken Fleming, a Renaissance analyst. Fleming expressed concern about the company's vendor financing program, in which LHS plans to allow small customers to pay for services over a longer period of time.
At current prices, LHS stock on Nasdaq is selling for more than 14 times last year's sales." |
