Kestra Medical Technologies, Ltd. (NASDAQ: KMTS) is a recent initial public offering. The wearable medical device and digital healthcare company’s ASSURE system monitors patients who are at risk of sudden cardiac arrest and to monitor and deliver appropriate defibrillation if needed. Now the company’s IPO quiet period has ended and Wall Street analysts are out with new analyst coverage calls.
Oggonomics always reminds its readers that no single analyst report should ever be the sole basis to buy or sell a stock. Analysts can sometimes be wrong in their thesis to support their ratings, and sometimes fundamentals can change internally or externally in an instance.
Kestra’s IPO was an upsized offering to 13.66 million shares (after 1.78 million shares from the over-allotment option) at $17.00 per share. The original offering was scheduled to be 10 million shares in the sale and an additional 1.5 million shares in the over-allotment. This brought in gross proceeds of approximately $232 million before fees.
Where this IPO is looking interesting is that it appears the institutions who bought shares at the IPO have not sold out of their stock. In fact, even after 18 trading days this stock has not seen anywhere close to a full turnover of its stock yet.
THE IPO WAS A SUCCESS
Despite a $17.00 IPO price, the first trade was at $22.95 on the March 6 date and it closed at $21.84 on more than 3.94 million shares. This implies that most of investors who were awarded shares at the IPO held on with very few flippers taking an instant profit. The trading volume has since diminished from 500,000 in the first three-days’ average to under 200,000 shares on average now.
Last Friday’s closing price of $23.42 was above its opening price and first day closing price — and is still handily above the formal $17.00 IPO price.
WHAT WALL STREET SAYS
Kestra Medical Technologies was initiated by Piper Sandler as Overweight with a $27 price target. Stifel started coverage as Buy with a $28 price target, and Wells Fargo started coverage as Overweight with a $28 price target.
Wolfe Research started coverage as Outperform with a $29 price target. BofA was the most aggressive of the analysts from the underwriting syndicate — starting coverage as Buy with a $30 price objective.
Goldman Sachs issued a more cautious Neutral rating with a $24 price target. Mizuho was the one firm with an outright negative view on its pricing, starting coverage as Neutral and only a $16 price target.
THE REACTION
In mid-afternoon trading after the analyst reports played into the day, Kestra Medical Tech shares were up 4% at $24.35 with about 120,000 shares trading hands.
