Zillow and Others Making Secondary Offerings (BBEP, HLS, MERU)
Companies often raise capital when the market is strong. Recently, a slew of companies have announced secondary offerings.
BreitBurn Energy Partners
Based in Los Angeles, this company develops oil and gas properties in the United States. It is selling 10 million units at $18.51 a piece for net proceeds of about $177.6 million. The market capitalization is about $1.3 billion and the company offers a dividend yield of about 9.6 percent. The price-to-earnings (P/E) ratio is about 6.7, the return on equity is near 14 percent and the operating margin is higher than the industry average. The CFO bought a thousand shares at the end of August. Short interest is less than two percent of the float. Ten of the 14 analysts surveyed by Thomson/First Call recommend buying shares -- none recommend selling. They believe the stock has room to run, as their mean price target is almost 14 percent higher than the current share price. That share price has pulled back more than four percent in the past week. Over the past six months, the stock has underperformed competitor Chesapeake (NYSE: CHK) and the broader markets.
This operator of some 99 inpatient rehabilitation hospitals and about 26 outpatient satellite clinics has filed an automatic shelf registration statement, which would allow the company to sell any combination of common stock, preferred stock, warrants and debt securities. No disclosure on the amount was made. The company has a market cap of near $2.3 billion and it is headquartered in Birmingham, Alabama. The long-term earnings per share (EPS) forecast is more than 14 percent, and the return on equity is about 132 percent. Short interest is almost six percent of the float. Twelve of 14 analysts who follow the stock and were polled by Thomson Reuters rate the stock at Buy or Strong Buy. Their mean price target is more than 8 percent higher than the current share price, as well as higher than the 52-week high. HealthSouth has narrowly outperformed peer HCA Holdings (NYSE: HCA) over the past six months.
This Sunnyvale, California-based company provides wireless local area network solutions to the education, health care, hospitality, manufacturing, retail, technology, finance, government, telecom, transportation and utility markets worldwide. It filed a universal shelf registration statement that allows it to periodically sell up to $15 million of its securities over the next three years. The market cap is more than $54 million, and the company posted record second-quarter results back in July. Its long-term earnings per share (EPS) growth forecast is about 20 percent, but the return on equity is in negative territory and short interest is more than 11 percent of the float. The mean price target, or where analysts expect the share price to go, is about 17 percent higher than the current share price. But over the past six months, Meru Networks has underperformed competitor Aruba Networks (NASDAQ: ARUN).
Online real estate information marketplace Zillow announced its plans to sell nearly 3.2 million shares of its common stock to raise capital. The company is based in Seattle and has a market cap of about $1.3 billion. Shares are trading near the 52-week high, and the long-term EPS growth forecast is about 40 percent. Revenue for the current quarter is expected to be about 65 percent higher than a year ago.The P/E ratio is ridiculously high but forecast to come down. Note that short interest is more than 34 percent of the float. Still, five of the seven analysts polled recommend buying shares and none recommend selling. However, their mean price target is only a little higher than the current share price. That share price has climbed about 48 percent in the past six months, including more than six percent in the past week. The stock has outperformed the broader markets over the past six months.
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