The U.S. IPO market was red-hot in 2021. The total number of traditional U.S. IPOs hit its highest level since the dot-com boom in the late 1990s, while total IPO deal value reached record levels last year.
Unfortunately for investors, many of the most popular 2021 IPO stocks have performed horribly in the public markets up to this point. Bloated valuations coupled with broad weakness in unprofitable growth stocks has weighed on the share prices of many IPO stocks.
The good news for investors: there are now plenty of high-quality stocks to buy at a significant discount to their IPO prices.Here are eight 2021 IPO stocks to buy on the dip, according to Bank of America.
VectivBio Holding AG VECT
VectivBio is a clinical-stage biotechnology company focused on next-generation GLP-2 analog apraglutide for treatment of short bowel syndrome intestinal failure (SBS-IF) and acute graft vs. host disease. VectivBio priced its IPO at $17 per share in April 2021, but it has since traded all the way down to $4.50. Analyst Tazeen Ahmad says the company's technology is differentiated and has demonstrated a longer half-life and a better pharmacokinetic profile than competing GLP-2 analogs.
Bank of America has a Buy rating and $19 price target for VECT stock, suggesting more than 300% upside ahead.
Nerdwallet Inc NRDS
NerdWallet is an online marketplace for financial products. In November 2021, NerdWallet priced its IPO at $18 per share. Roughly three months later, the stock is down to just $14.90.
Analyst Nat Schindler says NerdWallet investors are concerned rising interest rates will eat into demand for new credit in 2022. Schindler says the market is reaching the wrong conclusion, and banks are likely to increase marketing efforts in an environment of rising rates, providing more leads for financial marketplaces like NerdWallet.
Bank of America has a Buy rating and $40 price target for NerdWallet, suggesting more than 170% upside from current levels.
4D Molecular Therapeutics Inc FDMT
4D Molecular Therapeutics is a clinical-stage biotechnology company developing gene therapies for indications in ophthalmology, cardiology and pulmonology. The company went public in October 2021 at an IPO price of $25, but the stock is now trading at just $15.32.
Ahmad says 4D Molecular's evolved vector platform is highly differentiated and has demonstrated success in delivering genes to targeted tissues in a safe manner. In addition, Ahmad says the company's early stage assets could generate valuation upside in the long-term.
Bank of America has a Buy rating and $45 price target for FDMT stock, suggesting nearly 200% upside from current levels.
Singular Genomics Systems Inc OMIC
Singular Genomics Systems is a Life Sciences Tools company focused on next-generation sequencing (NGS) technology. Singular went public in June 2021 at an IPO price of $22, but it has since traded all the way down to $7.98.
Analyst Michael Ryskin says the launch of the G4 system in late December cleared a major overhang for Sinclair, and the initial specs of the system met most of his expectations. Ryskin says Singular shares took a big hit during a broad sell-off in genomics stocks in recent months, making the stock more attractive from a valuation perspective.
Bank of America has a Buy rating and $21 price target for OMIC stock, suggesting more than 160% upside from current levels.
Procept Biorobotics Corp PRCT
Procept Biorobotics markets its AquaBeam Robotic system and its Aquablation therapy for treatment of benign prostate hyperplasia. In September 2021, Procept priced its IPO at $25 per share. Less than five months later, the stock is down to just $19.03.
Analyst Craig Bijou says Aquablation therapy addresses the shortcomings of existing surgical alternatives in treating BHP. Bijou says BHP is an extremely large addressable market for rocept, with 40 million men suffering from the condition in the U.S. and 12 million men currently under physician care for symptoms.
Bank of America has a Buy rating and $48 price target for PRCT stock, suggesting more than 150% upside ahead.
First Watch Restaurant Group Inc FWRG
First Watch is a chain of breakfast, brunch and lunch restaurants with more than 400 locations throughout the U.S. The company went public in October 2021 at an IPO price of $10, but the stock is now trading at just $14.95.
Analyst Sara Senatore says the company's first earnings report in January was impressive, and the company has a valuable brand and a strong management team. Senatore says First Watch shares should trade at a premium valuation to restaurant peers that reflects the company's superior growth and return profiles.
Bank of America has a Buy rating and $30 price target for FWRG, suggesting more than 100% upside from current levels.
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