Last week our focus deal, Vital Farms (VITL) priced way above the range at $22 and settled in around $35 on Friday. It surged another few points yesterday to $42. We sold half above $40 and hold the balance. No matter what happens in November we’ll want eggs and butter.
This week starts off with BigCommerce (BIGC) tonight which is in high demand. Which makes sense given how well Shopify (SHOP) and other e-commerce stocks have performed. At $1083/share SHOP is trading at 61x trailing revenues. The new raised range is $21-23 but it will price above that and open at a premium. Prices tonight (Tuesday) to trade Wednesday. BigCommerce is positioned as more of a B2B and B2B2C engine than Shopify which still has a B2C emphasis. This one is also a big deal for the growing technology scene in Austin Texas.
Another high profile deal is Rackspace (RXT) which prices tonight for tomorrow. The current range is $21-24. This one got off to a slower start but is now gaining momentum and is expected to price well and trade at a premium. Their story is around customers wanting “multi-cloud” solutions that combine elements of public cloud infrastructure (Amazon AWS, Google Cloud, Microsoft Azure) with their own proprietary cloud elements.
Finally in terms of highlights we have Rocket Companies (RKT) provider of mortgages and related services. This is a very strong company with $5.8B in LTM revenues. It’s a large deal as well at over $3B. The current range is $20-22 and you can expect a major premium in the after-market. The market cap at the mid-point is ~$43B. Institutions love this deal for it’s quality and size. This company also fits into the “Amazonification” theme with companies like Zillow (Z) and Carvana (CVNA).
There are four healthcare deals on the calendar. So far there is no syndicate read on these in terms of demand. These are all later in the week so if we get a better read on any will do a mid-week update.
Oak Street Health (OSH) – Operates primary care facilities for medicare patients in the Midwest. LTM revenues are $640M and the market cap at the proposed range is $3.9B. The company is not profitable. We’ll take a closer look to see if this one shares any of the positive features of a OneMedical (ONEM).
Acutus Medical (AFIB) – This is a medical device company focused on the diagnosis and treatment of cardiac arrhythmia. It’s just beginning commercialization with $4M in LTM sales and the market cap at the proposed range is ~$500M. Good ticker!~
Checkmate Pharam (CMPI) – Another biotech targeting solid tumors by activating T cells. The proposed market cap is $350M. We still prefer NKarta (NKTR) but this space is too far down the healthcare food chain and we are invested more in “front-end” solutions.
Freeline Therapeutics (FRLN) – This is a gene therapy company using AAV to target rare diseases using one-time treatments. The proposed market cap is $570M.
One “sleeper deal” this week could be IBEX (IBEX) which provides outsourced customer support and marketing services. It’s a decent space and the current valuation looks attractive. LTM revenues are $392M with 12% EBITDA margins. The EV at the mid-point is ~$450M.
Elsewhere we have four more SPAC transactions – Yucaipa Acquisition (YCAQ), Health Sciences Acquisition (HSAQ), Vistas Media Acquisition (VMAC), and GO Acquisition (GOAC).