A restaurant spin-off and a financial services company are expected to command the attention of US initial public offering investors next week.
No 3 US burger chain Wendy's International Inc is due to sell a roughly 15 percent stake in its Canadian coffee-and-doughnuts chain Tim Hortons Inc on Thursday. The deal would be worth about $551 million if it prices at the midpoint of its forecast range.
Also on Thursday, Clayton Holdings Inc, a provider of services to the mortgage-backed securities market, plans an IPO worth about $100 million, according to Dealogic.
IPO analysts said Tim Hortons, which operates the largest restaurant chain in Canada, will likely meet with a warm investor reception in light of the strong performance of another recent fast-food spin-off. Shares of Chipotle Mexican Grill Inc doubled in their January debut after McDonald's Corp spun off the casual chain in an IPO. Chipotle shares were trading at $53.85 on Friday, off 2.2 percent on the New York Stock Exchange, still more than double their $22 IPO price.
"Hortons will do very well, it looks like a really good company," said Tom Taulli, author of "Investing in IPOs." "We've seen some hot restaurant IPOs lately. At some point that'll die down, but it looks like this one will do well."
But analysts cautioned investors against getting carried away in first-day bidding for the shares. Wendy's plans to sell its remaining 85 percent stake in Tim Hortons by the end of the year, and that flood of supply could pressure the shares, which are to be listed on the NYSE under the symbol "THI."
Francis Gaskins, president of independent research firm IPO Desktop, of Marina del Ray, California, said that at the $19 midpoint of its price forecast, Tim Hortons shares would be valued at 23 times projected earnings
Wendy's shares were trading at $65.38, up 48 cents on the NYSE on Friday, putting its forward price-to-earnings ratio at 27, according to Reuters data.
"It's coming at a P/E ratio lower than the parent Wendy's, which is quite a discount. So it's a marketing ploy," Gaskins said. "They cannot afford to have a broken IPO for a 15 percent offering. They're trying to create a marketing buzz."
Analysts also have their eyes on Clayton Holdings, a provider of services to the mortgage-backed securities market, but said it's less clear how the market will greet that IPO. The company provides automated back-office services for mortgage processing. Analysts compared its business model to DealerTrack Holdings Inc, a provider of services to help auto dealers communicate with the banks and financial institutions that make car loans.
DealerTrack shares have risen 25 percent to $21.30 since their $17 December debut, which could bode well for Clayton shares, due to trade on Nasdaq under the symbol "CLAY."
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