How To Get A Fair Value Estimate For Jetblue Ipo

How to get a fair value estimate for jetblue ipo


NEW YORK (CNN/Money) - JetBlue Airways Corp.

jumped 67 percent in its first day of trading Friday, making it the hottest initial public offering in nearly a year, while biotechnology company Ribapharm inched up in its debut.

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Shares of JetBlue (JBLU: up $18.00 to $45.00, Research, Estimates) closed at $45 on Nasdaq, up $18 from their $27 offer price. Friday's other IPO, Ribapharm Inc.

How to get a fair value estimate for jetblue ipo

(RNA: up $0.80 to $10.80, Research, Estimates), finished at $10.80 on the New York Stock Exchange, for an 8 cent gain.

"JetBlue is an absolute gift for IPO buyers," said analyst Ben Holmes of Morningnotes.com, which tracks new issues.

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"It's the hottest deal this year.

The JetBlue offering easily beat out 2002's other blockbuster deal from PayPal Inc.

(PYPL: Research, Estimates), which rose 54 percent in February.

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In fact, the discount airline posted the strongest first day gain since Simplex Solutions (SPLX: Research, Estimates) went public last May, gaining 77 percent, according to data from Dealogic.

JetBlue's gains hark back to the IPO gold rush of 1999, when deals often would open with a big pop.

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JetBlue's success also will give ExpressJet Holdings Inc., which goes public next week, a boost, Holmes said.

JetBlue raised $158 million late Thursday when it sold 5.87 million shares at $27 each, above its expected price range, via lead underwriters Morgan Stanley and Merrill Lynch.

How to get a fair value estimate for jetblue ipo

JetBlue had expected to sell 5.5 million shares at $25 to $26 each, up from its previous $22 to $24 range.

The low-fare airline began operating in February 2000 and is now profitable, having modeled itself on rival Southwest Airlines Co., which also makes money.

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JetBlue reported $26.8 million in operating income on $320.4 million in revenue for the year ended Dec. 31, compared with a $21.2 million operating loss on $104.6 million in revenue the year before.

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JetBlue offers 108 daily flights serving 18 cities across the United States.

But shares of Southwest (LUV: up $0.92 to $19.26, Research, Estimates) are trading much lower than JetBlue's $40 range.

"Southwest is such an established business and such a close comparison," Holmes said. "But it would be surprising if JetBlue held onto its premium."

A biotech offering

Separately, Ribapharm, which researches antiviral and anticancer drugs, went public on the Big Board.

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Ribapharm, a spinoff of ICN Pharmaceuticals, came in below expectations when it raised $260 million early Friday.

The company sold 26 million shares at $10 each, down from its initially expected range of $13 to $15, via UBS Warburg.

Ribapharm's product ribavirin is an antiviral drug that Schering-Plough markets to treat hepatitis C in the United States, the European Union and Japan.  

How to get a fair value estimate for jetblue ipo