Why Analysts Love nLIGHT Despite Strong Post-IPO Gains and Immediately Ahead of Earnings

nLIGHT Inc. (NASDAQ: LASR) has seen its shares rise handily since the April 25, 2018, pricing of its initial public offering. nLIGHT sold 6 million shares at $16.00 apiece, but this ended up totaling 6.9 million shares after the overallotment option was executed in full by underwriters.

The company estimated on April 30 that net proceeds from the offering were roughly $100.7 million, after deducting underwriting discounts, commissions and offering expenses.

24/7 Wall St. has tracked large upside estimates and price targets from the underwriting syndicate. Stifel and Raymond James were nLIGHT’s lead book-running managers, and co-managers were listed as Needham, Canaccord Genuity and D.A. Davidson.

While some of the price targets are set high, investors also need to consider that nLIGHT’s first formal earnings report will be released after the close of trading on May 23, 2018. That means these analysts are jumping in on nLIGHT after its shares already have risen handily, just two days ahead of its first report as a public company.

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24/7 Wall St. tends to weigh the analyst calls from the book-runners with more strength than the co-managers because it is generally assumed that the book-runners sold more shares. These calls were noted as follows:

• Stifel started nLIGHT as Buy with a $40 price target.
• Raymond James started it as Outperform and assigned a $40 price target.

The co-manager coverage was listed as follows:

• Canaccord Genuity started it with a Buy rating and assigned a $35 price target. The firm called nLIGHT a differentiated fiber laser supplier with considerable margin leverage.
• D.A. Davidson started it as Buy and assigned a $40 price target.
• Needham started it as Buy as well, with a $34 price target.

And for the outsider calls: A firm called Northcoast Research, which was not in the syndicate, initiated coverage with a Buy rating and a $35 price target on May 18. The stock’s prior close was $29.99 a share.

nLIGHT shares already had a post-IPO range of $22.24 to $31.72, and the shares closed at $29.97 on Friday. Monday’s mid-day trading session had shares up almost 3% more at $30.90 in rather light trading for a quiet period expiration day.

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