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8 2019 IPO Stocks To Buy, Sell Or Hold

Overall, 2019 was a huge year for the stock market, and there were plenty of high-profile IPOs throughout the year as well. Unfortunately, some of the most eagerly anticipated IPOs of the past year ended up being flops for investors.

Benzinga · 03/04/2020 18:15

Overall, 2019 was a huge year for the stock market, and there were plenty of high-profile IPOs throughout the year as well. Unfortunately, some of the most eagerly anticipated IPOs of the past year ended up being flops for investors.

But now that the excitement and volatility associated with 2019 IPOs has died down, investors can get a clearer look at the fundamentals, valuation and potential long-term upside of these stocks. The 2019 IPO class was a mixed bag in 2019, and it’s still that way heading into 2020.

Here are eight 2019 IPO stocks to buy, sell and hold.

LYFT Inc (NASDAQ: LYFT) - Buy

Lyft may have been the highest profile IPO flop of 2019, and its stock is still trading well below its $72 per share IPO price in April of last year. Despite the disappointment, CFRA analyst Angelo Zino recently said long-term investors should step in and buy the dip.

Lyft has struggled with profitability, but Zino said the stock should benefit from a massive end market, a scalable and recurring revenue-driven business model and an opportunity for sizable margin expansion. Zino said Lyft is still gaining market share in a rapidly growing ridesharing industry and is making the right moves toward cutting costs and achieving profitability.

CFRA has a Buy rating and $70 price target for LYFT stock.

Uber Technologies Inc (NYSE: UBER) - Buy

Uber is off to a hot start to 2020 after a disappointing 2019. The ridesharing stock soared in January and February after an impressive earnings report. Uber management also said the company will achieve profitability by the end of 2020.

Uber and Lyft are dealing with uncertainties surrounding California’s AB5 law, which could significantly increase costs in the near-term. But Bank of America analyst Justin Post recently said the long-term outlook for Uber is bright given its massive addressable market, its technology leadership in autonomous vehicles, and secular shifts toward a sharing economy.

Bank of America has a Buy rating and $49 price target for UBER stock.

See Also: Whitney Tilson: 'I Think We Are In An IPO Bubble'

Pinterest Inc (NYSE: PINS) - Hold

Unlike Uber and Lyft, Pinterest shares are actually trading slightly above their 2019 IPO price, but they've still underperformed the broad market and been a disappointment to investors.

Following a fourth-quarter earnings beat, Post said Pinterest demonstrated better convergence optimization and reported impressive growth in international users and average revenue per user. In addition, the company’s 2020 guidance was mostly in-line with expectations. Post said international ARPU is still just 5% of the U.S. rate, suggesting plenty of opportunity for upside.

Bank of America has a Neutral rating and $32 price target for PINS stock.

Avantor Inc (NYSE: AVTR) - Buy

Avantor didn’t get as many headlines as some of the other big IPOs of 2019, but the chemical company raised $3.33 billion in its May 2019 IPO.

Following its recent earnings report, Bank of America analyst Derik de Bruin said the stock’s negative initial reaction was overdone and Avantor’s 2020 outlook is solid. Looking ahead, de Bruin said the challenge for the company will be to balance deleveraging its balance sheet with pursuing expansion opportunities and developing proprietary products. For now, de Bruin said Avantor’s valuation is attractive relative to peers given its growth numbers.

Bank of America has a Buy rating and $21 price target for AVTR stock.

XP Inc (NASDAQ: XP) - Hold

Brazilian independent investment platform XP is off to a strong start on the market after its December IPO. However, after the company reported preliminary first-quarter numbers in January, Bank of America analyst Mario Pierry said the stock has plenty of additional upside ahead.

XP reported 1.7 million retail clients as of the end of 2019, up about 90% from a year ago. Year-end assets under custody were up more than 100% from a year ago and ahead of Pierry’s estimate. While these numbers suggest a strong growth story for XP moving forward, Pierry said the stock is fairly valued following its initial post-IPO run.

Bank of America has a Neutral rating and $43 price target for XP stock.

SmileDirectClub Inc (NASDAQ: SDC) - Buy

SmileDirectClub is the market leader in direct-to-consumer orthodontics. The stock hit the market at an IPO price of $23 per share back in September and was one of the biggest high-profile lops of the year. Shares are now trading at just $7.92, but Bank of America analyst Michael Ryskin recently said there is value in SmileDirectClub for patient investors that are willing to ride out the company’s growing pains.

SmileDirectClub reported fourth-quarter aligner case shipments and revenue below consensus expectations, but Ryskin said the stock still has the potential to be one of the best growth plays in the healthcare sector.

Bank of America has a Buy rating and $12 price target for SDC stock.

Tradeweb Markets Inc (NASDAQ: TW) - Buy

Tradeweb is a trading platform provider for more that 2,500 clients, and the stock has been a huge winner since its April IPO at $17 per share.

Bank of America analyst Michael Carrier recently said Tradeweb’s combination of structural growth, solid operating leverage and robust cash flow will be a winning recipe for investors. Carrier said Tradeweb’s 32% volume growth in 2019 is especially impressive given most of its peers saw flat volume growth on the year.

Bank of America has a Buy rating and $53 price target for TW stock.

SciPlay Corp (NASDAQ: SCPL) - Sell

SciPlay develops and produces social mobile and web casino games. Investors that took a gamble on the company’s $16 IPO back in May 2019 have seen their bankrolls take a hit given the stock is now under $10.

Bank of America analyst Ryan Gee recently said there wasn’t much to like about the company’s fourth-quarter earnings report. For three consecutive quarters SciPlay has missed Wall Street expectations, and Gee said its lack of clarity or guidance in the quarters to come is a red flag.

Bank of America has an Underperform rating and $9 price target for SCPL stock.