FleetMatics gets off to a flyer after New York IPO

Fri, Nov 2, 2012, 00:00

JUST FOUR weeks after its IPO on the New York Stock Exchange, the first broker reports for Ireland headquartered company FleetMatics Group have started to pop up.

William Blair initiated coverage this week with an “outperform” rating while Bank of America Merrill Lynch slapped a “buy” on the stock with a price objective of $26.

That’s a near 20 per cent premium to its current price of about $21.70, or a 53 per cent premium to its float price of $17.

Both brokers were involved in the IPO, which is worth bearing in mind.

Many Irish people were scratching their heads when FleetMatics floated in the US last month, as the company had barely registered on the media radar here.

It has now got a market cap of $750 million and was the first Irish listing in New York for a number of years.

The company provides low-cost software solutions to businesses that allows them to manage their commercial fleets, which usually operate within a 100-mile radius.

FleetMatics has 16,000 customers and tracks more than 281,000 vehicles, typically trucks and mini-vans.

Bank of America Merrill Lynch said FleetMatics was “on its way to cracking the code to becoming a scale player”.

“It is the largest and fastest-growing company with rising margins sporting low churn rates,” it added.

William Blair also noted the growth opportunities, particularly outside the US, the company’s prime market. It saw the main risk as customer churn.

Given its strong share performance to date and healthy financials, FleetMatics appears to be heading in the right direction.