US analysts bullish about flotation

FOREIGN companies generally receive a strong response to a global offering, says Mr Martin Teevan, vice-president of trading at Robb, Peck, McCooey Clearing Corporation, in New York.

Commenting on the Ryanair flotation, he said: "Morgan Stanley is the most prestigious under-writer in the world. The fact that it is the lead underwriter in this IPO means that if it's going to be done, it'll be done well. It'll make sure it's priced right. It may go to a small premium and trade up from there."

"It's a great time for the company, but a rocky time for investors," according to Mr Breiffne O'Connell of Gruntal & Co. in New York. "The US airline industry has had remarkable turn-around in the past two years and Ryanair is cashing in on that buoyancy," he added.

Market conditions in the US could not be better. The stock market is doing well, there is a tremendous appetite for new offerings, a lot of interest in turnaround companies and foreign stocks. The summer is peak flying, season.

Other airlines such as Delta, United and American have all been recording good profit margins. The Dow Jones Transportation Index is at an all-time high of 2693.00, which is a 20 per cent rise on last year.

The word from Morgan Stanley is that the deal is "going great", according to Mr Bill Reid, its managing director of investment banking.

The share order books closed at noon yesterday and the price will be set in New York tonight. The expected range is $12.28 to $14.52 a share. A total of 10.8 million American Depositary shares or 54.2 million ordinary shares will be on offer when trading begins under the symbols RYAAF (the F stands for foreign) on Nasdaq. Some 50 per cent of the shares will be offered to US investors.

The risks to Ryanair are seen to be sustainability and manageability of growth. "It is a high growth company but, by doubling its fleet, this high growth may be hard to sustain," Mr O'Connell said . "There is also growing competition in Europe with market deregulation and a serious US competitor in Northwest Airlines," he said.