The Hot IPO Trader
Thursday, March 9, 2006
By Louis Basenese
Email – #32
** Getting Picky About Our Entry
Eagle Test Systems (Nasdaq: EGLT) priced at $15.50 last night – the upper end of the expected range. While we’d prefer shares to be at or above the high end, I think the underwriters are playing it a little safe. Especially since Eagle is the first semiconductor equipment company to go public since late 2004.
Too high an offering price could be a signal that the deal is overheated and lead to a weak debut. By pricing more conservatively, though, the underwriters will actually drum up more interest (and support in the aftermarket) as investors are drawn to the reasonable valuation.
Make no mistake, Eagle’s sizeable growth opportunities and the cyclical upturn the semiconductor market is entering make this a deal worth investing in. We just need to be a bit more particular about our entry.
While I expect shares to enjoy a strong performance today, I think this is an IPO that will really gain traction in the days and weeks following its debut. With that being said, I’m recommending we wait until shares begin trading before picking our entry point.
In particular, I’m looking for shares to pull back off the open price before entering our orders. So stay tuned. I’ll be monitoring the trading action from the start and will issue an alert with specific instructions on when to buy and at what price.
Until then,
Louis Basenese
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