Vivint Solar
Ticker: (NYSE: VSLR)
Expected to Trade: Thursday, October 2
Price Range: $16.00-$18.00
Business Description
Vivint installs residential solar systems for customers through long-term (20-year) contracts at relatively lower rates than their average utility bills.
Vivint has installed solar systems for nearly 22,000 homes throughout seven states. According to GTM Research, Vivint Solar is the second-largest installer of solar energy systems to the U.S. residential market (behind only SolarCity), with approximately 8% market share in 2013.
Our Take
Average savings for Vivint customers range from 15% to 30%. The rates are competitive with conventional utilities (even without tax credits), and customers pay very little up front.
Vivint is turning a profit this year, up $12 million in the first half of 2014 compared to a loss of $20 million in the same period of 2013. The company is on track to double the number of solar systems it installed in 2013.
The Energy Information Administration estimates that U.S. solar demand increased by 32% in 2013. Merrill Lynch says solar demand is going to soar over the next three years.
Market Vectors Solar Energy ETF (NYSE: KWT) is up 38% in the last 12 months. Guggenheim Solar ETF (NYSE: TAN) is up 36%. First Solar (NASDAQ: FSLR) is up 69%, and SolarCity Corp. (NASDAQ: SCTY) is up 82%.
There was a slump in 2011, but solar is officially back. And second-largest installer Vivint offers some much-needed diversification across the residential market. This one’s a must-own.
Yodlee
Ticker: (NASDAQ: YDLE)
Expected to Trade: Friday, October 3
Price Range: $11.00-$13.00
Business Description
Yodlee is a cloud-based software company that provides data analytics and solutions for developing personal financial management applications. Specifically, Yodlee securely aggregates user credit card, bank, investment, and travel reward accounts into one place so developers can create financial apps.
Primary shareholders of Yodlee include Bank of America, Institutional Venture Partners, Warburg Pincus, and ACI Worldwide. Bank of America is one of Yodlee’s largest customers, contributing 14% of the company’s revenue in the first half of 2014.
Our Take
Apps come and go quickly, but the core technology behind them can certainly stick around for a while. The Yodlee Platform is near essential for building financial apps, with over 750 organizations relying on it as a foundation.
Yodlee’s technology is well protected, with 62 issued U.S. patents. It’s also growing at a healthy pace, with a top line increase of 26% in the first half of this year. The company is looking to turn a profit as well, with $2 million on the bottom line in the first half compared to a loss of $173,000 in the same period last year.
Yodlee is the only platform infrastructure play in the financial industry, which gives it free reign over this space. Expect the top and bottom line growth to continue for the foreseeable future.
EyeGate Pharmaceuticals
Ticker: (NASDAQ: EYEG)
Expected to Trade: Friday, October 3
Price Range: $12.00-$14.00
Business Description
EyeGate Pharmaceuticals is a clinical-stage biotechnology company focused on developing drug delivery systems for treating diseases of the eye such as macular degeneration, diabetic retinopathy, and glaucoma. The company’s lead candidate is the EyeGate II Delivery System.
EyeGate’s approach to drug delivery is a process called iontophoresis. This involves creating a low-level electrical field used to ionize a drug and increase absorption rates. EyeGate believes it is the only company to have successfully used this method.
Our Take
The proposed benefits of EyeGate’s delivery system are as follows: The treatment is non-invasive and takes about three minutes. The system is easy to use. And it eliminates patient non-compliance with eye drops (two EyeGate II administrations is the equivalent of 154 drops).
If this is all EyeGate has to offer, we don’t see much value here. The delivery system needs to be administered in office, so despite there being a lower number of applications, patients are arguably going through more of a hassle. Dropping medication in your eye takes two seconds. A trip to the optometrist takes two hours.
EyeGate is still waiting on FDA approval for the EyeGate II, and there is no guarantee optometrists will adopt the technology. The company is burning through millions each year and has less than $600,000 cash on hand.
EyeGate hasn’t been able to get enough VC funding to keep this charade going, so it’s looking to the public market instead. Avoid it like the plague.
