Esperion Therapeutics Inc (ESPR), NanoString Technologies Inc (NSTG) & Gogo Inc (GOGO): Three IPOs That Could Be Tomorrow’s Superstars

3. Gogo Inc (NASDAQ:GOGO)

In-flight Wi-Fi is shaping up to be a solid new revenueopportunity for many global airlines, and you can now find the service on many transcontinental flights. The fact that less than 15% of airline passengers have chosen to pay the $10 or $15 fee on any given flight may be seen as a possible disappointment, and may explain why this IPO has fallen roughly 25% from its late June $17 offering price.

Gogo Inc (NASDAQ:GOGO) installs and maintains the communications equipment that airplanes need to deliver Wi-Fi, and the company has lined up a blue-chip list of clients including Delta Air Lines, Inc. (NYSE:DAL), United Continental Holdings Inc (NYSE:UAL) and Virgin. In fact, the company controls more than three-fourths of the nascent domestic sky-high Wi-Fi market. And analysts at UBS add that “This dominance positions it to win share among international carriers, a market roughly two times the size of the U.S.” Gogo Inc (NASDAQ:GOGO) also provides gear to more than a third of all business jets flying across the U.S.

To be sure, the company will see greater competition in the next half-decade as existing contracts with the domestic carriers come up for rebid. That could lead to price pressures, especially if the airlines want to inspire greater adoption of the in-flight Wi-Fi service.

Those UBS analysts see considerable revenue growth and cash flow generation in the years to come for Gogo Inc (NASDAQ:GOGO), despite the competitive concerns, and using their 2015 financial metrics as a basis, have a $20 price target in place, which is more than 50% above current levels.

Risks to Consider: IPOs can perform quite well in a rising stock market but are especially vulnerable to sharp drops in a weak stock market, due to their lack of proven track records and established base of shareholders. Still, these stocks’ underwhelming debuts implies a lot less risk than owning some of this summer’s more scorching IPOs.

Action to Take –> The fact that IPOs like these have not raced out of the gate might highlight some red flags, so extensive research is necessary. It may be in your interest to await their upcoming quarterly releases, at which time they will hold their first deep conversations with the public.

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This article was originally written by David Sterman and posted on StreetAuthority.