Zeltiq's debut blows life into U.S. IPO market

Wed Oct 19, 2011 2:25pm EDT

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(Reuters) - Zeltiq Aesthetics Inc (ZLTQ.O), which developed a procedure called "CoolSculpting" that helps people get rid of "love handles," saw its shares rise 24 percent in their market debut, indicating investors may be returning to the U.S. IPO market.

Zeltiq -- the second company to go public in the United States in recent weeks -- priced its IPO at $13 a share, below the previously expected range of $14-$16 apiece.

"It's a very good sign for the IPO market," said David Menlow, president of IPOfinancial.com. "All the pieces are in place to make this market work."

Last week, wireless equipment maker Ubiquiti Networks (UBNT.O) -- the first company to get listed in the United States since August -- priced its IPO at the low end of the anticipated range, but had a strong market debut.

Europe's debt crisis and a weak domestic economic recovery had made it difficult to price new issues, with many companies opting to delay their IPOs until there is less volatility.

The success of Ubiquiti and Zeltiq IPOs may draw a few people back in the market, said Francis Gaskins, an analyst with IPOdesktop.com.

Ubiquiti's shares have gained about 9 percent since going public.

Zeltiq has developed a proprietary technology that eliminates body fat by cooling it, and says that "CoolSculpting" is a non-invasive technique that could be an alternative for people who can't get rid of fat by dieting or exercising.

Zeltiq is yet to post a profit, but boasts of having installed 629 CoolSculpting Systems worldwide, and sold 134,000 procedures to physicians as of June 30.

"Even though Zeltiq has always been unprofitable, their current growth trajectory suggests they are close to breakeven, and will be profitable in the near future," Gaskins said.

Zeltiq's revenue has been growing steadily, while its net loss has been consistently shrinking. For the latest quarter, it reported a net loss of $559,000 on revenue of $17.4 million.

Zeltiq and its owners sold 7 million shares at $13 apiece, raising $91 million.

JPMorgan, Goldman Sachs, William Blair and Canaccord Genuity were the lead underwriters of the Zeltiq IPO.

Zeltiq shares touched a high of $16.34 in Wednesday morning trade on Nasdaq.

(Reporting by Brenton Cordeiro in Bangalore; Editing by Maju Samuel)

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