Klarna, Black Rock Coffee IPO Filings Have Us Eyeing Price Targets on 2 Holdings

We recently discussed the potential for investment banking activity to bubble back up as we moved past the Labor Day holiday, but even we didn’t expect it to bounce back quite as quickly as it seems to be doing. This morning, Swedish payments solutions company Klarna filed with the SEC for its U.S. IPO, aiming to sell 28.8 million shares between $35-$37, implying a valuation of up to $14 billion. Of course we're interested because Morgan Stanley MS is one of the leads on the transaction.

Not to be confused with the investment firm, Black Rock Coffee also shared details of its IPO offering. The coffee chain, which currently has 158 locations, targets selling 14.7 million shares between $16-$18 to raise around $860 million. Here too, Morgan Stanley is one of the lead book runners of the transaction, but we’ll also want to track this IPO given our position in Dutch Bros BROS.

Other IPO transactions we’re waiting to see about include Stripe, StubHub, Netskope, Pattern Group, and crypto exchange Gemini Space Station. We’ll also continue to watch SEC filings for expected IPO filings from the likes of Databricks, Canva and Plaid, and what those last two could mean for our shares of SuRo Capital SSSS and dividend potential.

In addition to the IPO market heating back up, we’re also seeing a resurgence in M&A activity. This morning, Air Lease AL agreed to be acquired by an Ireland-based holding company in a transaction worth ~$7.4 billion. That’s the latest transaction of size following the very recent news that Keurig Dr Pepper KDP will acquire JDE Peet’s (JDEFPF) and split into two standalone companies.

But that wasn’t the only split news. This morning, Kraft Heinz KHC said that it will split into two independent companies. One will focus on sauces, spreads, seasoning, and shelf-stable meals with brands, including Heinz, Philadelphia, and Kraft Mac & Cheese. The other will focus on grocery staples, including brands like Oscar Mayer, Kraft Singles, and Lunchables.

Our Investment Banking Plays

In our August Monthly Roundup, we said that, subject to investment banking activity, we would look to once again revisit our price targets for Morgan Stanley and Bank of America BAC. As the above transactions unfold, we will do just that. We will review new IPO filings and their mastheads as they are filed with the SEC to see which firms will be managing what deals.

While we could see the renewed enthusiasm for investment banking activity lift MS and BAC shares in the very near-term, you should expect us to share our updated targets in the coming days. We will want to sift through all the comments made during the Barclays Global Financial Conference next week, including the ones made by Bank of America.

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At the time of publication, TheStreet Pro Portfolio was long MS, BROS, SSSS and BAC.