Two Niche Firm IPOs Surprise Analysts

Initial public offerings ended the second quarter on a high note, with two companies rising sharply in market debuts Wednesday.

Design Within Reach Inc., which sells modern design furniture, closed up $4.43, or 37%, to $16.43 on the Nasdaq Stock Market. Life Time Fitness Inc., an owner of fitness clubs, closed up $2.50, or 13.5%, at $21.

Because of the niche nature of both companies, analysts didn’t expect a big bounce for either stock. But demand for each deal turned out to be stronger than expected.

“What we expected to be a lackluster day turned out to be pretty good for IPOs,” said Sal Morreale, who tracks IPOs for Cantor Fitzgerald in Los Angeles.

San Francisco-based Design Within Reach was the biggest surprise, Morreale said, because of the specialized nature of its business. The company sells modern tables, chairs and light fixtures through its retail stores, a website and catalogs.

Morreale said a big part of the offering’s draw was how prominently the company’s products have been featured on design shows such as “Queer Eye for the Straight Guy” and “Trading Spaces.”

Already, the IPO market has exceeded the total for all of 2003. There have been 102 IPOs priced this year, raising $18.76 billion, according to data from Thomson Financial. In 2003 there were just 83 IPOs, raising $15.33 billion.