K2M has made the news recently with a secondary offering of 750,000 shares, and selling shareholders will also sell 3.75 million shares. Average share price for company stock is around $24, meaning the company would raise $18 million.
A new report from Seeking Alpha expects K2M will be able to sell those shares, meaning the company would have around $117 million in working capital and dilute shareholders roughly 11 percent.
Here are five key predictions from the report:
1. The company is raising near all-time highs, and management seems to "raise into a rising tide rather than the other way around." There is likely an atmosphere of market trust and positive sentiment to move higher.
2. Its time for K2M to tap into equity and make an acquisition. The article's authors is looking for aggressive mergers and acquisitions, and the K2M's management has discussed growing strategically through acquisitions in previous investor calls.
3. Its likely the company already has a few acquisitions in mind; but even if not, building cash at minimally dilutive levels gives them options. K2M is positioned to make acquisitions in the future.
4. The company also has strategic initiatives to fragment revenue exposure outside its core competency and spread risk. "If it means for the derisking that shares have to work a bit harder to move higher in a larger float, that's an exchange I'm willing to make," said Dallas Salazar, the article's author.
5. Mr. Salazar continues to recommend a long position in K2M.