The New York-based company, founded four years ago, is expected to begin trading on the Nasdaq under the symbol "ACOM."
In an initial public offering filing with the Securities and Exchange Commission last month, the company said it plans to sell 5.9 million shares in a projected range of $10 to $12 per share.
Analysts said the company, which advises clients on online business strategies, develops marketing campaigns and designs e-commerce sites, may increase that price range to $12 to $14 a share later this week, possibly late Wednesday or early Thursday.
IPOs for Internet services firms have grabbed the attention of analysts and investors in recent months as demand for their services has exploded. According to market research firm International Data Corp. (IDC), the market for Internet services is projected to reach $78.6 billion by 2003 as companies shift business to the Web.
Agency.com is stepping into a crowded space that includes iXL, Scient, Luminant, Razorfish, Proxicom and others. Most of these companies have done fairly well since going public. Scient has seen its shares climb since it began trading in March, opening at $20 a share. In late afternoon trading, shares of Scient jumped 9 points, up 6.4 percent, to 149.5, which reflects a recent 2-for-2 split in the company's stock.
Analysts said Agency should have a successful run when it takes center stage on Friday.
"It looks like it's going to initially be strong at the open," said David Menlow, an analyst who heads IPOfinancial.com, about Agency's debut. "It's one of the top deals we have on the board this week."
"There's a lot of room for growth in emerging industries," said Jeff Hirschkorn, an analyst at IPO.com. He said Agency has the potential to do well not only because it competes in a hot sector, but because its underwriters--Goldman Sachs, Hambrecht & Quist and Salomon Smith Barney--have a strong track record for leading successful IPOs.
Hirschkorn said it doesn't hurt that Agency is connected to advertising firm Omnicom, which owns a 50 percent stake in the company. Omnicom will hold a 46.6 percent stake in Agency after the IPO, according to Hirschkorn.
Omnicom also holds a 37.7 percent stake in Razorfish. Razorfish, which began trading at $16 per share in January, now trades at more than quadruple its IPO price.
Randall Roth, an analyst at IPO Plus AfterMarket Fund, said Agency.com's biggest challenge may not be its IPO--but sustaining its strong branding and marketing efforts in an overcrowded field of competitors who all offer similar services.
"There are a lot of companies in this space that [have] gone public...Part of [their success] is a matter of branding," said Roth.
With more than 800 employees, Agency.com has 12 offices in the United States, Europe and Asia. The company's largest clients include British Airways, Compaq, Sprint, Nike and Benetton. Agency reported $30.4 million in revenues during the first six months of this year and posted $411,000 in net losses.