Four IPOs surged more than 100 percent in first-day trading, with three ending the day at more than double their offering prices.
Wireless equipment maker Triton Network Systems closed up 156 percent at $38.43. Sunrise Telecom, which makes equipment to test digital subscriber line systems and Internet networks, ended up 166 percent at $40.
And Network Engines, a maker of specialized Web service appliances, reached a 100 percent intraday gain before closing up 70 percent at $29.
The optimism spilled over to today, as OmniVision, a maker of image sensors used in digital cameras and other devices, closed up 161 percent at $34.
IPOs "basically look like they're going to start performing again like they were six or eight months ago," said Vincent Slavin, who tracks IPOs for Cantor Fitzgerald. "That stuff is not healthy for the market. It's why we had the difficulties we had before."
Meanwhile, the market doesn't look like it will cool much next week. Eighteen companies planning IPOs are expected to raise $1.2 billion, according to market research firm Commscan. Analysts fear this pack of companies may stifle the slowly building momentum.
"I'm kind of surprised at how full the calendar is for the next couple of weeks," said Steven Tuen, director of research for the IPO Value Monitor. "It looks like it's really starting to pick up, and I think that these deals might choke (the recovery) off."
Indeed, the IPO market is still shaky. Although five companies that launched IPOs yesterday posted an average first-day gain of 86.8 percent, four companies that went public Tuesday barely budged, gaining an average 0.16 percent.
On Tuesday, shares of Turkey-based cellular phone company Turckcell closed up just 2 cents. Shares of Chinese semiconductor company ASAT Holdings fell below their offering price, while shares of Entegris, which makes transport devices, remained little changed. A third semiconductor-related company, Axcelis Technologies, posted a gain of 9 percent.
Analysts predict more strong debuts next week as several biotechnology companies prepare for IPOs.
"A lot of them are going to be doubles, probably four or five," Cantor Fitzgerald's Slavin predicted. "In my opinion this is not a good thing."
Among the biotech companies, analysts say to watch DeCode Genetics, Transgenomic and Variagenics.
DeCode plans to raise an estimated $128 million through the sale of 8 million shares at a range of $14 to $18. Decode is an Iceland-based company that looks to genomic data to create products for the health care industry. It has applied to trade on the Nasdaq Stock Market under the ticker symbol "DCGN." Morgan Stanley Dean Witter will handle the sale.
Transgenomic, which makes tools to study the human genetic code, plans to raise an estimated $52 million through the sale of 4 million shares at a range of $12 to $14. The Omaha, Neb.-based company has applied to trade on the Nasdaq under the ticker "TBIO." Chase Hambrecht & Quist will handle the sale.
Variagenics, which assists in drug development, plans to raise an estimated $60 million through the sale of 5 million shares at a range of $11 to $13. The Cambridge, Mass.-based company has applied to trade on the Nasdaq under the ticker symbol "VGNX." Credit Suisse First Boston will handle the sale.
Among tech companies, some analysts are bullish on next week's IPO of SMTC, an electronic manufacturing services company. SMTC plans to raise $125 million through the sale of 9.6 million shares at a range of $12 to $14. The Ontario-based company has applied to trade on the Nasdaq under the ticker symbol "SMTX." Lehman Brothers will handle the sale.
Airspan Networks, a supplier of wireless communications systems, plans to raise an estimated $50 million through the sale of 5 million shares at a range of $9 to $11. The Uxbridge, England-based firm has applied to trade on the Nasdaq under the ticker symbol "AIRN." Credit Suisse First Boston will handle the sale.