Myob Group Ltd (ASX: MYO) has made its long awaited return to the ASX boards, opening at a significantly higher price than most investors were expecting.
On Friday last week, it was revealed that investors who subscribed to the initial public offering (IPO) had been sold shares at $3.65 – a price which many analysts deemed to be overly expensive. However, the shares opened more than 7% higher than that price at 12:00pm (Sydney time) today, debuting at $3.91 before rising slightly to a high of $3.92.
Should you buy shares of MYOB?
MYOB has arguably been the most highly anticipated float since that of Medibank Private Ltd (ASX: MPL) late last year. In its prospectus, the accounting software provider set an indicative price range between $3 and $4 which ultimately ended towards the higher end of that range due to high demand.
However, a number of analysts have suggested the shares were too expensive at $3.65, especially considering the hot competition in the sector from the likes of Reckon Limited (ASX: RKN) and New Zealand-based XERO FPO NZ (ASX: XRO). Xero in particular is quickly gaining market share in New Zealand, Australia, the U.S. and U.K. and could certainly impede on MYOB's growth prospects.
As was the case with Medibank's float in November 2014, MYOB's high price doesn't leave a lot of room for error and investors could be sorely disappointed when the company provides its first earnings update in the coming months. While MYOB deserves a positon on your watchlist, long-term investors would be wise to wait for the stock to cool down before pressing the 'buy' button.
Buy this ASX tech stock before you buy MYOB
