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Stock Strategist

LogMeIn IPO: Slight Disconnect

We like the firm's products, but we're a little sour on the economics of the business

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After a busy week, in which four IPOs made their way to the market, software solutions provider LogMeIn (LOGM) will unveil its own offering on Wednesday. The offering will total 6.7 million shares with a price range of $14-$16 per share. Morningstar equity analyst Rafael Garcia likes the firm's products, but is a little sour on the economics of the business. He values the company at $14 per share, at the low end of its range, and further expounds on LogMeIn's long-term prospects in his thesis:

"LogMeIn deserves high marks for its software solutions, but the economics of its business are discouraging. We think the firm is well positioned to capitalize in the near term on the growing adoption of remote-access solutions for personal computers. However, its long-term success rests on its ability to convert its users of free services to paying customers.

Bill Buhr does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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