Digital Theater Systems Jumps 37% on Trading Debut

Digital Theater Systems (DTSI Quote) is on track to be the best-performing first-day IPO gainer of the year.

Shares of the digital audio company were up $6.35, or 37.4%, at $23.33 on their debut of trading -- a bullish sign for the slowly reviving new-issues market. The stock has so far surpassed iPayment (IPMT Quote), which had been in the lead for initial-day performances this year, according to Thomson Financial. It rose 27.5% on its first day of trading.

Digital Theater sold 3.84 million shares at $17 a share, above a previously expected range, for $65.3 million. The lead underwriter was SG Cowen, with William Blair and Thomas Weisel as co-managers.

During the first quarter, Digital Theater earned $1.6 million, compared with $1 million in the year-ago period. Revenue rose to $11.8 million from $9.4 million in the same quarter last year.

"In order to succeed in today's market, you have got to be profitable," said Jeffrey Hirschkorn, a senior analyst at IPO Monitor. "This company fits into that model."

Digital Theater is the fifth IPO to price in the past three weeks, following Molina Healthcare (MOH Quote), Axis Capital (AXS Quote), American Financial Realty (AFR Quote) and Maguire Properties (MGP Quote). Each of those stocks is above its opening level, as investors have begun to embrace IPOs again.