DETROIT (

TheStreet

) -- Worried that the

General Motors

IPO will diminish the value of

Ford

(F) - Get Report

shares?

Don't be. Not only are Ford shares cruising along,

approaching $20 a share,

but history indicates that a company's shares are not disadvantaged when a leading competitor has an IPO.

Standard & Poor's analyst Efraim Levy, who has a buy on Ford, said the success of Ford's products sets the tone for the shares, which are up about 62% this year after rising 334% in 2009. "We see positives for Ford, regardless of whether other automakers return to the publicly traded stock markets," wrote Levy in a September report.

Ultimately, he said, "success comes down to product. We believe Ford has already benefited from its peers' struggles with government bailouts and bankruptcy -- as well as

Toyota's

(TM) - Get Report

reputation-tarnishing product recalls -- but, more importantly, from products that were well received by consumers in terms of technology, quality and utility."

It should be noted that while Levy has a buy on Ford, his price target is $16. "The worst may be over for Ford, but some risk to demand remains, and based on historical and peer comparative P/E multiples, our 12-month target price is $16," he wrote in a Nov. 13 report.

Risk to Ford investors is high, Levy said, due to the cyclicality of the auto market, historically weak demand, "intensifying competition, high fixed and legacy costs and a weak albeit improving balance sheet."

For the moment, Ford shares continue to benefit from continuing market share gains by the company as well as a commitment to debt reduction.

Meanwhile, UBS analyst Colin Langan reviewed the sector impact of large IPOs in a July study. "We found that on average, during the three-and-one months preceding an IPO, the main competitor experienced above-market returns, outperforming the S&P 500 by 1.8% and 2.9% respectively," Langan wrote.

Among the past IPOs Langan reviewed was the $5.5 billion

UPS

(UPS) - Get Report

offering in November 1999. In the six preceding months,

FedEx

(FDX) - Get Report

shares fell by 22%. In the year following, FedEx shares gained 7%.

The offering was pitched as an e-commerce play, but multiples for UPS and FedEx contracted as the air went out of that bubble, so both stocks were underperforming the S&P 500. Nevertheless, "there is little evidence that investors reallocated their resources from FedEx to invest in UPS," Langan wrote.

In the case of the March 2008

Visa

(V) - Get Report

$17.9 billion IPO, shares in

MasterCard

(MA) - Get Report

rose 39% in the six months prior and 40% in the three months afterwards. During much of the period, both stocks outperformed the S&P. "There is no clear evidence that MasterCard investors were negatively impacted by Visa's IPO," Langan wrote.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here:

Ted Reed

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