Sept 26 (Reuters) - The U.S. IPO market has bounced back

strongly in 2024 after a nearly two-year dry spell, driven by

receding recession fears and a searing rally in stocks.

Still, investor preference for companies with a clear path

to profitability has kept enthusiasm in check, with analysts

expecting a recovery to take roots next year.

"Right now, (the IPO market recovery) is very sober and

clinical," said Mike Bellin, IPO Services Leader at PwC U.S.,

citing the election uncertainty and doubts about the Federal

Reserve's ability to guide the economy to a soft landing.

"As we get more momentum and alleviate some uncertainty, we

may move into a market where investors are willing to put more

money in riskier IPO candidates."

Below are some graphics outlining the state of the IPO

market:

STRONG DEBUTS

Companies that raised at least $100 million in their IPOs

this year have traded up about 25% on average, according to data

from Renaissance Capital, with first-day gains of 16%.

The Renaissance IPO Index, a benchmark for

broader trends, is up about 14% so far this year.

Social media giant Reddit ( RDDT ), logistics heavyweight

Lineage and healthcare firm Concentra are

among the firms that went public this year.

BIOTECHS SHINE

September has turned out to be the busiest month for

healthcare IPOs this year, Dealogic data showed, a contrast from

risk-averse investors moving to the sidelines as biotechs

struggled with dried-up funding due to high interest rates.

"Biotech is a very capital-intensive business," said Ross

Carmel, partner at securities law firm Sichenzia Ross Ference

Carmel.

"Access to the public markets gives them the opportunity to

continue raising capital as they need it, faster than they would

as a private company."

On Thursday, shares of weight-loss drug developer BioAge

Labs opened 25% above their IPO price.

POSITIONED FOR ACCELERATION

While IPOs have recovered from the lows of last year, the

proceeds raised via such sales are well below the 10-year

historical average, according to Renaissance Capital.

"The August sell-off, stubbornly high inflation and anxiety

surrounding the upcoming election likely deterred a number of

potential issuers weighing fall IPOs," said Angleo Bochanis,

data and index associate at Renaissance.

Heightened investor scrutiny could also have prompted some

startups to delay a listing until they were on a stronger

financial footing.

"We've seen a change in the scale required to go public. If

you back up five years, a typical IPO-bound company had $100

million in annual recurring revenue. Nowadays, it's probably

double that, if not more," PwC's Bellin said.

Still, next year may bring more activity.

"We are anticipating a steady recovery, and plenty more

names will go public in the coming months," Renaissance's

Bochanis said.

ARTIFICIAL INTELLIGENCE

"Anything AI-related should have an easy story to tell and

investors love a good narrative when they're seeking new

opportunities," said Dan Coatsworth, investment analyst at AJ

Bell.

But investors will likely seek more concrete evidence of the

advantage of AI to the business model.

"The buy side today is very diligent around AI matters.

There will be good questions asked," said PwC's Bellin.