Human Genome strengthens on takeover talk; AMD extends gains; Radio Shack marketed at 99.75

By Rebecca Melvin

New York, Aug. 25 - Human Genome Sciences Inc. jumped Tuesday on rumors and a newspaper report that the Rockville, Md.-based biopharmaceutical company may be acquired by GlaxoSmithKline plc.

Separately, Advanced Micro Devices Inc. convertibles extended gains from Monday when Citigroup upgraded the semiconductor company to "buy" from "hold."

Home builder D.R. Horton Inc. gained a couple of points along with shares that rose 3% after housing data that was better than expected.

Beazer Homes USA Inc., another homebuilder with convertibles, wasn't seen in trade, however, even though its underlying share were also 3% higher.

FiberTower Corp. was getting a look, although its convertibles didn't trade despite a 26% surge in its underlying shares. The move still leaves the stock under $1.

Another name not trading, but which gets a look among convertibles players, was Radio Shack Corp., which saw its one-year-old 2.5% convertibles marketed at 99.75 versus a share price of $15.25 early Tuesday.

Although these names were quiet, it wasn't viewed as a negative.

It doesn't speak to anything other than the fact that it is the last week of August and many people are away on vacation, a West Coast-based market source said.

It was fairly slow, but news items like the Human Genome rumor perked things up, sources said.

Also on Tuesday, better-than-expected improvement in consumer sentiment helped lift the Dow Jones Industrial Average to its sixth consecutive gain.

The Conference Board said its Consumer Confidence index rose to 54.1 this month from a revised 47.4 in July. Analysts had been expecting a reading of 47.5. The Dow closed up 30 points, or 0.3%, to 9.539.29.

Meanwhile, the Standard & Poor's/Case-Shiller U.S. National Home Price Index rose 1.4% in the second quarter, from the previous quarter, marking the first such increase in three years.

In addition, president Barack Obama nominated Ben Bernanke to a second term as Federal Reserve chairman. The reappointment was largely expected and got a "so what" from one market source.

Nevertheless, word came sooner than anticipated and removes any uncertainty surrounding leadership at the Fed.

Human Genome gains

Human Genome Sciences' 2.25% convertible due 2011 traded at 139 versus a share price of $19.00, compared with 121 against a stock price of $15.50 on July 20, up by 13 points outright, after the stock rallied on Tuesday.

Human Genome's 2.25% convertibles due 2012 traded at 128 versus a share price of $19.00.

The common stock closed at $19.21, up by $2.03, or 12%.

The moves followed a report printed by the Daily Telegraph that GlaxoSmithKine might take over Human Genome, a New York-based sellside desk analyst said.

"It's been out there and it's been rumored before, but this is the first time that I've seen it in print, the sellsider said.

"It was a big name here today," the sellsider said.

Last month, the stock and bonds of the Rockville, Md.-based company jumped after the company said its experimental lupus treatment received positive late-stage data.

AMD extends gains

AMD's 6% convertibles due 2015 gained another point to trade at 64 compared to trades at 63 on Monday and 61 to 61.5 on Friday.

AMD 5.75% convertibles due 2012 traded at 77.5 versus a share price of $4.05 on Tuesday, compared to 76.5 on Monday.

Shares of the Sunnyvale, Calif.-based chip company settled up 2 cents, or 0.5%, to $4.03.

On Monday, a Citigroup analyst upgraded AMD, noting that there are aspects of its businesses that are stabilizing and that it would likely outperform its 2010 consensus estimates, which he termed conservative.

D.R. Horton adds

D.R. Horton's 2% convertibles due 2014 gained 2 points or more during the session, having traded at 119.5 versus a share price of $12.75 and also at 121.715 with closing stock price at $13.05.

Shares of the Forth Worth-based homebuilder gained 3%.

"We saw a little trading of that name. There was housing data out there that was a little better," a sellsider said.

Meanwhile, Beazer Homes' 4.625% convertibles due 2024 were last at 79 on Monday but weren't seen in trade on Tuesday even though the underlying shares of the Atlanta-based homebuilder gained 3% to $4.03.

The company has taken out some of that paper, but a market player who said he still likes them said "They've been rising along with everything else, but there's more room in those" to move up.

FiberTower seen at 52 bid, 56 offered

FiberTower 9% convertible senior secured notes due November 2012 weren't in trade Tuesday but were seen at 52 bid, 56 offered.

The San Francisco-based wireless concern's shares surged 26% to $0.59.

Sources didn't know what sparked the stock move, but one said, "Lots of people are looking at the name."

Radio Shack at 99.75

A market for Radio Shack's 2.5% convertibles due 2013 was at 99.75, versus a share price of $15.25 on Tuesday.

The company announced Friday that it is authorized to buy back an additional $200 million of shares, for a total authorization of $290 million.

But the Fort Worth-based electronics retailer has not repurchased any stock in the last three quarters, as it has been building its cash position, according to Gimme Credit analyst Carol Levenson.

Levenson also said that Radio Shack is attempting to "contemporize" the brand with a new ad campaign, encouraging shoppers to call it the "Shack." But she believes that the retailer's key to success is to stock those things that one can't find elsewhere.

Its sales resurgence over the past year has benefited, for example, from "one of the most retro of technology accessories, the analog-to-digital television converter box ($200 million in sales last year and another $120 million in the first half of this year)," Levenson wrote in a research note published Tuesday.

"In fact, this weekend, coincidentally, we searched in vain for a similarly geeky item at a gorgeous Best Buy but found it instantly at the Shack," Levenson said.

In addition, Radio Shack isn't as holiday-sensitive as other retailers, so despite the uncertainty about holiday spending this year, "we are raising our credit score from 'deteriorating' to 'stable,'" Levenson said.

Mentioned in this article:

Advanced Micro Devices Inc. NYSE: AMD

Beazer Homes USA Inc. NYSE: BZH

D.R. Horton Inc. NYSE: DHI

FiberTower Corp. Nasdaq: FTWR

Human Genome Sciences Inc. Nasdaq: HGSI

RadioShack Corp. NYSE: RSH

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