Earnings in focus; FireEye convertibles gain; Akamai notes active; LivaNova up on swap

By Abigail W. Adams

Portland, Me., July 29 – The convertibles primary market was again quiet on Wednesday, dashing hopes for an active week of new deal activity.

With no new paper entering the space, focus centered on the slew of earnings reports pouring in and the Federal Reserve’s latest announcement regarding continued economic support.

The secondary space remained firm with buyers picking over outstanding issues amid the dearth of new paper and equities posting gains after the Federal Reserve’s announcement.

Earnings-related news was the driving force of trading activity on Wednesday.

FireEye Inc.’s 0.875% convertible notes due 2024 topped par for the first time since February and expanded dollar-neutral as stock skyrocketed after a large earnings beat.

Akamai Technologies Inc.’s 0.125% convertible notes due 2025 were active and trading off on an outright basis following its earnings report.

LivaNova USA Inc.’s 3% convertible notes due 2025 were down outright but up on swap as stock traded off on weak forward guidance.

FireEye gains

FireEye’s 0.875% convertible notes due 2024 were posting gains on an outright and dollar-neutral basis following its second-quarter earnings report.

The notes gained more than 5 points outright to trade up to 99 early in the session.

They continued to gain as the session progressed, topping par for the first time since February.

The notes were trading around 100.5 in the late afternoon, a source said.

They expanded about 0.5 points dollar-neutral on the move up.

FireEye’s other tranches – its 1% convertible notes due 2035 and 1.625% convertible notes due 2035 – were not very active, a source said.

While small lots of the 2035 convertible notes trade daily, the issues are mostly in the hands of long-term holders, the source said.

FireEye stock traded to a high of $16.28 and a low of $14.74 before closing the day at $15.84, an increase of 18.39%.

FireEye reported earnings per share of 9 cents versus analyst expectations for a loss per share of 2 cents.

The EPS was an all-time high for the cybersecurity firm, MarketWatch reported.

Revenue was $229.9 million versus analyst expectations for revenue of $214.8 million.

Forward guidance also beat expectations with the company projecting earnings per share of 6 to 8 cents in the third quarter versus analyst expectations for earnings per share of 5 cents.

Akamai active

Akamai’s 0.125% convertible notes due 2025 were active early Wednesday and trading off alongside stock.

The 0.125% notes were down about 3 points outright to 126.75 with stock down more than 2%.

However, they pared their losses as the session progressed.

The 0.125% notes were changing hands around 128.875 in the late afternoon with stock trading off their lows.

While active, the notes saw only nominal movement on a dollar-neutral basis, a source said.

Akamai stock traded to a high of $111.16 and a low of $106.61 before closing the day at $110.68, a decrease of 1.17%.

Stock was trading off despite a second-quarter earnings beat.

Akamai reported earnings per share of $1.38, which beat analyst expectations for earnings per share of $1.18.

Revenue of $795 million also beat analyst expectations for revenue of $768 million.

While second-quarter earnings trumped expectations, the pullback in stock was attributed to an anticipated slow-down in the internet company’s revenue growth.

LivaNova down outright

LivaNova’s 3% convertible notes due 2025 were down outright but up on swap as stock sold off following its earnings report.

The 3% notes dropped about 6 points outright to 110.875 in the late afternoon.

They gained about 1 point dollar-neutral on the move down, a source said.

LivaNova stock traded to a high of $55.20 and a low of $49.89 before closing the day at $50.52.

Stock was trading off despite a second-quarter earnings beat.

The medical device manufacturer reported losses per share of 15 cents, which beat analyst expectations for losses per share of 30 cents.

Revenue of $182.2 million also beat expectations for revenue of $171.7 million, according to Zacks Investment Research.

However, stock was trading off on weak forward guidance with the company expecting earnings per share of $1.15 to $1.35 in 2020 compared to analyst expectations for earnings per share of $1.47.

Mentioned in this article:

Akamai Technologies Inc. Nasdaq: AKAM

FireEye Inc. Nasdaq: FEYE

LivaNova USA Inc. Nasdaq: LIVN

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