Twitter tops estimates, convertibles flat; Anthem firms on earnings; new deals on tap

By Stephanie N. Rotondo

Seattle, April 26 – Earnings season continued on Wednesday and remained a catalyst for some convertible bonds.

However, a surprise earnings beat wasn’t doing much to shake up Twitter Inc.’s 0.25% convertible notes due 2019, a market source reported on Wednesday.

The source saw the bonds trading in a 94.5 to 94.625 context, which was deemed unchanged to up a touch.

The news did result in gains in the underlying shares, which gained $1.16, or 7.91%, to close at $15.82.

The equity’s upward push came as the social media company said that it added 9 million active monthly users in the first quarter. In the U.S. alone, 3 million users were added – not bad, considering that’s about how many users were gained in all of 2016.

However, the company did see sales decline, its first since going public in 2013.

On the other hand, Anthem Inc.’s 5.25% equity units due 2018 (NYSE: ANTX) were quite active after the health insurance company reported a 43.7% gain in profit for the first quarter.

The units firmed 74 cents, or 1.46%, to $57.49, on over 517,000 units trading. The company’s stock also traded higher, adding $6.57, or 3.81%, to $179.03.

For the quarter, Anthem reported net profit of $1 billion, or $3.73 per share, on revenue of $22.5 billion.

For its part, revenue was up 11%.

The improved results were due in part to a 3% gain in total medical memberships, including expansion of its Medicaid unit due to an enlargement of that program under the Affordable Care Act.

However, should the Trump Administration look to reduce cost-sharing plans under the ACA, Anthem is leaving the option of reducing its participation on the table, the company said.

Meanwhile, Akamai Technologies Inc.’s 0% convertible notes due 2019 were seen inching up just north of par, versus previous levels just south of that threshold.

Akamai’s shares finished 44 cents higher at $62.24.

There was no fresh news out on the company, but earnings are expected May 2.

New deals on the horizon

The market was waiting for two new issues that were expected to come after Wednesday’s close, though neither deal had surfaced by the end of the day.

Late Tuesday, Flexion Therapeutics Inc. and Neurocrine Biosciences Inc. announced Rule 144A offerings. Flexion is selling $125 million of seven-year convertible senior notes, with the initial yield talked at 3.125% to 3.625% and an initial conversion premium of 30%.

Wells Fargo Securities LLC, BMO Capital Markets and RBC Capital Markets are running the books.

As for Neurocrine, it plans to price $450 million of seven-year convertible senior notes with price talk at a 2.5% to 3% yield and an initial conversion premium of 37.5% to 42.5%.

Barclays and Jefferies LLC are the bookrunners.

In addition to being both pharmaceutical companies’ inaugural convertible issue, both carry similar terms. Flexion is provisionally callable after year three, while Neurocrine can be called after year four – both only if the stock hits a 130% price hurdle.

For its part, Flexion plans to use proceeds to further its Zilretta drug development, assuming it receives approval from the Food & Drug Administration. Neurocrine will meanwhile use the funds for general corporate purposes.

Ahead of pricing, Flexion’s stock was getting beat down, falling $5.36, or 20.65%, to $20.60.

The hefty decline put the name among the day’s biggest equity losers.

Neurocrine’s shares were little changed, though, dipping 34 cents to $53.28.

Both equity issues saw well above-average trading during the session.

Mentioned in this article:

Akamai Technologies Inc. Nasdaq: AKAM

Anthem Inc. NYSE: ANTM

Flexion Therapeutics Inc. Nasdaq: FLXN

Neurocrine Biosciences Inc. Nasdaq: NBIX

Twitter Inc. Nasdaq: TWTR

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.