BioMarin lower outright on earnings; Fluidigm stronger ahead of earnings; Hologic active

By Rebecca Melvin

New York, May 2 - U.S. convertibles were little changed in quiet trade on Friday, maintaining a trend that was in place all week, as equities slipped after April jobs data showed more jobs than forecast were added last month.

BioMarin Pharmaceutical Inc.'s convertibles were actively traded and looked to be in line, or flat, on a hedged basis - although they were lower outright, after the Novato, Calif.-based biopharmaceutical company left full-year guidance unchanged when it reported a narrower first-quarter loss late Thursday. Shares fell 4% after ending sharply higher Thursday.

Fluidigm Corp.'s 2.75% convertibles due 2034, which priced in February, traded slightly better ahead of earnings expected on Monday. Shares of the South San Francisco-based genomics and DNA research company ended up 1%.

Hologic Inc.'s two convertible bond issues remained active, extending outright gains notched Thursday after the Bedford, Mass.-based medical diagnostics company raised full-year guidance.

Alpha Natural Resources Inc.'s 3.75% convertibles recouped a point Friday after slipping 2 points Thursday when the Bristol, Va.-based coal producer reported earnings that revealed the metallurgical and thermal coal markets are likely to remain depressed through 2014.

On the economic front, 288,000 jobs were added to non-farm payrolls in April, which was much better than expected, and the unemployment rate fell to 6.3%., the Labor Department said Friday.

Analysts had expected 218,000 jobs and 6.6% unemployment.

A lower labor participation rate of 62.8%, which is viewed as negative for the economy, contributed to the lower unemployment rate.

BioMarin slips outright

BioMarin's 1.5% convertibles and 0.75% convertibles were actively traded, and both were down more than 2.5 points at about 101 and 102, respectively. Shares ended down 4% to $57.70 on Friday.

The shares had been off 6% earlier. "These traded very actively," a trader said.

BioMarin posted a narrower first-quarter loss of 27 cents per share that was better than analysts expected, mainly due to higher revenue.

Total revenue on an adjusted basis rose 19% to $155.3 million, which was higher than expected.

The gain was attributed to higher revenue from products, including Naglazyme, a treatment for a rare genetic enzyme deficiency disorder called MPS-VI.

Fluidigm stronger

Fluidigm's 2.75% convertibles due 2034 traded at 107.43 bid, 107.55 offered versus an underlying share price of $37.60 during the session. That was up slightly on a dollar-neutral level, assuming a 65% to 70% delta, a trader said.

The paper ended the session in the same area around 107.5 with shares of the genomics and DNA research company up 40 cent, or 1.1%, at $37.95 on Friday.

There was an outright buyer in the name Friday ahead of earnings expected on Monday, a trader said.

The paper was mostly in line to a little better.

"I think the earnings are likely to be good and they might jumpstart the bond. Alumina had good earnings, which bodes well for Fluidigm," the trader said.

Alumina is a Fluidigm customer, the trader said.

Hologic follows shares

Hologic's 2% convertibles due 2042 traded up to 107.25 in the early going, which was up from 105.487 late Thursday, according to Trace data. The Hologic 2% convertibles due 2037 changed hands at 118.30, which was up from 117 Thursday. Hologic shares were up about 1% early Friday and ended only 8 cents higher, or 0.4%, at $22.74.

Late in the day, the Hologic 2% convertibles due 2042 were back down to the 105 handle.

Hologic raised its full-year guidance to $1.37 to $1.40 per share, compared to previous guidance of $1.34 to $1.38 per share, and raised revenue guidance to $2.46 billion to $2.49 billion for the year, up from $2.425 billion to $2.475 billion.

Alpha Natural steady

Alpha Natural's 3.75% convertibles due 2017 traded at 85.93 versus an underlying share price of about $4.60. That was up a point on an outright basis from 84.75. On Thursday the bonds fell 2 points.

Alpha Natural shares gained 10 cents, or 2.2% to $4.63 on Friday.

"Alpha Natural's first-quarter adjusted EBITDA (as reported) jumped 147% to $289 million, but was $39 million excluding a non-recurring gain," Gimme Credit analyst Evan Mann wrote in a note published Thursday.

Reflecting continued market weakness, ANR reduced its 2014 shipment guidance for Eastern metallurgical and Eastern thermal coals.

Revenue was down 17% to $1.1 billion. Lower pricing of metallurgical coal and lower shipments in all segments of its coal business contributed to the decline.

"Metallurgical coal prices continue to disappoint, and the timing of a possible recovery in market fundamentals remains uncertain. The weak outlook for metallurgical coal pricing will likely weigh on results over the intermediate term," Mann wrote.

Alpha Natural said that seaborne thermal and metallurgical coal markets remain difficult, but domestic thermal prices have firmed up. It reiterated its view that oversupply in metallurgical coal will likely continue through 2014 with improved pricing coming potentially in 2015.

Mentioned in this article:

Alpha Natural Resources Inc. NYSE: ANR

BioMarin Pharmaceutical Inc. Nasdaq: BMRN

Fluidigm Corp. Nasdaq: FLDM

Hologic Inc. Nasdaq: HOLX

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