Fluidigm ‘comes in’ on the back of disappointing earnings; Iconix drops; Post expands slightly

By Rebecca Melvin

New York, Aug. 7 – U.S. convertibles ended the week notably soft on Friday after the July jobs report came in largely as expected, resulting in higher short-term Treasury bond rates and lower equities.

The employment statistics were deemed solid enough to keep the Federal Reserve on target for a rate rise as soon as next month.

Sellers were seen in the biotechnology sector. Fluidigm Corp.’s convertibles fell on an outright basis and contracted on a dollar-neutral, or swap, basis, a trader said, after the South San Francisco-based genomics and DNA research company reported disappointing earnings.

The Fluidigm bonds fell more than 9 points into the mid 70s as Fluidigm common shares fell 36% to $12.70.

“Fluidigm came in a lot. It’s trading all over the place and everyone is on a different delta, but it definitely came in,” the trader said.

Sequenom Inc.'s convertibles remained weak on Friday along with the underlying shares of the San Diego-based provider of genetic analysis products after it posted earnings on Wednesday that missed estimates.

Sequenom’s 5% convertibles due 2018, a small issue that priced in June, were last seen with an 89 handle, having slumped from the mid to upper 90s on Thursday, according to Trace data.

“It’s a special situation, so it is hard to find those bonds,” a trader said of Sequenom. But biotechnology convertibles overall were weaker.

“Things are selling off. There is no doubt about it,” the trader said.

Sequenom shares closed down about 3% at $2.28.

Iconix Brand Group Inc.’s convertibles tanked about 9 points as well along with sharply lower common shares of the New York-based brand management company after the company announced that its chief executive officer, Neil Cole, is stepping down.

Elsewhere, the common shares of Post Holdings Inc. popped early Friday after the St. Louis-based cereal maker reported third-quarter profit that exceeded estimates.

The Post 5.25% mandatory convertibles were said to have expanded about 0.25 point on a dollar-neutral basis.

Third-quarter sales rose 91% to $1.21 billion. A rise driven mainly by acquisitions.

Post also raised its forecast for the year, projecting adjusted earnings of as much as $650 million, which was up from a previous forecast for as much as $610 million.

Post shares were last up more than $7.00, or 14%, at $58.90.

Also seeing a sharp stock boost was Amarin Corp. plc after a U.S. district court made a preliminary ruling on Friday in favor of the company in a lawsuit against the U.S. Food and Drug Administration. The court said that the drug company has the right to promote information about off-label uses for its prescription fish-oil pill.

Amarin filed the suit in May and a favorable decision could have broader implications for the pharmaceutical industry.

The Amarin convertibles weren’t heard in trade, but the shares surged 15% to $2.35.

In economic news, nonfarm payrolls rose to a seasonally adjusted 215,000 in July, the Labor Department said Friday. Revisions showed employers added 6,000 more jobs in May and 8,000 more in June than previously estimated.

The unemployment rate was steady at 5.3% in July.

Fluidigm ‘comes in’ on swap

Fluidigm’s 2.75% convertibles due 2034 were quoted at 73 bid, 77 offered in the early going with the bond’s underlying shares down 35%.

A second market source said the paper was 74 bid. Prior to Friday the bonds were trading in the mid 80s.

Fluidigm shares ended down $7.08, or 35.5%, to $12.85.

A trader said he didn’t immediately know by how much the bonds came in because holders were on various deltas.

Fluidigm reported a second-quarter loss, and earnings excluding items missed estimates substantially. Revenue also missed estimates, and the company cut its full-year revenue outlook below consensus.

Revenue for the quarter was up 4% at $28.6 million compared to the year-earlier period, but its quarterly loss, excluding items, was wider at $5.8 million compared to a loss of $1.7 million in the second quarter of 2014.

“2015 continues to be a challenging year for Fluidigm,” according to a company news release. “While our single-cell proteomics product line performed well in the second quarter, our results were pressured by decreased sales of consumables to production genomics customers and a decline in single-cell genomics instrument sales.”

The company said it has implemented an action plan to address the issues.

Iconix craters

Iconix’s 1.5% convertibles due 2018 fell to about 78 from 92 on Friday, according to a market source.

The Iconix 2.5% convertibles due 2016 were 87 compared to 97 previously.

Iconix shares slid $4.68, or 24%, to $14.92 in heavy volume.

“Iconix stock was buried. The 2.5% convertibles are yielding more than the 1.5% issue, which is insane,” a New York-based trader said.

Iconix announced that Cole, who was CEO, chairman and president, and also a member of the board, is stepping down and being replaced on an interim basis by board member Peter Cuneo.

Cole founded the company in 2006 and has served as its CEO since that time. His departure follows the resignations of both the chief financial officer and chief operating officer earlier this year after questions regarding the company’ accounting methods surfaced.

Iconix is expected to report earnings on Monday. When it reported earnings in April, Iconix guided full-year earnings, excluding items, to between $3.00 and $3.15 per share.

The New York-based brand management company said Cole intends to pursue other business opportunities. But he will serve as special adviser to the company through the end of September to assist in the transition process.

Mentioned in this article:

Amarin Corp. plc Nasdaq: AMRN

Fluidigm Inc. Nasdaq: FLDM

Iconix Brand Group Inc. Nasdaq: ICON

Post Holdings Inc. Nasdaq: POST

Sequenom Inc. Nasdaq: SQNM

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