Morning Commentary: Actavis preferreds pare early gain after strong earnings; FXCM quiet

By Rebecca Melvin

New York, May 11 – Earnings continued to cycle through for U.S. convertibles issuers, but trading got off to a sluggish start on Monday and with equities little changed following a bump higher on Friday.

Actavis plc’s 5.5% convertible mandatory preferreds were paring gains by late morning after a boost at the open from better-than-expected earnings. They were last up 1.8% compared to a 3% rising in the common stock.

The convertibles were last at 104.75, after opening at 105.4. Shares were up 3.5% at $303.00 after touching a high of $305.72.

The specialty pharmaceutical company, which completed its acquisition of Allergan Inc. in March, reported a net loss related to acquisition costs. But the Dublin-based company, with operational headquarters in Parsippany, N.J., reported first-quarter earnings of $4.30 a share excluding items, which was better than the $3.92 that was forecast. Revenue rose to $4.23 billion compared to $4.1 billion.

FXCM Inc.’s convertibles were quiet early Monday after dropping sharply late Friday on weak earnings reported by the New York-based foreign exchange services company. Shares were down 25 cents, or 10%.

The FXCM 2.5% convertibles due 2018 traded last around 84 which was down from 93 previously.

FXCM reported an adjusted profit of $14.5 million, which was down from $24.6 million in the year-earlier quarter.

Revenue was $98.8 million, which was down compared to $111.3 million in the first quarter of 2014.

FXCM was bailed out by Leucadia National Corp. in January after FXCM was swamped by client losses related to the Swiss National Bank’s action to remove its cap on the value of the Swiss franc.

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