Morning Commentary: Cepheid comes in after revenue warning; Amyris plans $50 million convertibles

By Rebecca Melvin

New York, Oct. 14 – Cepheid Inc.’s convertibles fell on an outright basis and came in on a dollar-neutral, or hedged, basis on Wednesday after the Sunnyvale, Calif.-based molecular diagnostic tests company warned that its third-quarter results will fall short of estimates. The shares sank 20%.

Cepheid’s 1.25% convertibles due 2021 were seen trading at about 88.625 versus an underlying share price of $32.45 in the early going, a New York-based trader said.

The bonds contracted by about a point on a dollar-neutral basis after the negative earnings preannouncement, and hedged players were stepping in at about 88.625, the trader said.

Cepheid said that its third-quarter gross margin and revenue will be lower than expected due to lower margin sales and less commercial business as well as manufacturing costs for new virology tests.

The company now expects revenue of $126.5 million for the period. The company also expects to report a loss of 13 cents per share, excluding items, compared to a previous expectation for a loss of 6 cents to 8 cents per share.

In the primary market, Amyris Inc. launched an offering of $50 million of five-year convertible senior notes that were expected to price on Thursday, according to a company news release.

Price talk for the issue was not immediately available.

Ayris shares sank 14% in the early going to about $2.20 per share.

A portion of the proceeds from the new deal will be used to repurchase certain of the company’s existing 6.5% convertible senior notes due 2019. Those bonds were last seen around 60.

The existing 6.5% convertibles initially priced in May 2014 in a $75 million deal.

Proceeds of the new deal will also be used for general corporate purposes, which may include development of the company’s sales and marketing infrastructure as well as for other strategic transactions and acquisitions.

Emeryville, Calif.-based Amyris is a maker of renewable chemicals and fuels.

© 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.