Morning Commentary: Illumina convertibles trade off on disappointing results; Molina also active

By Stephanie N. Rotondo

Seattle, Oct. 11 – Illumina Inc.’s convertible bonds were in focus early Tuesday following the company’s release of preliminary third-quarter results.

“The stock is down $47 today,” a trader noted at mid-morning. He saw the 0% convertible notes due 2019 trading at 98.5 to 99 against a share price of $137.5. The 0.5% convertible notes due 2021 were “trading on a heavier delta, like a 40% delta” at 101.75 to 102.25 versus a share price of $138.75.

That came to an 87% premium, he said.

The San Diego-based biotechnology company said late Monday that it expects to report revenue of $607 million for the quarter. While that is a gain of 10% year over year, it fell short of the company’s $625 million to $630 million forecasts.

The company also noted that its sequencing instruments sales were down 26%.

Elsewhere in the health care arena, a trader saw Molina Healthcare Inc.’s 1.125% convertible notes due 2020 trading with a 151 handle versus a stock price of $57.90.

There was no fresh news out on the Long Beach, Calif.-based managed care company to spark the moves – gains in the debt and weakness in the equity.

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