Palo Alto Networks convertibles eyed; sector peer FireEye gains post-earnings; Impax bounces

By Stephanie N. Rotondo

Seattle, Nov. 4 – A trader said the convertible bond market was modestly better on Friday, though trading volume remained thin.

“Everyone is afraid,” he said. An uptick in liquidity would be good for outright players, he said, as it would “take a little risk off the table.”

As it is, “the risk is moving on to the hedge guys who can handle risk a little better.”

Of the day’s dealings, Palo Alto Networks Inc.’s 0% convertible notes due 2019 were trading actively Friday, as investors reacted positively to fresh earnings out of the computer security sector.

Those earnings belonged to FireEye Inc., whose debt also traded better. The results beat on both the top and bottom lines.

Meanwhile, Impax Laboratories Inc. was on the busy side. The activity was due to news out Thursday regarding a Department of Justice antitrust probe into potential price-fixing among over a dozen generic drug makers.

Palo Alto, FireEye firm

Palo Alto Networks’ 0% convertible notes were trading actively on Friday, in the wake of fresh earnings out of the computer security sector.

A trader said the convertibles were trading around 145. The equity finished up $2.40, or 1.65%, at $148.00.

The activity in the name came as sector peer FireEye reported a narrower loss of 16 cents per share. That compared to a loss of 37 cents a share the year before.

Revenue meantime grew 13% to $186.4 million.

Analysts had expected a loss of 31 cents per share on revenue of $182.6 million.

FireEye’s 1.625% convertible notes due 2035 were not overly active but were trending higher, adding 0.5 point to 1 point to trade in a 90 to 90.5 context, according to a market source. The company’s equity was among the day’s biggest percentage gainers, rising $1.86, or 16.88%, to $12.87 at mid-morning.

At the bell, the stock was up $1.33, or 12.09%, at $12.34. The gains came in well-above average trading volume.

For its part, Palo Alto Networks is slated to release its latest quarterly results on Nov. 21.

Impax eyed

Also active during the session was Impax Laboratories’ 2% convertible bonds due 2022.

A trader said the stock experienced a “big bounce back” after falling heavily on news out Thursday regarding a Department of Justice investigation into generic pharmaceutical companies.

“They all got beat up,” he said of the drugmakers.

But while the stock rebounded – gaining $1.25, or 7.58%, to $17.75 – the convertibles traded off.

A market source placed the issue in an 83 to 84 context, which compared to a range of 84.625 to 85.125 on Thursday.

The Justice Department has opened an antitrust investigation into over a dozen drug makers, including Impax. The probe is centered on whether or not top executives from those companies agreed on a price-fixing scheme.

The first round of charges could come by year’s end, Bloomberg reported.

Mentioned in this article:

FireEye Inc. Nasdaq: FEYE

Impax Laboratories Inc. Nasdaq: IPXL

Palo Alto Networks Inc. NYSE: PANW

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