Convertible bond market continues to eye earnings; FireEye paper weakens; Weatherford firms

By Stephanie N. Rotondo

Seattle, Feb. 3 – The week’s earnings news continued to be a driving force of convertible bonds on Friday.

FireEye Inc.’s convertibles were trading down in early dealings as the market responded to the company’s quarterly announcement. The earnings – which came late Thursday – beat on the bottom line but missed on revenue. The current quarter’s guidance also failed to impress investors.

Meanwhile, Weatherford International plc’s 5.875% exchangeable senior notes due 2021 were up 3 to 4 points as the stock jumped more than 6%.

On Wednesday, the oil and gas company reported quarterly results, showing improved revenue and a narrower loss. The company also said that it had inked a deal with Nabors Industries Ltd. to provide drilling services in the United States.

The company then held its conference call on Thursday. The convertibles and the equity have been on the rise ever since.

Away from earnings, the Medicines Co.’s convertibles gained ground, following the equity upward. On the equity side, those gains were attributed to news that rival Amgen said its LDL-buster Repatha stemmed cardiac upsets.

Medicines has a rival drug, though it is a different class of inhibitor. That allowed the company to side-step issues other rivals have had.

FireEye wanes on earnings

FireEye’s convertible debt was in decline on Friday as the market reacted to the company’s latest quarterly results.

At day’s end, a source saw the 1% convertible notes due 2035 in a 91.75 to 92 context, which was down about a point. The 1.625% convertible notes due 2035 dipped about the same amount, trading in a range of 87.875 to 88.125.

Earlier in the session, a market source pegged the 1% convertibles in a 91.5 to 92 context. The 1.625% convertibles were at 87.5.

As for the underlying equity, it was off $2.06, or 15.88%, at $10.91.

For the fourth quarter, the Milpitas, Calif.-based cybersecurity company posted a loss of 3 cents per share on revenue of $144.7 million.

Analysts had forecast a loss per share of 16 cents on revenue of $190.99 million.

For the current quarter, FireEye is projecting a loss of 26 cents to 28 cents per share on revenue of $160 million to $166 million.

Analysts are estimating a loss of 24 cents per share on revenue of $176.9 million.

In addition to the results, the company said CFO Mike Berry was leaving the position he has held since 2015 to pursue other opportunities. Frank Verdecanna, senior vice president and chief accounting officer, has been appointed the new CFO.

Weatherford drives ahead

Weatherford International’s 5.875% exchangeable notes continued to climb higher on Friday.

The notes have been gaining ground since the company released its quarterly results on Wednesday.

The paper was seen trading with a 123 handle at the bell, a gain of 3 to 4 points on the day. The issue was up 1 to 2 points at mid-morning, as a source placed the issue at 121.375.

The company’s common shares were also better, ticking up 37 cents, or 6.41%, to $6.14.

Revenue for the fourth quarter was up 4% from the previous quarter at $1.41 billion. However, that was down from $2.01 billion the year before.

Loss narrowed to $549 million. On an adjusted basis, the loss was $303 million, or 32 cents per share.

Analysts had expected a loss of 34 cents on revenue of $1.42 billion.

Movement for Medicines

Amgen’s recent announcement that its Repatha drug was working out well in preventing cardiac events helped Medicines’ convertibles gain traction.

The 2.5% convertible notes due 2022 jumped nearly 22 points to 149.25 on Friday, as the 1.375% convertibles coming due in June improved over 23 points to around 166.5.

The underlying stock meantime added $7.96, or 20.95%, to close to $45.96.

Medicines’ has a similar drug to Repatha, but it works in a different way, using RNA interference instead of binding to LDL-cholesterol receptors. That has worked in Medicines favor, especially given that other rivals with similar drugs were barred from selling their product due to patent infringement.

Mentioned in this article:

FireEye Inc. Nasdaq: FEYE

The Medicines Co. Nasdaq: MDCO

Weatherford International plc NYSE: WFT

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