RingCentral, NXP Semiconductors, Neurocrine Biosciences, Ligand active post-earnings

By Abigail W. Adams

Portland, Me., July 30 – After a slow start to the week, there was an uptick of activity in the convertible secondary space on Tuesday with earnings related news pushing outstanding issues into the spotlight.

While equities were weak at the start of Tuesday’s session, RingCentral Inc.’s 0% convertible notes due 2023 jumped on an outright basis as stock soared after a strong earnings report. However, the notes were largely flat on a dollar-neutral, or hedged, basis.

NXP Semiconductors NV’s 1% convertible notes due Dec. 1, 2019 were also active post earnings but largely unchanged dollar-neutral.

Neurocrine Biosciences Inc.’s 2.25% convertible notes due 2024 jumped outright and were slightly improved dollar-neutral as stock soared after its earnings report.

And Ligand Pharmaceuticals Inc.’s 0.75% convertible notes due 2023 were gaining dollar-neutral as the convertible notes sank alongside stock following its earnings report.

RingCentral up outright

RingCentral’s 0% convertible notes due 2023 jumped on an outright basis as stock soared following a second-quarter earnings beat and strong forward guidance.

However, the notes were moving more or less in line on a dollar-neutral basis, a market source said.

The 0% notes rose almost 20 points outright with stock up more than 15% in intraday trading.

The 0% convertible notes were changing hands at 182.375 early in the session.

They came in alongside stock into the afternoon and were changing hands at 176.75 shortly before the market close.

A high delta name, the notes trade with about 5 points of premium, a market source said. They were little changed dollar-neutral due to their high dollar price.

RingCentral stock traded as high as $146.38 during Tuesday’s session but closed the day at $140.11, an increase of 11.07%.

RingCentral beat on both the top and bottom lines in its second-quarter earnings report.

The communications software company announced second-quarter earnings of 21 cents versus analyst expectations for earnings of 16 cents.

Revenue was $215 million versus analyst expectations for earnings of $204.7 million.

The company also beat expectations with its third-quarter guidance for earnings per share of 19 cents on revenue of $221 million.

NXP’s earnings

NXP Semiconductors’ 1% convertible notes due Dec. 1, 2019 were active on Tuesday following its earnings report.

However, the notes were largely flat on a dollar-neutral basis.

The 1% convertible notes were down about 1 point outright to change hands just shy of 107 with stock off slightly early in the session.

They improved alongside stock into the afternoon to change hands around 108.

NXP stock traded as low as $101.12 and as high as 106.26 before closing the day at 105.79, an increase of 1.5%.

NXP reported earnings per share of 14 cents on revenue of $2.2 billion.

However, the semiconductor company gave a downbeat forecast for the third-quarter due to slowing demand and continued uncertainty regarding supplying Huawei Technologies, Bloomberg reported.

Neurocrine improves

Neurocrine Biosciences’ 2.25% convertible notes due 2024 also saw large gains on an outright basis and were slightly improved dollar-neutral following its earnings report.

The 2.25% convertible notes gained about 10 points outright to trade around 143 in the late afternoon.

The notes expanded about 0.125 point to 0.25 point on a dollar-neutral basis.

Neurocrine stock traded as high as $97.625 during Tuesday’s session but closed the day at $95.95, an increase of 10.33%.

Neurocrine reported earnings per share of 37 cents versus analyst expectations for earnings of 24 cents. Revenue was $183.58 million, according to Zacks Equity Research.

Ligand expands

Ligand Pharmaceuticals’ 0.75% convertible notes due 2023 were down outright but up on a dollar-neutral basis as stock tanked following its earnings report.

The 0.75% convertible notes traded down about 2 points outright to 83.375 in the late afternoon. They were up about 0.25 point dollar-neutral, according to a market source.

Ligand stock traded as low as $94.04 before closing the day at $95.22, a decrease of 11.38%.

While the pharmaceutical company beat on both the top and bottom lines in its second-quarter earnings report, stock traded off after Lemelson Capital Management announced it was increasing its short position in the company and called on the US Attorney’s office of Southern California to investigate the company for securities fraud.

Lemelson’s allegations about the company mirrored those of Andrew Left’s Citron Research.

The 0.75% convertible notes plunged to the low 80s in January after Citron Research released a report alleging the revenue from Ligand’s strategic partners was overstated.

The notes have remained in the 80s since.

Mentioned in this article:

Ligand Pharmaceuticals Inc. Nasdaq: LGND

Neurocrine Biosciences Inc. Nasdaq: NBIX

NXP Semiconductors NV Nasdaq: NXPI

RingCentral Inc. NYSE: RNG

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