Morning Commentary: Earnings in focus; FireEye convertibles gain; Akamai notes active

By Abigail W. Adams

Portland, Me., July 29 – The convertibles primary market was again quiet early in Wednesday’s session, dashing hopes for an active week for new deal activity.

With no new paper entering the space, focus centered on the slew of earnings reports pouring in and the Federal Reserve meeting.

There was about $89 million in reported volume a little over one hour into Wednesday’s session.

FireEye Inc.’s 0.875% convertible notes due 2024 and Akamai Technologies Inc.’s 0.125% convertible notes due 2025 were active following their earnings reports.

FireEye’s convertible notes were posting gains on an outright and dollar-neutral basis.

While Akamai’s 0.125% notes traded off on an outright basis, they were little changed dollar-neutral.

FireEye gains

FireEye’s 0.875% convertible notes due 2024 were posting gains on an outright and dollar-neutral basis following its second-quarter earnings report.

The notes gained more than 5 points outright to trade up to 99 early in the session.

They expanded about 0.5 points dollar-neutral on the move up, a source said.

FireEye’s other tranches – its 1% convertible notes due 2035 and 1.625% convertible notes due 2035 – were not active, a source said.

While small lots of the 2035 convertible notes trade daily, the issues are mostly in the hands of long-term holders, the source said.

FireEye stock traded at $15.68, an increase of 17.23%, shortly before 11 a.m. ET.

FireEye reported earnings per share of 9 cents versus analyst expectations for a loss per share of 2 cents.

The EPS was an all-time high for the cybersecurity firm, MarketWatch reported.

Revenue was $229.9 million versus analyst expectations for revenue of $214.8 million.

Forward guidance also beat expectations with the company projecting earnings per share of 6 to 8 cents in the third quarter versus analyst expectations for earnings per share of 5 cents.

Akamai active

Akamai’s 0.125% convertible notes due 2025 were active early Wednesday and trading off alongside stock.

The 0.125% notes were down about 3 points outright to 126.75 with stock down more than 2%.

However, the notes saw little movement on a dollar-neutral basis.

Akamai stock was changing hands at $108.80, a decrease of 2.85%, shortly before 11 a.m. ET.

Stock was trading off despite a second-quarter earnings beat.

Akamai reported earnings per share of $1.38, which beat analyst expectations for earnings per share of $1.18.

Revenue of $795 million also beat analyst expectations for revenue of $768 million.

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