Morning Commentary: Palo Alto convertible notes in focus early, gain post-earnings

By Abigail W. Adams

Portland, Me., Aug. 24 – Palo Alto Networks Inc.’s convertible notes were in focus on an otherwise quiet day in the convertibles secondary space with the notes surging outright and expanding dollar-neutral as stock rose double digits post-earnings.

Activity in the name accounted for almost $60 million of the $135 million in reported volume shortly before 11 a.m. ET.

Palo Alto’s 0.375% convertible notes due 2025 rose 17 points outright with stock up more than 18%.

They were changing hands just shy of 153 versus a stock price of $436.42 early in the session.

The notes expanded 0.125 point dollar-neutral, a source said.

There was $30 million in reported volume.

Palo Alto’s 0.75% convertible notes due 2023 rose 21 points outright.

They were changing hands at 166.875 versus a stock price of $437.50 early in the session.

The notes expanded upwards of 1 point dollar-neutral, a source said.

There was $27 million in reported volume.

Palo Alto’s stock was changing hands at $439.91, an increase of 17.99%, shortly before 11 a.m. ET.

Stock surged following blow-out earnings for the cyber-security firm.

Palo Alto reported earnings per share of $1.60 versus analyst expectations for earnings of $1.44.

Revenue was $1.22 billion versus analyst expectations for revenue of $1.17 billion.

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