Morning Commentary: Insulet convertibles in focus on earnings beat

By Abigail W. Adams

Portland, Me., Nov. 4 – The convertible bond secondary space stood poised for a firm end to a volatile week with equity markets recovering from a post-Fed sell-off following the latest non-farm payrolls report.

While the report continued to paint a mixed picture of the economy with job growth stronger than anticipated, there was a tick up in the unemployment rate, which the market saw as a positive sign for a less aggressive Fed.

The Dow Jones industrial average was up 446 points or 1.4%, the S&P 500 index was up 1.37%, the Nasdaq Composite index was up 1.07% and the Russell 2000 index was up 1.3%, shortly before 11 a.m. ET.

Earnings-related volatility remained the driver of activity in the space with Insulet Corp.’s 0.375% convertible notes due 2026 in focus early in the session.

The notes shot higher on an outright basis as stock surged following a large earnings beat.

The 0.375% notes rose 13 points outright with stock up more than 17%.

They were changing hands at 141.625 early in the session, according to a market source.

Insulet stock was trading at $300.12, an increase of 17.38%, shortly before 11 a.m. ET.

Stock surged after the medical device company crushed analyst expectations with earnings per share of 41 cents versus analyst expectations for earnings of 14 cents.

Revenue was $340.8 million versus analyst expectations for revenue of $311.22 million.

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