Priceline convertibles rise on earnings beat; Depomed misses; Medicines mixed; Iconix steady

By Stephanie N. Rotondo

Seattle, Nov. 8 – While overall trading volume remained thin, convertible bonds were getting pushed around by fresh news.

Priceline Group Inc., for instance, was getting pushed up by earnings that beat expectations. The convertibles rose 5 to 10 points outright.

In other earnings news, Depomed Inc.’s 2.5% convertible notes due 2021 were under pressure after missing expectations.

The convertibles were deemed down as much as 20 points outright, trading just north of 115.

Also in the health care space, the Medicines Co.’s convertible bonds were unchanged to softer following the announcement of a nixed clinical trial.

The 2.5% convertible notes due 2022 were steady at mid-morning, trading with a 119 handle against a $29.88 share price. The 2.75% convertible notes due 2023 weakened over a point to 92.85.

Initially, the stock was up 50 cents, or 1.54%, at $33.02. However, it ended the day unchanged at $32.52.

Back on the earnings front, Iconix Brand Group Inc.’s 1.5% convertible notes due 2018 were “not much changed,” according to a trader, as the company reported its quarterly results and also lowered its revenue guidance.

Emergent Capital Inc.’s 8.5% convertible notes due 2019 were also seen trading in the wake of earnings.

“That doesn’t trade all that often,” a trader said.

He pegged the paper in an 8 to 86.5 context, which was down from 89.125 just two days ago.

The equity was also in retreat, falling 7 cents, or 2.54%, to $2.69.

Late Monday, the Vancouver, B.C.-based specialty finance company posted a loss of $8.6 million for the third quarter. That came to a loss of 31 cents per share.

Revenue was $4.8 million.

Priceline on the rise

Priceline convertibles were getting a boost on Tuesday, following the company’s earnings release on Monday.

The results beat expectations.

The 1% convertible notes due 2018 were up about 7.5 points in early trading at 166.767. That was against a stock price of $1,566.85.

The 0.35% convertible notes due 2020 were meantime up nearly 5 points at 131.614, according to a market source.

At the close, a source saw the 1% convertibles adding nearly 10 points to end at 169. The 0.35% convertibles were up over 5.5 points, closing at 133.25.

For its part, the equity underlying the debt hit record highs in the wake of the results, rising $100.82, or 6.81%, to $1,581.15 by mid-morning.

The stock came a bit off those highs, however, finishing up $97.80, or 6.61%, at $1,578.13.

For the quarter, the travel services company reported net income of $506 million, or $10.13 per share. That was less than half the profit seen the previous year, due to a $941 million impairment charge tied to the company’s acquisition of OpenTable.

On an adjusted basis, EPS was $31.18 per share.

Revenue improved 18.9% to $3.69 billion, as bookings jumped 24.9%.

Analysts polled by Thomson Reuters had forecast adjusted EPS of $29.91 per share on revenue of $3.62 billion.

Depomed dives

Depomed’s 2.5% convertibles were under pressure on Tuesday after the company reported earnings on Monday that missed expectations.

A market source saw the paper falling about 20 points to a 115 handle early in the day. By the bell, the bonds had recovered a couple of points, ending just south of 118.5, a loss of 17 points.

The stock weakened $3.88, or 16.95%, to $19.01, on well-above average trading.

In the third quarter, the pharmaceutical company posted EPS of 28 cents on revenue of $111 million.

Analysts had expected EPS of 35 cents on revenue of $127.22 million.

The company did note that revenue was up 5% year over year, but that they failed to even meet its own targets.

Iconix holds steady

Iconix Brand’s 1.5% convertibles were “trading some,” a trader said Tuesday, on earnings that were a “slight miss.”

He saw the issue at 84.875 bid, 85 offered, which he said was little changed day over day.

The stock was trading quite actively during the session, finishing a penny lower at $7.99. That was better than opening levels of $7.71.

On an adjusted basis, the parent of brands such as Ed Hardy and Candies saw EPS of 19 cents, up from 11 cents the year before. Revenue dipped 0.4% to $90.09 million.

According to one source, analysts had predicted EPS of 17 cents on revenue of $88.9 million.

However, the company also lowered its full-year revenue guidance by $3 million to $5 million.

Iconix had previously forecast revenue at $370 million to $390 million. Adjusted EPS guidance was held at $1.06 to $1.21, though GAAP EPS was dropped to 93 cents to $1.08.

Analysts have placed full-year adjusted EPS at $1.17.

Cobalt trades off

A trader said Cobalt International Energy Inc.’s 2.625% convertible notes due 2019 were off 3 points in Tuesday trading.

He pegged the convertibles at 43 bid, 43.25 offered.

Another market source also saw the debt at those levels, though that was deemed off 4.25 points.

The equity rose 2 cents, or 1.87%, to $1.09.

On Monday, the Houston-based oil and gas company said it had agreed to exchange some of its 2.625% convertibles, as well as some of the 3.125% convertible notes due 2024.

In the wake of the news, S&P lowered its unsolicited corporate credit rating to CC from CCC-.

The rating on the convertibles was maintained at C.

Mentioned in this article:

Cobalt International Energy Inc. NYSE: CIE

Depomed Inc. Nasdaq: DEPO

Emergent Capital Inc. NYSE: EMG

Iconix Brand Group Inc. Nasdaq: ICON

Medicines Co. Nasdaq: MDCO

Priceline Group Inc. Nasdaq: PCLN

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