Interpublic rises on earnings; NuVasive up on insurer support; Amylin gains with coverage

By Kenneth Lim

Boston, Feb. 26 - Interpublic Group of Companies Inc. rallied with its stock on a quiet Friday after the company beat earnings expectations and issued comforting guidance.

NuVasive Inc. also rose after a key therapy by the company was added to coverage by two insurers.

Amylin Pharmaceuticals, Inc. continued the health care theme, gaining on a positive research report that lifted its common stock.

Other names seen trading included Newmont Mining Corp., which continued to gain slightly a day after reporting strong fourth-quarter profits.

Newmont's 3% convertibles due 2012 added about a point outright to change hands at 124 versus a common stock price of $49.00. The common stock closed at $49.28 on Friday, up by 0.53% or 26 cents.

The Greenwood Village, Colo.-based gold producer said Thursday that its fourth-quarter profit was $558 million, or $1.13 per share, well above the $0.01-per-share profit a year ago and the $0.79-per-share Street expectation.

Eastman Kodak Co.'s 7% convertibles due 2017 gained slightly to 109.75 versus a stock price of $5.90. The common share price was $5.94 at the close, up by 2.95% or 17 cents.

The Rochester, N.Y.-based imaging technology company sold $500 million of 9.75% senior secured notes due 2018 on Wednesday to buy out debt maturing in 2013 and 2017.

Overall, the convertible market had a flat week, with the BarCap Convert Composite Index only up by 0.03% for the week, according to a note by Barclays Capital analyst Manoj Shivdasani. Convertibles outperformed equities but lagged high yields, investment grades and five- to seven-year Treasuries.

Slow session

Market activity had been lackluster all week, and Friday did not bring any relief to thumb-twiddling traders as heavy snow kept away a significant number of market participants, a sellside analyst said.

"The week's been really quiet, and especially today," the analyst said. "The week's winding down and there's this big snow storm out that's keeping some people out. We're still here, but I know a lot of people didn't come in today."

The analyst said the market is probably ready for a jolt of life, but a lack of a clear catalyst is putting a damper on volumes.

"I think people are sort of expecting it to pick up, but no one's really taking the lead in that regard," the analyst said. "Nobody seems to know what the catalyst may be. But things do have a way of picking up. It could be a couple of big new issues; it could be something macro-economic or something geopolitical."

Interpublic up with earnings

Interpublic's 4.25% convertible due 2023 rose about 2 points to 102, while its 4.75% convertible was 3 points higher at 102.25, both against a common stock price of $7.50. On a dollar-neutral basis, the bonds were in slightly.

"IPG stock's rallying today," the analyst said.

Interpublic reported a fourth-quarter profit of $129.4 million, or 24 cents per share, down from a year-ago earning of $209.8 million, or 39 cents per share. Analysts were expecting about 24 cents per share.

But the New York-based advertising and marketing company also continued to cut its operating expenses and painted a hopeful picture for the year ahead.

"Looking forward, economic conditions appear to have stabilized, clients are beginning to refocus on their brands and the tone of the business is one of cautious optimism," chief executive Michael Roth said in a statement.

The convertibles did not gain as much as the stock because there is a potential for a call in 2012, a sellsider said. But the volume on Friday could probably have been higher if the market was not so sluggish, the sellsider added.

"We usually see them trading in bits and pieces, a little here and there, but today the trades were bigger, it was pretty good," the sellsider said. "Any other week I think we could have easily seen double the volume. They picked the wrong day to have a rally."

NuVasive up with insurers' nod

NuVasive's 2.25% convertible notes due 2013 gained slightly to 111.5 versus a common stock price of $39.75. Shares of the San Diego, Calif.-based medical device company closed at $39.95, up by 34.56% or $10.26.

NuVasive's stock shot up on Friday after the company said insurers Aetna Inc. and United Healthcare would include the company's spinal surgery procedure in their coverage.

The news was highly positive for both the stock and convertibles held on an outright basis, the sellsider said.

"They were getting hit last year because insurers were saying they wouldn't cover their treatment, so this is a very important reversal," the sellsider said. "I think guys who were hedged may have taken a bit of a hit, but the good news is it's credit positive."

Amylin up with report

Amylin's 2.5% convertible due 2011 gained about a half point to trade at 98 against a common stock price of $18.90.

Amylin is a San Diego, Calif.-based drug company.

"We saw a couple of rallies in some small health care-related names," the analyst said.

The company's common stock increased by 7.39%, or $1.30, to close at $18.90 on Friday after equity analysts at Credit Suisse rated the stock "outperform" with a target price of $28.00.

Mentioned in this article:

Amylin Pharmaceuticals, Inc. Nasdaq: AMLN

Eastman Kodak Co. NYSE: EK

Interpublic Group of Cos. Inc. NYSE: IPG

Newmont Mining Corp. NYSE: NEM

NuVasive Inc. Nasdaq: NUVA

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