Priceline tanks on profit warning; Heartware drops on weak earnings; Spirit Realty slips

By Rebecca Melvin

New York, May 4 – Priceline Group Inc.’s 1% convertible due 2018 initially dropped more than 10 points on an outright basis on Wednesday but pared some of the early loss in busy trading after the Norwalk, Conn.-based online travel services company warned its current-quarter profit will not grow as much as previously expected.

Priceline’s first-quarter earnings were strong, but it said that second-quarter earnings will be hurt by the timing of some holidays including Easter and costs associated with the company’s promotion of its Booking.com brand.

Heartware International Inc.’s convertibles fell in tandem with a slump in the underlying shares after the Framingham, Mass.-based medical device maker posted disappointing quarterly results.

Ahead of its earnings report posted after the market close, Spirit Realty Capital Inc.’s 3.75% convertibles due 2020 slipped to about 109.5 from 110 to 111 during the trading session.

The Scottsdale, Ariz.-based real estate investment trust posted earnings per share that beat estimates by a penny and revenue that was in line with expectations. It also reaffirmed full-year FFO guidance.

Spirit’s convertibles and shares have run up recently on S&P’s upgrade of the REIT’s corporate credit rating and the convertibles.

Spirit Realty shares closed higher by 17 cents, or 1.5%, at $11.72.

Also after the market close, WebMD Health Corp. reported earnings for its most recent quarter that beat estimates and guided the current quarter in line with expectations. Shares of the Elmwood Park, N.J.-based provider of online medical information gained 4.6% in after-hours action. Its shares had closed the session down 52 cents, or 0.8%, at $62.07.

Elsewhere, the majority of the convertibles of bankrupt SunEdison Inc. traded at about 5. The newest SunEdison 5% bond was indicated down at 22 from 25.5 previously.

“It was about in line,” a Connecticut-based trader said of the bonds. “There are things moving a bit but nothing drastic. Everything was basically in line.”

Chesapeake Energy Corp.’s 2.5% convertible notes due 2037 were seen trading just south of 83, which was a little lower compared to previous trades and about in line with lower shares for the Oklahoma City-based energy company that closed at $5.65.

Priceline drops on warning

Priceline’s 1% bonds dropped to 136.875 in active, early dealings Wednesday, which was down from about 148 previously, according to Trace data. Priceline shares were down about 10% to $1,217.45 at that time.

The Priceline bonds recovered some ground, trading late in the session at 139.35 with shares of the travel site a little better, but still lower, at $1,253.04, which was down $101.60, or 7.5%.

Priceline reported a strong first quarter, with earnings and revenue that beat forecasts. But it provided weak guidance for the second quarter, blaming Easter holiday timing and marketing costs, but not competition, for the slower earnings growth.

The company now expects bookings to rise as much as 18% in the second quarter. But that was short of some forecasts, Nevertheless, RBC Capital restated its “buy” rating on Priceline shares and Guggenheim Securities upgraded the shares to “buy” from “neutral.”

Heartware gaps lower

Heartware’s 1.75% convertibles due 2021 were indicated down to 67.92 from 71.87, according to a pricing source. Heartware’s 3.5% convertibles due 2017 were not seen to have traded but were last seen at 93.25. Heartware shares fell $5.65, or 16.4%, to $28.81.

The company reported a loss of $17.5 million in its first quarter, or $1.00 per share, compared to a loss of $14.5 million, or $0.85 per share, for the first quarter of 2015.

Losses adjusted for costs related to mergers and acquisitions and amortization costs, came to 95 cents per share.

Revenue came to $55.1 million for the period, which was down from $70 million for the same period of 2015, and fell short of Wall Street’s forecasts.

Revenue was hurt by competition in Germany as well as lower implant volumes in certain other international markets, the company said in a news release.

In the United States, the bridge-to-transplant segment of the market, for which Heartware’s heart devices to assist ventricular function is approved, showed softness resulting from a slowdown in the volume of patients eligible for the procedures at the start of the year and an evolving trend related to ease of reimbursement.

During the first quarter, Heartware sold 578 of these heart devices, which represented a 19% decrease from 713 units sold in the first quarter of 2015. U.S. revenue generated through the sale of 295 units was $33.3 million, which was down 21% from $42.2 million in the first quarter of 2015.

For the first quarter of 2016, revenue from international markets was down 20% on a constant-currency basis. Currency fluctuations negatively affected total revenue growth by about $0.6 million, or about 1%, the company said in a news release.

Mentioned in this article

Chesapeake Energy Corp. NYSE: CHK

Heartware International Inc. Nasdaq: HTWR

Priceline Group Inc. Nasdaq: PCLN

Spirit Realty Capital Inc. NYSE: SCR

SunEdison Inc. Nasdaq: SUNE

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.