Morning Commentary: Iconix convertibles remain in focus; Veeco active on earnings

By Abigail W. Adams

Portland, Me., Feb. 13 – Iconix Brand Group Inc.’s 1.5% convertible notes due on March 15, 2018 remained in focus early in Tuesday’s session. The notes remained in the 95 to 98 range in active trading after jumping more than 20 points on Monday.

The 1.5% notes jumped after the company announced a $110 million exchange agreement for new 5.75% convertible notes due 2023.

The exchange agreement eliminated fear the New York-based owner, licenser and marketer of consumer brands would default on the 1.5% notes.

The fear of a default sent the notes tumbling into the 75 to 80 range in November, which is where they remained until Monday. Iconix stock was down 7.8% early in Tuesday’s session to $1.595.

Veeco Instruments Inc.’s 2.7% convertible notes due 2023 saw some action early Tuesday after reporting fourth-quarter and year-end earnings after the market close on Monday.

The 2.7% notes traded up to 90 after closing Monday at 88, according to Trace data. The notes have largely traded in the 88 to 90 range for the past several months, except for a brief period in early December.

The notes sank to the low 80s in early December after the Fujian High Court in China issued a ruling on a patent infringement case against Veeco.

The ruling banned the company from selling, making or importing its EPIK 700 model MOCVD systems in China.

Veeco was simultaneously pursuing a patent infringement case against SGL Carbon, which involved Advanced Micro-Fabrication Equipment Inc., the company that filed suit in China.

The three companies announced on Feb. 8 that the pending patent litigation had been resolved and all legal action, including the decision of the Fujian High Court, would be either dismissed or withdrawn.

Veeco reported a sharp increase in revenue in the fourth quarter of $143.4 million and non-GAAP earnings per share of 19 cents, which beat consensus estimates of 9 cents to 10 cents a share.

Veeco reported annual revenue of $484.8 million in 2017 and non-GAAP earnings per share of 53 cents. Sales growth in the fourth quarter was largely due to shipment of Veeco’s MOCVD system, according to a company release.

Veeco stock skyrocketed early in Tuesday’s session in response to the earnings. Stock was up to $17.70, an increase of 17.22%.

Despite the improvement in equity, Veeco’s convertible notes remain in busted territory.

© 2015 Prospect News.
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