Convertibles ‘firm’ ahead of holiday; Western Digital tops actives list; Workday drops

By Rebecca Melvin

New York, Aug. 30 – Convertibles trading was thin on Friday as market players were closing out month end books ahead of the long holiday weekend that marks the unofficial end of summer.

Financial markets will be closed on Monday in observance of Labor Day, and after that the market may see new issuance as the market reset that typically occurs in September is expected.

On Friday, convertibles were described as “quite firm,” with no evidence of any meaningful selling or valuation slippage, according to a New York-based market source.

The top volume names were Western Digital Corp. and Workday Inc., with Western Digital accounting for 15% of the volume of convertibles traded on the day, according to Trace data.

Western Digital’s 1.5% convertibles due 2024 rose nearly a point to 94.60, with volume topping $27 million of bonds by midafternoon on Friday.

Shares of the San Jose, Calif.-based hard disk drive maker and data storage company gained $1.98, or 3.6%, to $57.06.

But moving in the opposite direction, Workday’s 0.25% convertibles due 2022 fell 6.7 points to about 134, which was in line with the drop in the underlying shares by $10.61, or 5.7%, to $177.04 at late afternoon. The securities fell despite quarterly numbers that were deemed positive and a lift in guidance.

One news service suggested the drop occurred because of mixed response from Wall Street analysts. BMO cut its price target for shares to $225 from $230. JPMorgan cut its target to $220 from $225. But Citigroup upgraded the stock to “neutral” from “sell,” and raised its price target to $192 from $138.

The company posted second-quarter earnings per share that were up year over year on revenue that rose 32%.

Medicines Co., which was a big name in the space this past week after the Parsippany, N.J.-based biopharmaceutical company reported positive trial data for its inclisiran drug on Monday, was a little lower on an outright basis.

The Medicines 2.5% convertibles due 2022 traded at 134.35, which was off about a 0.25 point from the previous trades. Medicines shares were lower by $1.17, or 2.7%, at $41.82 in intraday trading and closed down $1.03 at $41.96 on Friday.

Medicines is developing inclisiran to treat high cholesterol with Alnylam Pharmaceuticals. The first phase 3 trial hit its primary endpoints and all secondary objectives. The primary endpoints tracked changes in LDL-C out of 18 months after the start of treatment.

The Medicines’ 2.75% bonds surged about 5 points on Monday and continued to gain on Tuesday and Thursday before coming off some on Thursday. They were seen at 109.5 on Friday.

Mentioned in this article:

Medicines Co. Nasdaq: MDCO

Western Digital Inc. NYSE: WDC

Workday Inc. Nasdaq: WDAY

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