Intel’s 2.95% convertible sees outright sellers; Proofpoint sees better buyers on earnings

By Rebecca Melvin

New York, Oct. 22 – Semiconductors accounted for a majority of trading in U.S. convertibles on Thursday, with Intel Corp.’s bonds trading actively in addition to SanDisk Corp. and Micron Technology Inc.

NXP Semiconductors NV and Microchip Technology Inc. were also pulled into trade as chipmaker stocks moved up in tandem with the broader markets.

NXP’s 1% convertibles due 2019 traded at 117.6, which was up 2.6 points on the day, according to Trace data.

Microchip’s 1.625% convertibles changed hands up a point to nearly 105.

“The market ripped today,” a New York-based analyst said.

Proofpoint Inc. was also a name in the convertibles market after the Sunnyvale, Calif.-based internet security-service company reported quarterly results that pushed its shares up 12%.

Valuations were mostly steady with better buyers, a third trader said, noting trading action also in Acor Inc., and calling those convertibles higher by about 0.25 point on the day on a swap basis.

The Acor 1.75% convertibles due 2021 traded up to nearly 102, which was up 3.4 points on an outright basis, according to Trace data.

Market players continued to monitor the situation with Valeant Pharmaceuticals International Inc., which was fending off allegations of fraud related to its specialty pharmacies. But the Valeant shares were sharply lower again Thursday as were the shares of Horizon Pharma plc.

Horizon’s 2.25% convertibles took another leg lower, quoted at 81 versus an underlying share price of $13.31 by a New York-based trader on Thursday. That move represented a drop of about 3 points on an outright basis. Later, the bonds were seen trading at 82.

The Irish pharmaceutical company came under fire after a news article critical of its drug pricing and PME program, under which doctors send prescriptions directly to a mail-order specialty pharmacy outlets affiliated with Horizon rather than to retail pharmacies.

Intel 2.95% bond sees sellers

Intel’s 2.95% convertibles due 2035 traded down about 1.5 points on an outright basis to 105.5, against shares of the Santa Clara, Calif.-based chip giant that were up 3%, or $1.03, to $34.40.

Intel’s 3.25% convertibles due 2039 traded at 128 to 128.375, which was up a point on the day.

Intel was in focus amid some outright sellers of the 2.95% convertibles, a New York-based analyst said.

“Those bonds have cheapened recently so have been on hedge fund radars,” the analyst said.

On Tuesday, Intel said it may invest up to $5.5 billion in manufacturing facilities in China. The company said it would convert a facility in Dalian, its first plant in China, for memory chip production.

It said it will begin making advanced memory chips that can store data without using up power in the second half of 2016. It said it plans to invest as much as $3.5 billion in the next three to five years and then boost the amount to $5.5 billion.

Proofpoint sees better buyers

Proofpoint’s 0.75% convertible due 2020 traded at 107 bid, 107.625 offered against shares at $63.33.

Proofpoint shares rose $6.80, or 12%, to end at $62.21.

On Wednesday, the Proofpoint convertibles were quoted at 101 bid, 105 offered.

The Sunnyvale, Calif.-based internet security-service company reported a third-quarter loss, but excluding one-time items, earnings were better than expected. It also beat on revenue but guided fourth-quarter earnings below consensus estimates and put revenue for that period above consensus.

Total revenue was $69.1 million for the third quarter, which was up 37% from $50 million in the year-earlier period.

Its loss excluding items was $2.5 million, or 6 cents per share, compared to a loss of $4.2 million, or 11 cents per share, in the year-earlier quarter.

The company attributed strong results to its ongoing high competitive win rates, traction with new products and robust add-on and renewal activity.

Looking ahead, Proofpoint expects revenue to be in the range of $72.5 million to $73.5 million in the fourth quarter. Its net loss is expected to be 12 cents to 11 cents based on 40.6 million weighted average shares outstanding.

For the full year, revenue is expected to be in the range of $263 million to $264 million with a net loss of 36 cents to 35 cents per share.

Citrix also reported better-than-expected earnings and positive guidance, and those bonds traded some, but not that actively, a second New York-based trader said at the end of the session.

Mentioned in this article:

Acor Inc. Nasdaq: ACOR

Citrix Systems Inc. Nasdaq; CTXS

Horizon Pharma plc Nasdaq; HZNP

Intel Corp. Nasdaq: INTC

Microchip Technology Inc. Nasdaq: MCHP

Micron Technology Inc. NYSE: MU

NXP Semiconductors NV Nasdaq: NXPI

Proofpoint Inc. Nasdaq: PFPT

SanDisk Corp. Nasdaq: SNDK

© 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.