Morning Commentary: Wayfair convertibles in focus on earnings beat; Fortive frenzy cools

By Abigail W. Adams

Portland, Me., Feb. 22 – The convertibles secondary space was returning to its normal pace on Friday with the trading frenzy surrounding Fortive Corp.’s 0.875% convertible notes due 2022 tempering.

There was about $90 million of bonds on the tape a little over one hour into Friday’s session with earnings related news pushing several long-standing issues into the spotlight.

Wayfair Inc.’s convertible notes made large gains on an outright basis as stock broke out to a new 52-week high following an earnings beat.

The home goods e-commerce company’s 1.125% convertible notes due 2024 jumped more than 25 points outright, a market source said.

The notes were changing hands around 145.75, a market source said. They were trading between 120.5 and 121.25 during Thursday’s session.

More than $15 million of the bonds were on the tape about one hour into Friday’s session.

Wayfair’s 0.375% convertible notes due 2022 also saw a large gain on an outright basis.

The 0.375% notes were changing hands just north of 153 early Friday, a market source said. They were previously trading around 128.

Wayfair stock skyrocketed early Friday. Stock traded up to $152.59, an increase of 30.11%, and a new 52-week high shortly before 11 a.m. ET.

Stock soared after Wayfair reported a large earnings beat.

Wayfair reported a loss per share of $1.12 versus analyst expectations of a loss per share of $1.28.

Revenue rose to $2.01 billion versus analyst expectations for revenue $1.97 billion.

Wayfair also reported a 38% increase in its customer base.

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