Morning Commentary: RH convertibles active, higher outright on earnings outperformance

By Abigail W. Adams

Portland, Me., June 13 – Trading activity surrounding new paper in the convertibles universe tempered early Thursday with earnings related news pushing outstanding issues into the spotlight.

RH, formerly Restoration Hardware Holdings, convertible notes were in focus early in Thursday’s session as stock soared following a large earnings beat.

The luxury furniture retailer’s 0% convertible notes due 2020 were among the most actively traded issues early in the session.

The notes jumped almost 7 points outright to 114.25 as stock skyrocketed more than 20%. About $10 million of the bonds were on the tape early in the session.

RH’s 0% convertible notes due 2023 gained about 8 points outright to trade up to 90.625. More than $7 million of the bonds were on the tape about one hour into the session.

RH’s convertible notes accounted for nearly one-third of the $56 million in reported volume early Thursday.

RH stock was $114.25, an increase of 20.4%, shortly before 11 a.m. ET.

Stock soared after an earnings beat and an upbeat forecast.

RH reported first-quarter earnings of $1.85 per share versus analyst expectations for earnings of $1.55 per share.

RH reported revenue of $598 million versus analyst expectations for revenue of $584 million.

Guidance for 2019 was raised to $8.76 to $9.27 per share versus the previous range of $8.05 to $8.69.

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