Morning Commentary: Yahoo! in focus as shares drop; MGM lower with shares; Concur steady

By Rebecca Melvin

New York, Sept. 22 – Yahoo! Inc.’s 0% convertibles due 2018 were in focus in early trading Monday as shares fell sharply on a couple of analysts’ share downgrades.

One trader queried said he hadn’t traded a single Yahoo convertible but that the convertible market overall felt weaker with equities off and given that there was lighter trading volume since it was a Monday morning and markets weren’t in full swing.

A second trader said Yahoo was trading actively.

The Yahoo bonds were last at 103.25 bid, 103.5 offered on Friday, down from 105 to 106.

That drop was precipitated by sagging shares of the Sunnyvale, Calif.-based internet search, content and communications company following pricing of the initial public offering of Alibaba Group, of which Yahoo owns a 22.5% stake.

On Monday, BofA Merrill Lynch downgraded Yahoo shares to “neutral” from “buy” but raised its price target to $46.00 from $40.00. Bernstein also downgraded Yahoo shares to “market perform” from “outperform” but raised its target to $42.00 from $40.00.

Yahoo shares were down $2.21, or 5.4%, at $38.74 in the early going.

MGM Resorts International shares were also weak on a downgrade by Wells Fargo to “market perform” from “outperform.”

MGM shares were down 70 cents, or 3%, at $22.42.

MGM’s 4.25% convertibles due 2015 changed hands at 126.38, which was down 1.9 points on an outright basis, according to Trace data.

Concur Technologies Inc.’s 0.5% convertibles remained in trade as well at steady pricing following a jump by about 11 points on Friday on news that German software giant SAP is buying the Redmond, Wash.-based expense management software company.

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