Palo Alto jumps on earnings report, Array BioPharma’s new notes gain steam, Tesla active

By Abigail W. Adams

Portland, Me., Nov. 21 – Palo Alto Networks Inc.’s 0% convertible notes due 2019 jumped during active trading after the company released its first quarter earnings report which beat analysts’ expectations.

The convertible notes were the most active of the day by number of trades and were second only to Intel Corp.’s 2.95% convertible notes due 2035 in trading volume by dollar amount.

Intel’s 2.95% convertible notes were trading almost at parity and will most likely continue to do so until the Dec. 18 call date, a market source said.

Array BioPharma Inc.’s new 2.65% convertible notes due 2024 picked up steam after seeing few trades on the secondary market since they were issued late last week.

Tesla Inc.’s 1.25% convertible notes due 2021 were in high demand even as analysts predicted a volatile year ahead for the company’s stock.

Palo Alto reports record revenue

Palo Alto reported record revenue in its fiscal first quarter earnings announcement on Nov. 20 and investors responded in kind.

The company’s 0% convertible notes due 2019 traded from a low of 139 to a high of 146 before closing the day at 141.34, according to Trace data.

Palo Alto stock correspondingly traded from a low of $149.00 to a high of $156.85 before ending the day at $149.40, an increase of 4.82%.

The network security company broke its first quarter revenue record at $505.5 million, a year-over-year increase of 27%, and beat expectations with earnings per share of $0.74.

The company has raised its future guidance and appointed Kathy Bonanno as the next chief financial officer to replace retiring executive Steffan Tomlinson.

In a quiet pre-Thanksgiving secondary market, there were more than 20 trades of the 0% convertible notes totaling about $19 million, according to a market source.

Array’s new notes hit market

Array BioPharma’s new 2.65% convertible notes due 2024 made their way into the secondary market with trades about 3 points above par, according to a market source.

The notes were issued after the market close on Nov. 16 as part of an exchange agreement with holders of the company’s 3% convertible notes due 2020.

There was little secondary market activity in the 2.65% convertible notes after they were issued, but trading picked up on Tuesday afternoon, with the new notes being one of the most heavily traded of the day, according to a market source.

The notes were changing hands at 103.115 in the late afternoon, according to a market source. Array stock was $11.215 at market close, a decrease of 0.58%.

Jury’s out on Tesla

Tesla’s 1.25% convertible notes due 2021 saw an uptick in activity as analysts expressed uncertainty about the future prospects of the company.

The 1.25% convertibles were among the busiest of the day, gaining about 1.5 points to trade at 109 on an outright basis, according to a market source.

There was little activity in Tesla’s 2.375% convertible notes due 2022 or 0.25% convertible notes due 2019 in contrast. Tesla stock closed the day at $317.82, an increase of 2.94%.

In a report released as the markets opened, Morgan Stanley analyst Adam Jonas predicted a volatile year ahead for the electric car manufacturer.

While the report set a price target of $379 for Tesla stock, a 20% upside from the current level, it also warned of a potential short-term surge in stock price followed by a long fall that would take stock far below its current level.

The report leaves its forecast of 120,000 Model 3 deliveries in 2018 unchanged despite setbacks in the production process. However, the report cites increased competition from tech firms experimenting with electric transportation systems as a long-term risk for the company.

Mentioned in this article

Palo Alto Networks Inc. NYSE: PANW

Array BioPharma Inc. Nasdaq: ARRY

Tesla Inc. Nasdaq: TSLA

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