Citrix down on swap in active trade after earnings; Workday higher; Tesla, Twitter better

By Rebecca Melvin

New York, Oct. 23 – Citrix Systems Inc.’s convertibles traded down amid lots of sellers Thursday after the Fort Lauderdale, Fla.-based cloud computing company reported third-quarter earnings that dropped compared to a year earlier but which beat estimates. Revenue missed estimates, and the company also guided lower for current-quarter revenue.

Elsewhere, many of the convertible market’s larger, liquid issues traded higher and were better by about 0.25 point dollar neutral overall, a New York-based trader said.

“Things were better to buy,” the trader said. Although markets slid in the last hour of trade amid reports of a possible Ebola case in Manhattan, the overwhelming course of trading for the day was higher, he said.

The theme continued to be “reflating from last week,” he said.

Markets sputtered in late afternoon after news that a doctor who had returned to New York from treating Ebola patients in Guinea had been quarantined and taken to Bellevue Hospital Center after he called police to report that he was suffering from a fever.

Workday Inc.’s convertibles were higher in active trade. They expanded on a dollar-neutral basis by about 0.25 point against a 3-point climb outright for both tranches.

Tesla Motors Inc. was seen continuing to move up; and both Twitter Inc.’s convertible tranches were also better, the trader said.

Lam Research Corp.’s 2.625% convertible was among the top volume names Thursday, according to Trace data, and higher by nearly 10 points on an outright basis; while the Lam Research 0.5% convertibles Traced up 3 points at 130.5.

But the semiconductor equipment company’s convertibles are tightly held, and when they do trade they “get whippy,” said a trader, who added the bonds were not particularly active. Late Wednesday, the company reported fiscal first-quarter revenue that met analysts’ expectations and beat earnings estimates but forecast current quarter revenue and earnings below estimates.

GT Advanced Technologies Inc.’s two convertible bonds extended gains after popping Tuesday and Wednesday. The 3% GT Advanced bonds of 2020 of the bankrupt Merrimack, N.H.-based solar and LED equipment company traded up another 4-plus points to 47.56, and the 3% convertibles due 2017 traded up more than 5 points to 46.5.

Shale energy and natural gas equipment company Chart Industries Inc.’s 2% convertibles added more than 2 points to 107.78, and the Greenbrier Cos. Inc. convertibles were indicated higher on a 10% stock jump. The Greenbrier 2.375% convertibles were indicated up at 141.9 from 131.23, and the Greenbrier 3.5% convertibles were indicated up to 178 from 165.5.

Sundry other convertibles were in trade. Shutterfly Inc.’s 0.25% convertibles due 2018 traded up a point to 97.4, according to Trace data. Shares of the Redwood City, Calif.-based online photography company were up 78 cents, or 1.8%, at $42.47.

Convertibles players are watching earnings reports pour in even if the reports weren’t from convertibles issuers. Amazon.com Inc. and Microsoft Inc. reported earnings after the market close. Neither company is a current convert issuer, but their reports offer clues about sector trends and where markets are going.

Amazon shares fell in after-hours trade after the internet retail giant reported a disappointing quarter.

Citrix active, contracts

The Citrix 0.5% convertibles due 2019 were last seen at 102.5 bid, 103 offered versus a closing share price of $61.84, which was down $2.94, or 4.5%.

That level was said to be an improvement on the early Thursday market.

The contraction was about 0.5 point, a trader said, but that level was an improvement from earlier in the day when the paper was said to have dropped on a hedged basis by 0.625 point.

“It was very active, but it calmed down from this morning,” a trader said. “It is still a reasonably rich bond.”

Earlier the paper was quoted at 102.5 bid, 102.75 offered versus an underlying share price of about $61.50.

Citrix shares pared early losses but still dropped $2.94, or 2.9%, to $61.84 on Thursday.

Previously the bonds were seen 104.5 bid, 105 offered.

Citrix said earnings were $48 million, or 29 cents a share, compared to $77 million, or 41 cents per share, in the year-earlier period. But adjusted earnings, which fell to $125 million, or 75 cents per share, from $132 million, or 70 cents per share a year ago, were better than the estimate of 73 cents per share.

Revenue rose 6% to $759 million but missed estimates.

Workday higher

Workday’s 0.75% convertibles due 2018 were seen last at 123.5, which was up 3 points on an outright basis from 120.5 previously, a New York-based source said.

Workday’s 1.5% convertibles due 2020 were seen last at 127.5, which was also up 3 points from 124.5.

Shares of the Pleasanton, Calif.-based enterprise cloud applications company gained $3.17, or 3.8%, to $85.73.

Workday, which focuses on finance and human resources applications, was mentioned as a notable trade of the day. The shares have been tracking higher since a slump Oct. 15, when the stock fell in a sharp market downdraft.

Mentioned in this article:

Chart Industries Inc. Nasdaq: GTLS

Citrix Systems Inc. Nasdaq: CTXS

Greenbrier Cos. Inc. NYSE: GBX

GT Advanced Technologies Inc. Nasdaq: GTAT

Lam Research Corp. Nasdaq: LRCX

Shutterfly Inc. Nasdaq: SFLY

Tesla Motors Inc. Nasdaq: TSLA

Twitter Inc. Nasdaq: TWTR

Workday Inc. Nasdaq: WDAY

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