Amgen active around 101; Molson Coors, Lam Research trade at steady pricing; WebMD adds

By Rebecca Melvin

New York, May 19 - Amgen Inc.'s convertibles traded actively Thursday at firm to slightly higher levels as shares of the Thousand Oaks, Calif.-based biotechnology giant stood near their 52-week high following positive drug data earlier in the week.

Also trading in good action was Molson Coors Brewing Co., which came out of nowhere to trade little changed from previous levels at 111.5 to 111.8. The underlying shares of the Denver-based brewing company were also little changed.

Lam Research Corp. was also seen in trade, with its two recently priced convertible tranches moving in line with shares after Goldman Sachs & Co. raised its rating on the Fremont, Calif.-based semiconductor equipment company stock to "buy" from "neutral" at the same time that it downgraded Intel Corp. and urged investors to sell that semiconductor sector heavyweight.

WebMD Health Corp. has been trading all week and its convertibles were moving up a little with higher shares on Thursday. The spread between the WebMD 2.25% convertibles due 2016 and the WebMD 2.5% convertibles due 2018 has been fairly constant, a New York-based sellside desk analyst said.

Overall, the convertibles secondary market was lackluster with thin trading volumes as equity markets wavered but ended in positive territory amid mixed economic data. The convertible primary market remained quiet.

"I thought we'd have a few more issues this week, but it doesn't look like it, not even the little ones that we have been having," a New York-based sellsider said.

Amgen 'looks OK here'

Amgen's 0.375% convertibles due 2013 traded around 101 and a little lower, with the underlying shares about flat, but near their 52-week high after touching there Wednesday and Thursday.

"Amgen traded a bunch," a New York-based sellside trader said.

Shares of the biotech company ended at $61.03, which was off 13 cents.

Amgen is focused on research on secreted protein and small molecule therapeutics with particular emphasis on neuroscience and cancer.

"It looks OK at these levels," a New York-based sellside trader said as to the reason for the robust action in the 2013 bonds. "It's two-year paper and at 101, your downside is a point over the next year."

With shares at these levels, it's run up significantly in the last few months, it has changed the valuation of the convertibles and the implied volatility input in the valuation is now different.

Looking at fundamentals, Amgen said Tuesday that its bone treatment Xgeva outperformed a placebo in a late-stage study of how it works in preventing advanced prostate cancer from spreading to bones.

A monthly treatment of the injectable drug, known by the generic name denosumab, increased bone metastasis-free survival by about four months on average compared with a placebo.

Molson trades at 111.5

Molson's 2.5% convertibles due 2013 traded at 111.5 versus a share price of $46.25, which was little changed from previous levels.

Shares of the company ended at $46.40, which was up 13 cents.

"They've always been unattractive, and they are still unattractive," a New York-based sellside trader said, by way of expressing that he was surprised to see the trading action in the name.

Lam in line with shares

Lam Research's 0.5% A tranche convertibles due 2016 traded at 102.5 versus an underlying share price of $46.20, which was down about 0.5 point from previous levels.

Lam Research's 1.25% B tranche convertibles due 2018 traded at 102.625 versus the $46.20 share price, down from 103 bid, 103.25 offered versus a $47.00 stock price previously.

Lam Research shares ended down 57 cents, or 1.2%, at $46. 61.

Goldman Sachs analyst James Covello cut his rating on Intel stock to "sell" from "neutral," warning that a recent run-up is unwarranted. Covello sees high capital expenditures impacting Intel's chip prices and cost of goods, and reiterated a view that chips based on ARM Holdings designs will be formidable competition for Intel in tablet computers and smartphones.

Covello's cut comes after Intel reiterated its forecast for the year and said the current quarter was on track, giving further details about its processor roadmap and how it will compete with others. Covello lowered other semiconductor companies at the same time, but he raised Lam Research.

Mentioned in this article:

Amgen Inc. Nasdaq: AMGN

Intel Corp. Nasdaq: INTC

Lam Research Corp. LRCX

Molsen Coors Brewing Co. NYSE: TAP

WebMD Health Corp. Nasdaq: WBMD

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