WellPoint debt drifts down ahead of earnings; Herbalife convertibles, stock decline

By Stephanie N. Rotondo

Phoenix, July 29 – WellPoint Inc.’s 2.75% convertible notes due 2042 were trading actively but lower on Tuesday as investors prepare for the company’s earnings release on Wednesday.

A market source pegged the issue at 160.25 versus a stock price of $112.84. The bonds were down about 2.5 points on the day.

As for the stock, it closed down $3.02, or 2.61%, at $112.55.

For the second quarter, the health care benefits company is expected to report earnings per share of $2.26 on revenue of $18.21 billion. If the figures come in as expected, the earnings per share would equal a 13% decline year over year, while revenue would increase 2.6%. The revenue increase would be driven by an increase in Medicaid memberships, which have risen due to efforts made under Obamacare.

In other earnings-driven names, Herbalife Ltd.’s 2% convertible notes due 2019 were coming in early Tuesday following the company’s disappointing earnings release late Monday.

The notes finished the session around 87.5. The paper was seen at 89.125 at mid-morning, down from 96.125 going out Monday. As for the stock, it was “down a lot,” a trader said.

The equity ended at $58.35, down $9.13, or 13.53%.

Investors were hoping that the dietary supplement seller would beat analysts’ expectations for the 22nd consecutive quarter. However, the company missed profit estimates by a penny.

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