The US economy showed further gains in August as second quarter GDP growth was revised from 4.0% to 4.2%, led by consumer spending and inventory surges. However, while growth was stronger than expected following a slow start to the year due to extreme weather conditions, housing prices showed signs of slowing, and labor markets were soft. In addition, the geopolitical turmoil in the Ukraine and Syria remained unsettling to global markets. Nevertheless, the Dow Jones Industrial Average, S&P 500 and NASDAQ advanced 3.2%, 3.8% and 4.8% for the month, respectively. Year to date, the Dow, S&P 500 and NASDAQ are up 3.1%, 8.4% and 9.7%, respectively.

All four IBO Stock Indexes advanced in August, led by the Process/Metrology Instrumentation Stock Index, which jumped 7.7%. The Diversified, Lab Consumables/Equipment and Laboratory Instrumentation Stock Indexes improved 4.9%, 4.6% and 0.5%, respectively.

Laboratory Instrumentation Stock Index

Despite strong equity gains for the major US indexes, the Laboratory Instrumentation Stock Index advanced only 0.5% to 1040.88, with just under half the companies in positive territory. Year to date, the Index is up 6.7%, leading all other IBO Stock Indexes.

This month, only two companies recorded double-digit price gains, led by Pacific Bioscience, which jumped 28.2%. Illumina also maintained positive price momentum, climbing 12.2% for the month. On August 21, the company announced a partnership agreement with three large pharmaceutical companies to develop a next-generation sequencing–based oncology-test system (see page 2). The company was upgraded by Wedbush on August 20 from a “Neutral” to “Outperform” rating. The investment firm also raised its price target on Illumina by 21% to $200 per share.

Other companies recorded less dramatic price changes for the month. Bio-Rad Laboratories ended August up 4.6%. On August 5, the company beat second quarter adjusted EPS estimates, leading shares up 4.4% the next day. On August 6, MOCON announced that second quarter GAAP EPS grew 43% to $0.20 per share. Sales reached a quarterly record of $15.6 million, driven by instrument sales to oil and gas exploration and environmental-monitoring markets. Shares climbed 5.4% that day but retracted slightly to end the month up 1.3%. Cepheid advanced 6.3% for the month. On August 11, ISI Group upgraded the company from “Sell” to “Neutral” and set a price target of $38.50 per share.

Partially offsetting these price gains were notable declines for Bruker, Pressure BioSciences and NanoString Technologies. Pressure BioSciences lost the most value in August as shares slumped 16.7%. However, on August 18, the company reported Product and Service revenue growth of 56.5% and projected full-year Product and Service sales growth of 54% to $1.6 million. On a reported basis, second quarter sales fell 14.1% due to the absence of grant revenue.

Bruker beat second quarter adjusted EPS estimates on August 6 but lowered its full-year EPS outlook by 8% to $0.78–$0.81, as a result of restructuring activity and weak orders. Shares contracted 8.3% the next day and dropped 11.7% for the month. On August 5, NanoString reported that second quarter sales grew 50.7% to a record $10.9 million and that adjusted EPS loss was smaller than expected. The company maintained its full-year outlook including revenue growth of 43%–59% to $45–$50 million and an operating loss of $40–$50 million. Shares fell 10.1% the next day and ended the month down 7.6%. On August 29, the company filed for a $100 million mixed-security shelf offering.

Process/Metrology Instrumentation Stock Index

The Index jumped 7.7% to 786.04 in August and is up 1.8% for the month. All five companies were in positive territory for the month, led by FEI, which gained 9.7%. The company was upgraded by Sidoti on August 4 from “Neutral” to “Buy.”

MTS Systems also recorded a strong gain this month, climbing 7.7%. On August 4, the company missed fiscal third quarter adjusted EPS and lowered its fiscal adjusted EPS by 5% to $3.20–$3.30. However, the company recorded strong order growth and a record backlog, leading shares slightly higher the next day.

Lab Consumables/Equipment Stock Index

The Index grew 4.6% to 955.56 in August and is up 5.4% for the year. Most companies in the Index increased in value this month, with Enzo Biochem leading the way, up 24.0%. Pall advanced 8.9% for the month. The company beat fiscal fourth quarter EPS and revenue expectations on August 28. It also projected fiscal 2015 EPS of $3.75–$3.95 for growth of 9%–15%. Shares climbed 3.4% that day.

Other companies to report earnings included Techne (Bio-Techne), which beat fiscal fourth quarter EPS estimates on August 11 due in part to demand in China. Shares traded slightly higher that day and improved 2.4% for the month. On August 26, Kewaunee Scientific reported that GAAP EPS declined 23% to $0.47 for the fiscal 2015 first quarter ending July 31 due to a strong year-over-year comparison. On August 27, the company increased its quarterly dividend by 9% to $0.12 per share. Shares declined 1.5% that day but were unchanged for the month. Cellular Dynamics missed second quarter sales and adjusted EPS expectations on August 11, leading shares down 11.3% the next day. However, this decline was mostly erased as the company announced on August 28 that it was awarded a patent covering automated production of human pluripotent stem cells. Shares climbed 9.5% the next day to end the month down 0.4%.

Diversified Instrumentation Stock Index

In August, the Index climbed 4.9% to 221.80, with all companies trading higher. For the year, the Index is up 2.8%. AMETEK recorded the largest gain for the month, rising 8.7%. On August 5, the company beat second quarter adjusted EPS and raised its full-year adjusted EPS outlook by 2% to $2.37–$2.42. Shares elevated 3.8%.

On August 14, Agilent Technologies beat fiscal third quarter adjusted EPS consensus but projected fiscal fourth quarter EPS of $0.87–$0.91, which was below analysts’ expectations of $0.94. The company also narrowed its fiscal 2014 EPS outlook from $2.96–$3.16 to $3.04–$3.08. Shares climbed 3.5% the next day but retreated slightly to end the month up 1.9%.

On August 7, ISI Group upgraded Illinois Tool Works from “Neutral” to “Buy” and raised its price target by 2% to $92 per share.

International

In August, Asia-Pacific equity markets were mixed. The Japanese Nikkei 225 fell 1.3% as a result of weak consumer spending due to the country’s April sales-tax increase. For the month, prices for the Pacific Region companies in the IBO Stock Table were mixed. The biggest surprise was recorded by Precision System Science. On August 14, the company reported that fiscal 2014 EPS ending June 30 declined 40% to ¥33.53 ($0.33), which was below its expectations. However, several days later, shares exploded to the upside, ending the month up 109.8%.

HORIBA also recorded a positive gain for the month, climbing 7.1%. On August 6, the company reported that second quarter EPS grew 16% to ¥31.68 ($0.31). The company maintained its 2014 EPS forecast of ¥211.60 ($2.07) and raised its half-year dividend by roughly 40% to ¥25.00 ($0.25). Shares improved 3.4% the next day. Conversely, Shimadzu fell 8.1% for the month. On August 7, the company reported that fiscal 2015 first quarter EPS dropped 60% to ¥3.61 ($0.04). However, it maintained its fiscal 2015 EPS target of ¥52.56 ($0.53). Shares fell 8.4% the next day. Techcomp contracted 2.8% for the month. On August 13, the company reported that second quarter sales declined 5.6% to $37.5 million as a result of weak demand in China. Second quarter EPS for the company fell 34% to $0.01.

All major European markets expanded in August with the exception of Italy’s FTSE MIB. European markets were mostly lifted by strength in the US and expectations for further quantitative-easing measures by the European Central Bank to stimulate the economy. For the second quarter, Eurozone GDP was flat, including a 0.2% contraction for Germany due to slow foreign trade and weak capital spending.

Despite the UK FTSE 100 expanding 1.3% in August, only three of the eight UK-based companies in the IBO Stock Table improved. Halma had the highest return for the month, climbing 9.8%. Conversely, Renishaw fell 10.2% in August.

On August 11, Scientific Digital Imaging reported that fiscal 2014 sales ending April 30 declined 9.1% to £7.0 million ($11.2 million). Full-year net income was just above breakeven excluding acquisition costs, compared to a profit of £192,000 ($306,000). Shares fell 5.8% that day but were flat for the month.

Other European companies in the IBO Stock Table contracted for the month, including Exiqon, which slumped 27.6%. On August 14, the company reported that second quarter revenue declined 7.8% due to weak OEM sales. EPS loss was similar to a year ago at DKK 0.03 ($0.01) but benefited from tax benefits. The company lowered its 2014 sales outlook by 10% to DKK 135 million ($24.5 million) but maintained its EBITDA estimate of roughly DKK 5 million ($0.9 million). Shares slumped 18.8% the next day.

Biotage and Tecan recorded modest declines for the month. On August 13, Tecan reported that six-month EPS grew 11% to CHF 1.68 ($1.89) due to increased gross margins. On August 14, Biotage reported that second quarter EPS grew 6% to SEK 0.24 ($0.04) due to lower operating expenses and changes in accounts receivable. On August 14, Analytik Jena reported that fiscal third quarter EPS loss widened 31% to €0.21 ($0.29). However, shares ended the month slightly higher.