To start the year, volatility returned to the equity markets as a consequence of mixed corporate earnings and slower jobs growth in the US, financial turmoil in emerging markets and weak manufacturing data for China. Adding to the anxieties, the US Federal Reserve reduced its monthly asset purchases by another $10 billion to $65 billion. While the Fed’s actions were motivated by improving economic growth, signs of slowing resurfaced late in the fourth quarter 2013 due to lower government spending and weak business investments. As such, the Dow Jones Industrial Average and S&P 500 fell 5.3% and 3.6% in January, respectively, which were their worst monthly declines since May 2012. The NASDAQ contracted 1.7% for the month.

The Lab Consumables/Equipment and Diversified Instrumentation IBO Stock Indexes followed a similar downward trend, falling 2.9% and 3.0% for the month, respectively. In contrast, the Laboratory Instrumentation and Process/Metrology/Motion Instrumentation Stock Indexes climbed 3.0% and 3.1% in January, respectively.

Laboratory Instrumentation Stock Index

The Index advanced 3.0% to close at 1,004.70 for the month, as a number of life science companies posted strong gains. Pressure BioSciences recorded the highest return, rising 45%, while Harvard Bioscience fell 6%.

The most notable gainer in the Index was Illumina, which jumped 37% due to a barrage of positive headlines, including new partnerships, product introductions and strong revenue projections (see IBO 1/15/14). On January 14, the company preannounced that fourth quarter 2013 sales and EPS would be above its previous guidance. Forecasted 2014 sales also were above expectations, and projected EPS of $2.00–$2.06 was line with consensus. On the same day, it launched two new sequencing systems. Shares climbed 6.7%. On January 16, the company announced an agreement with Amgen to develop an oncology companion diagnostic test, leading shares up 3.4%. On January 17, the company outlined its corporate growth strategy and received two price upgrades, including a 58% increase to $190 a share by JPMorgan. Shares jumped 8.9% the next day.

Similarly, Affymetrix, Fluidigm and NanoString Technologies, which climbed 10%, 18% and 5% for the month, respectively, benefited from positive preliminary fourth quarter 2013 sales announcements. On January 7, Affymetrix preannounced fourth quarter 2013 sales that were 10% above consensus at $91 million, leading shares up 11.5%. On January 13, NanoString projected fourth quarter 2013 sales that were 5% above consensus at $10.1 million and announced a new stock offering for up to $63 million. Shares traded marginally higher. The company priced its stock offering at $18.50 per share on January 23. Shares fell 9.1% the next day. Fluidigm climbed 7.2% on January 14 after the company preannounced higher-than-projected fourth quarter 2013 sales of $21 million. On January 29, the company proposed a $175 million convertible senior note offering to help fund the acquisition of DVS Sciences (see page 2). Shares fell 2.5%.

Sequenom preannounced on January 12 that full-year 2013 sales grew 81%, yet shares slipped 1.5% the next day. However, shares benefited earlier in the month, rising 7.3% on January 9 after the company received a European patent for its method of detecting fetal aneuploidy and announced a new national coverage agreement for the MaterniT21 PLUS test. On January 14, the company announced a partnership with the Mayo Clinic Laboratories, leading shares up 6.2% the next day.

Other companies benefited from better-than-expected fourth quarter 2013 EPS. Waters jumped 7.3% on January 28 after beating EPS estimates. The company projected 2014 EPS of $5.35–$5.55, which was in line with expectations. First quarter EPS are expected to be $1.05–$1.15. On January 30, Thermo Fisher Scientific projected 2014 EPS of $6.70–$6.90 including Life Technologies. Shares rose 2.9%. Cepheid jumped 11.8% on January 31 after beating EPS and revenue expectations. The company projected an EPS loss of $0.22–$0.17 for 2014. PerkinElmer also beat fourth quarter 2013 EPS estimates on January 30, yet shares slipped 1.0% the next day. The company projected 2014 EPS of $2.40–$2.45, in line with expectations.

In other news, on January 16, Transgenomic filed an application to be listed on the NASDAQ Capital Market and approved a 1-for-12 reverse stock split, which was effective January 27. Accelrys jumped 29.3% on January 30 after announcing it would be acquired by Dassault Systèmes for $12.50 per share (see page 2).

There were several ratings changes this month. Cowen upgraded PerkinElmer on January 6 to “Outperform” from “Market Perform.” The next day, Bank of America upgraded Becton, Dickinson to “Neutral” from “Underperform,” but lowered its price target on the company by 23% to $95 per share.

Conversely, on January 6, Morgan Stanley downgraded Affymetrix to “Underweight” from “Equal Weight” and NanoString to “Equal Weight” from “Overweight.” On January 7, JPMorgan downgraded Luminex to “Underweight” from “Neutral” and Cepheid to “Neutral” from “Overweight.” Piper Jaffray downgraded Sequenom on January 10 to “Neutral” from “Overweight.”

Process/Metrology/Motion Instrumentation Stock Index

The Index rose 3.1% for the month to 796.20 despite half of the companies trading lower. Veeco Instruments led the Index, climbing 15%, while Nanometrics fell 11%.

MKS Instruments beat fourth quarter 2013 EPS estimates on January 29 and projected first quarter EPS of $0.35–$0.48, in line with expectations. Shares climbed 4.7%. On January 30, MTS Systems reaffirmed its fiscal 2014 EPS growth outlook of $3.55–$3.70. Share improved 2.9% the next day. On January 9, the company was downgraded by Credit Suisse to “Underperform” from “Outperform” and by Morgan Stanley on January 17 to “Equal Weight” from “Buy.”

Lab Consumables/Equipment Stock Index

In January, the Index contracted 2.9% to 874.30, with most companies trading lower. Kewaunee Scientific had the highest return, climbing 6%. QIAGEN weighted on the Index, as shares fell 7%. The company met fourth quarter 2013 EPS expectations on January 29 and projected first quarter and full-year 2014 EPS of $0.21–$0.22 and $1.07–$1.09, respectively, in line with expectations. Shares slipped 1.5% the next day.

In other news, Enzo Biochem climbed 5.5% on January 7 after the company was awarded $12.4 million in prejudgment interest from the patent infringement case against Life (see IBO 11/15/12). On the same day, Bank of America upgraded Pall to “Buy” from “Neutral.”

Diversified Instrumentation Stock Index

The Index declined 3.0% to 209.24 this month due to negative market conditions. Agilent Technologies recorded the highest return, rising 2%, while Illinois Tool Works (ITW) fell 6%.

The five Index companies that reported this month exceeded fourth quarter 2013 EPS expectations. Teledyne Technologies, ITW and AMETEK also forecast full-year EPS in line with expectations. On January 23, Teledyne projected first quarter and full-year GAAP EPS of $1.08–$1.14 and $5.06–$5.12, respectively. Shares slipped 1.3%. On January 28, ITW projected first quarter and full-year EPS of $0.93–$1.01 and $4.30–$4.50, respectively. Shares climbed 0.9%. On the same day, AMETEK projected first quarter and full-year EPS of $0.55–$0.57 and $2.30–$2.35, respectively. Shares traded slightly lower.

Roper Industries and Danaher each projected first quarter EPS slightly below consensus, but forecasted full-year EPS in line with expectations. On January 27, Roper projected first quarter and full-year EPS of $1.30–$1.35 and $6.05–$6.25, respectively. Shares traded modestly lower. On January 28, Danaher projected first quarter and full-year EPS of $0.76–$0.80 and $3.60–$3.75, respectively. Shares rose 1.5%. The company was upgraded by Bank of America on January 14 to “Buy” from “Neutral.”

International

Four of the seven Pacific Region companies in the IBO stock table contracted in January, as the Nikkei 225 slumped 8.5%. Techcomp and Precision System Science recorded the largest declines, falling 16% and 13%, respectively. HORIBA improved 4%.

On January 27, Hitachi High-Technologies reported fiscal third quarter EPS of ¥35.29 ($0.35), compared to ¥2.11 ($0.03) a year ago. However, the company lowered its fiscal 2014 EPS outlook by 3% to ¥139.60 ($1.40). Shares fell 6.0% the next day.

This month, roughly half of the European companies in the IBO stock table declined, a majority of which were UK based. Scientific Digital Imaging and Spectris lost the most value, falling 13% and 10%, respectively. Sartorius enjoyed the best return, climbing 15%, and trading for Alpha MOS remained suspended.

Sartorius announced on January 28 that full-year 2013 adjusted EPS grew 3% to €3.79 ($5.05) and projected 2014 EBITA to improve 50 basis points to 20.0% of sales. Shares rose 3.7%.

On January 17, Spectris preannounced that fourth quarter 2013 organic sales grew 3%, resulting in flat organic sales growth for the year. Shares fell 2.8%. Abcam stated on January 21 that half-year sales ending December 31, 2013, grew 8.1% on both a reported and currency-neutral basis. Shares rose 2.2%. On January 27, Porvair reported that fiscal 2013 EPS ending November 30, 2013, grew 26% to £0.13 ($0.20). The company also provided a positive fiscal 2014 outlook; however, shares retreated 1.7%.

On January 29, Renishaw reported that adjusted EPS fell 37% to £0.30 ($0.46) for the first six months of fiscal 2014 ending December 31, 2013, due to large Chinese orders in the previous year. Yet shares rose 4.2% due to an improved outlook for the second half of the fiscal year. The company was downgraded by Investec on January 13 to “Sell” from “Hold.”