The new year has brought uncertainty, as investors fear the economic recovery may be a masquerade. New US economic data revealed a sharp decline in home sales and a smaller-than-expected improvement in durable-goods orders and jobless claims. In addition, the political divergence between the major banks and Obama Administration over regulations, coupled with the uncertainty of Federal Reserve Chairman Ben Bernanke’s reconfirmation pressured US equity markets lower. For the three days ended January 22, the Dow Jones Industrial Average, S&P 500 and NASDAQ contracted 5.2%, 5.1% and 5.0%, respectively.

On January 27, the Federal Reserve left rates unchanged despite an overall positive economic assessment, citing concerns about the unemployment rate and fragile housing market. Even positive earnings reports for a number of companies and a higher-than-expected GDP estimate could not reverse the downward market trend. On January 29, the fourth-quarter US GDP estimate was increased to an annualized rate of 5.7%, compared to expectations of 4.5%, yet the Dow, S&P 500 and NASDAQ fell 0.5%, 1.0% and 1.5%, respectively. For the month, the Dow, S&P 500 and NASDAQ ended down 3.5%, 3.7% and 5.4%, respectively.

All four IBO Stock Indexes traded lower. The Process/Metrology/Motion Instrumentation, Diversified Instrumentation, Lab Consumables/Equipment and Laboratory Instrumentation Stock Indexes declined 10.1%, 6.4%, 4.6% and 3.4%, respectively.

Laboratory Instrumentation Stock Index

Informatics firm Accelrys and Becton, Dickinson and Company (BD) have been added to the Laboratory Instrumentation Stock Index. For January, the Index declined 3.4% to close at 546.93. Sixteen companies traded lower, while eight companies improved. Illumina led the Index, climbing 20%, while Affymetrix and Symyx Technologies each fell 10%.

The Laboratory Instrumentation Index sustained the smallest loss among the IBO Indexes this month. On January 7, Bruker reported that it had received over 100 orders in the second half of the year due to global stimulus spending (see IBO 1/15/10), leading shares up 2.8%. Luminex reported on January 11 in an SEC filing preliminary full-year revenues of $119–$121 million, 2% below the company’s prior guidance, yet shares improved 3.2%. On January 12, Illumina reported preliminary fourth-quarter revenue growth of 9% and forecasted 2010 revenue to grow 20%, with EPS of $0.90–$1.00 (see IBO 1/15/10). Shares jumped 15.8%. On January 14, Caliper Life Sciences announced preliminary fourth-quarter revenues of $37.6 million and full-year revenues of $130.3 million (see IBO 1/15/10). Shares soared 23.9%.

The few companies to report earnings produced mixed results. Waters announced on January 26 EPS of $1.12 (see page 12), $0.02 better than consensus, and forecasted first-quarter EPS to grow 4% to $0.75–$0.79, which was within the lower range of expectations. For 2010, the company projected EPS to grow 9% to $3.70–$3.85. Shares declined 2.0%. On January 28, BD reported fiscal first-quarter EPS of $1.30, $0.10 ahead of expectations, and raised its full-year EPS growth rate by one percentage point to 2%–4%, or $5.05–$5.15 a share. The company traded modestly higher. On the same day, Cepheid reported a fourth-quarter loss of $0.07, $0.05 narrower than consensus, but forecasted a loss of $0.27–$0.35 for 2010, $0.08 wider than expectations. However, shares climbed 1.4% the following day.

In other news, Sequenom settled a class action lawsuit on January 15 (see page 2), leading shares up 3.4%. On January 29, BlackRock disclosed in an SEC filing that it has purchased a 6% stake in Sequenom, sending shares up 1.5%. On January 28, OI Corporation increased its initial stock repurchase agreement by 100,000 to 136,007 shares and extended its Value Added Reseller Agreement with Agilent. Shares traded slightly lower.

JP Morgan upgraded Beckman Coulter on January 4 to “Overweight” from “Neutral.” William Blair upgraded Cepheid on January 11 to “Outperform” from “Market Perform.” On January 21, Jefferies & Company initiated coverage of both Cepheid and Beckman Coulter with a “Buy” rating. On January 7, Deutsche Bank upgraded PerkinElmer to “Buy” from “Hold.” Barclays Capital downgraded Affymetrix on January 13 to “Underweight” from “Equal Weight,” sending shares down 14.1%. On January 20, Thomas Weisel Partners increased it fourth-quarter and full-year revenue estimates for Affymetrix, yet shares slipped 1.7%. On January 19, First Analysis downgraded Bio-Rad Laboratories to “Equal Weight” from “Over Weight.”

Process/Metrology/Motion Instrumentation Stock Index

The Process/Metrology/Motion Instrumentation Stock Index fell 10.1% in January to 331.26, making it the worst-performing Index to begin the year. Six companies traded in negative territory. Zygo and Strategic Diagnostics rose 57% and 8%, respectively. Following gains in December, ICx Technologies lost the most value, falling 28%.

Zygo received an unsolicited $10 a share offer on January 7 from II-VI, leading shares up 45.3%. ICx Technologies jumped 10.7% on January 8, following a press conference regarding last month’s failed airplane bombing attempt. On January 19, Zygo appointed Chris Koliopoulos president and CEO, and announced the release of its TurboDisc K465i gallium nitride (GaN) metal organic chemical vapor deposition (MOCVD) system and the purchase of Zemetrics. Shares were relatively unchanged. RBC Capital Markets initiated coverage of Nanometrics on January 5 with an “Outperform” rating. JP Morgan initiated coverage of Veeco Instruments on January 8 with an “Overweight” rating. On January 13, Merriman downgraded FEI Company to “Neutral” from “Buy.”

Lab Consumables/Equipment Stock Index

For the month, the Laboratory Consumables/Equipment Stock Index declined 4.6% to 477.92, with all eight companies in negative territory. Enzo Biochem suffered the largest decline, contracting 12%, while Kewaunee Scientific recorded only a marginal loss.

On January 28, Life Technologies announced EPS of $0.80 (see page 12), $0.08 ahead of consensus, and forecasted 2010 EPS 2% above expectations to $3.30–$3.50, leading shares up 1.4%. Earlier in the month, on January 7, Deutsche Bank downgraded the company to “Hold” from “Buy,” but raised its price target to $59 a share. On January 15, BB&T Capital Markets initiated coverage of Pall with a “Buy” rating. On January 21, Pall announced a 10.3% increase in its quarterly dividend to $0.16, yet shares slipped 1.7%.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index contracted 6.4% in January to 95.15, with all six companies losing value. Agilent led all decliners, losing 10% of its value, while Teledyne Technologies sustained the smallest loss, sliding 3%.

Danaher reported on January 28 fourth-quarter EPS of $1.12 (see page 12), $0.04 ahead of analysts’ consensus, and confirmed its 2010 EPS of $3.80–$4.10, in line with expectations. The company anticipates first-quarter EPS to grow 15% to $0.77–$0.82. Shares declined 1.8% due to a sharp market sell off. On January 26, AMETEK reported EPS of $0.48 (see page 12), $0.01 ahead of expectations, and forecasted 2010 EPS of $2.10–$2.20, in line with expectations. However, the company projected first-quarter EPS of $0.45–$0.47, 15% below analysts’ consensus, sending shares down 1.3%. Three days later, the company increased its share repurchase authorization by $75 million, bringing the total amount authorized for share repurchase to $143 million. Shares traded marginally lower due to negative market conditions. On January 28, Teledyne Technologies reported EPS of $0.88 (see page 12), $0.08 better than estimates, but forecasted 2010 EPS of $2.80–$2.90, 10% below analysts’ expectations, leading shares down 3.3%. Teledyne projected first-quarter EPS of $0.57–$0.61. On January 19, Longbow upgraded Roper Industries to “Buy,” from “Neutral,” leading shares up 4.1%.

International

In January, three Pacific Region companies traded in negative territory, led by Shimadzu, which fell 3%. Techcomp and JEOL improved 25% and 1%, respectively.

Datacolor AG has been added to the list of European companies in the Stock Table, and Genetix has been removed. This month, 10 European firms recorded negative returns, three improved and Alpha MOS was unchanged. The largest gainer, Biohit, jumped 99%, while Scientific Digital Imaging fell 13%.

Biohit’s announcement on January 11 of the development of an over-the-counter capsule for the elimination of carcinogenic acetaldehyde led shares up 159.9%. On January 20, Oxford Instruments reported that for the six-month period ended January 19, revenues were in line with expectations and higher than a year ago. Shares climbed 7.1%. On January 25, Scientific Digital Imaging reported half-year EPS fell 56% to £0.01 ($0.01) (see page 12). Shares climbed 8.0%. Renishaw reported on January 27 a 49% decline in EPS for the six months ended December 31, 2009 to £0.08 ($0.13) (see page 12), yet shares improved 0.8%.

Chart: IBO Instrument Industry Stock Index

Lab Instrument Stock Index S&P 500

Jan-08 583.13 330.52

Feb-08 607.77 319.03

Mar-08 600.29 317.13

Apr-08 600.29 332.20

May-08 622.99 335.75

Jun-08 602.24 306.89

Jul-08 639.07 303.86

Aug-08 643.46 307.57

Sep-08 590.45 279.64

Oct-08 456.82 232.26

Nov-08 416.63 214.88

Dec-08 390.29 216.56

Jan-09 397.41 198.01

Feb-09 376.99 176.24

Mar-09 393.81 191.29

Apr-09 428.75 209.26

May-09 446.23 220.37

Jun-09 479.85 220.41

Jul-09 522.15 236.75

Aug-09 528.47 244.70

Sep-09 543.19 253.44

Oct-09 535.42 248.43

Nov-09 548.41 262.68

Dec-09 565.94 267.35

Jan-10 546.93 257.47