On the verge of a major correction in early October, US equity markets rebounded fervently to end the month in positive territory. The Dow Jones Industrial Average and S&P 500 climbed 2.0% and 2.3%, respectively, in October to close at record highs. The NASDAQ advanced 3.1%. The US markets were encouraged by corporate earnings reports, stronger-than-expected initial third quarter GDP growth of 3.5% and improved unemployment data. Equity prices were further bolstered by a surprise announcement by the Bank of Japan to accelerate its stimulus program. Conversely, following six years of quantitative easing, the US Federal Reserve announced the end of its bond-buying program. Year to date, the Dow, S&P 500 and NASDAQ are up 4.9%, 9.2% and 10.9%, respectively.

All four IBO Stock Indexes traded higher this month. The Laboratory Instrumentation, Diversified Instrumentation and Lab Consumables/Equipment Stock Indexes improved 7.1%, 4.6% and 2.7%, respectively, to close at record levels. The Process/Metrology Instrumentation Stock Index climbed 6.6%. For the 24 US companies in the IBO Stock Table that reported earnings this month, 71% of firms exceeded analysts’ estimates.

Laboratory Instrumentation Stock Index

The Index climbed 7.1% in October to 1,093.08 and is up 12.1% for the year. A majority of companies grew in value this month, led by Pacific Biosciences, which soared 33.4%. The company beat third quarter adjusted EPS estimates on October 24 and raised its full-year sales-growth outlook.

Cepheid, Illumina, Waters and Affymetrix increased by double digits this month after beating third quarter adjusted-EPS expectations and raising outlooks. On October 16, Cepheid lifted the lower end of its full-year adjusted-EPS loss by $0.01 to $0.34–$0.36. On October 20, Illumina raised its full-year adjusted-EPS outlook by $0.37 to $2.63–$2.65. On October 21, Waters raised its full-year adjusted-EPS outlook by $0.05 to $5.34–$5.44. On October 30, Affymetrix lifted its 2014 EBITDA outlook by 250 basis points to 17% of revenue.

Harvard Bioscience and Fluidigm also expanded by double digits in October despite missing third quarter adjusted-EPS estimates on October 30. Harvard Bioscience increased its 2014 EPS outlook to $0.21–$0.22 to include recent acquisitions (see IBO 10/15/14). Fluidigm narrowed its full-year sales outlook from $112–$118 million to $114–$117 million.

Despite reporting better-than-expected third quarter adjusted-EPS results, Thermo Fisher Scientific, Luminex and PerkinElmer were negatively impacted by reduced outlooks. Thermo Fisher fell 3.4% this month as it lowered its full-year adjusted-EPS outlook by $0.02 on October 22 to $6.87–$6.95. On October 27, Luminex lowered the upper range of its 2014 revenue outlook by 5% to $225–$228 million. Shares crashed 9.9% the next day but ended the month down 2.6%. On October 30, PerkinElmer reduced its 2014 adjusted-EPS outlook by $0.04 to $2.39–$2.41. On October 23, it announced a new share-repurchase program for up to 8.0 million shares.

The largest decline in October was recorded by Transgenomic, which slumped 14.9% due to missed third quarter adjusted-EPS results and further share dilution. On October 22, the company announced that it raised gross proceeds of $2.4 million in a private placement from the sale of roughly 730,000 common shares, including 37,000 warrants.

In other news, Becton, Dickinson climbed 7.9% on October 6 following its proposed $12.2 billion acquisition of medical-technology company CareFusion. Consequently, Moody’s Investors Service placed Becton’s rating on watch and expects to downgrade its senior unsecured debt based on the company’s announced financing plans. The company was upgraded by JPMorgan Chase from “Underweight” to “Neutral” on October 6, and by Stifel Nicolaus from a “Hold” to “Buy” on October 7. The two investment firms set price targets of $134 per share and $153 per share, respectively.

There were several other positive ratings changes this month. On October 9, Cowen and Company upgraded Luminex from “Underperform” to “Market Perform” and raised its price target by 13% to $18 per share. Illumina was upgraded by Piper Jaffray from “Neutral” to “Overweight” on October 16, and by Janney Montgomery Scott from “Neutral” to “Buy” on October 21. Both investment firms set a price target of $192 per share.

Process/Metrology Instrumentation Stock Index

The Index grew 6.6% to 789.86 this month and is up 2.3% for the year. FEI had the largest monthly gain, rising 11.7%. However, on October 28, the company projected fourth quarter adjusted EPS of $0.94–$1.08, slightly below estimates.

MKS Instruments and Veeco Instruments benefited from better-than-projected quarterly EPS results, as shares climbed 9.0% and 3.0% for the month, respectively. On October 22, MKS projected above-consensus fourth quarter EPS of $0.42–$0.53. On October 29, Veeco projected an adjusted EPS loss of $0.02–$0.14, in line with expectations.

Despite beating quarterly estimates on October 28, Nanometrics recorded a significantly larger third quarter adjusted-EPS loss compared to a year ago. The company projected a fourth quarter adjusted-EPS loss of $0.08–$0.24. Shares fell 7.7% the next day and ended the month down 10.3%. MTS Systems also recorded a loss for the month, sliding 3.3%. On October 29, it reported preliminary 2014 adjusted EPS of $3.01, which was below its previous outlook. The company projected adjusted fiscal 2015 EPS of $3.60–$4.00. MTS was downgraded by Needham on October 22 from “Buy” to “Hold.”

Lab Consumables/Equipment Stock Index

VWR was added to the Index following its IPO on October 2 (see IBO 10/15/14). The Index advanced 2.7% in October to 1,098.75 and is up 21.2% for the month. Cellular Dynamics and Pall led the Index, rising 10.5% and 9.2%, respectively. On October 9, Pall announced a quarterly dividend increase of 11% to $0.31 per share.

QIAGEN also traded higher for the month, rising 3.0%. On October 29, the company projected fourth quarter and full-year adjusted EPS of $0.33 and $1.08, respectively, in line with expectations. Techne recorded the largest decline, sliding 2.7%, as it missed fiscal first quarter 2015 adjusted-EPS estimates on October 28. However, the company raised its quarterly dividend by $0.01 to $0.32 on October 30.

Diversified Instrumentation Stock Index

The Index gained 4.6% to 225.99 in October to 225.99 and is up 4.7% year to date. All companies except for Agilent Technologies were in positive territory for the month. Teledyne Technologies had the highest return, rising 10.2% as the company lifted its full-year GAAP EPS by $0.18 on October 23 to $5.49–$5.53.

Illinois Tool Works (ITW), Roper Industries and AMETEK also beat quarterly adjusted-EPS estimates and raised outlooks. On October 21, ITW raised its 2014 EPS by $0.05 to $4.57–$4.65. On October 27, Roper boosted its 2014 adjusted EPS by $0.03 to $6.32–$6.38. On October 28, AMETEK raised its 2014 outlook from $2.37–$2.40 to $2.40–$2.42, excluding Zygo (see IBO 4/15/14). On October 16, Danaher projected adjusted full-year EPS of $1.06–$1.11, in line with its previous guidance. Conversely, on October 28, Xylem narrowed its 2014 adjusted EPS by $0.02 to $1.92–$1.98.

International

Despite significant gains at the end of the month due to Japan’s elevated stimulus announcement, Asia Pacific markets were mixed in October. The Japanese Nikkei 225 soared 7.3% in the final week to end the month up 1.5%.

In October, five Pacific Region companies improved, while Precision System Science and GL Sciences fell 16.4% and 2.6%, respectively. Hitachi High-Technologies recorded the largest price increase for the month, climbing 5.7%. On October 23, the company reported that fiscal 2015 second quarter EPS grew 16% to ¥42.91 ($0.41), which was above its previous forecast. The company maintained its fiscal full-year EPS outlook of ¥186.14 ($1.81).

In other news, on October 9, Techcomp announced two separate private placements to help fund its acquisition of Bruker’s GC assets (see IBO 10/15/14). The company offered a combined 34.9 million shares at a price of HKD 2.40 per share, lifting its share count 15% to 267.4 million.

European markets also rebounded sharply in the final trading week but could not erase earlier declines due to weak economic forecasts. The hardest-hit European Indexes this month were Italy’s FTSE MIB and France’s CAC, which slumped 5.3% and 4.1%, respectively. UK’s FTSE 100 Index contracted 1.2% for the month.

The UK-based companies in the IBO Stock Table were mixed. Renishaw recorded the largest gain, climbing 9.1% for the month, as it reported on October 16 that fiscal 2015 first quarter revenues climbed 28% including acquisitions. Spectris announced on October 24 that third quarter organic sales fell 5%, and projected full-year EBITA outlook to fall below the current consensus of £200 million ($330 million). However, shares ended the month up 1.5%.

For other European firms in the IBO Stock Table, shares traded mostly higher in October. Exiqon recorded the highest return, advancing 21.5%, while Alpha MOS fell 17.2%.

On October 21, Sartorius reported that adjusted third quarter EPS jumped 31% to €1.13 ($1.88). Biotage reported on October 30 that third quarter EPS climbed 70% to SEK 0.17 ($0.02). However, earnings benefited from other operating income. On October 29, Datacolor reported that fiscal 2014 revenues grew 14.3% to $70.0 million, but EBITDA fell 4.4% to $6.5 million. Shares advanced 1.3% for the month.