The US equity markets rebounded sharply in October as the Dow Jones Industrial Average, S&P 500 and NASDAQ climbed 8.5%, 8.3% and 9.4%, respectively. Stronger-than-expected corporate earnings, especially from telecom, health care and consumer staples sectors, boosted equity prices, along with unchanged interest rates and historically low jobless claims. Third quarter GDP came in just below expectations at 1.5% annualized growth but was hampered by slow inventory buildup. Consumer spending, especially for durable goods, drove economic growth for the quarter. Unfortunately, housing data and consumer confidence took a negative turn. Year to date, the S&P 500 and NASDAQ are up 1.0% and 6.7%, respectively, while the Dow is down 0.9%.

Laboratory Instruments and Products

The Index improved 3.1% in October to 219.49 but is down 1.3% for the year. A majority of companies increased in value this month, led by Pacific Biosciences, which soared 94.0%. The company jumped 48.9% after it announced the launch of the Sequel gene sequencer (see IBO 10/15/15). But the company missed analysts’ third quarter sales expectations on October 22 (see page 12) due to lower contractual revenue, yet projected milestone payments of $20 million in the fourth quarter. As a result, the company raised its 2015 revenue growth forecast from a minimum of 40% to a range of 50%–55%. The company was upgraded by Stephens from “Equal Weight” to “Overweight” on October 2, and by Piper Jaffray from “Neutral” to “Overweight” on October 23.

Continuing with sequencing news, Illumina contracted 18.5% for the month as Leerink downgraded the company on October 1 to “Market Perform” from “Outperform,” and lowered its price target from $225 to $185. In addition, on October 6, Illumina preannounced third quarter sales below company expectations and lowered its 2015 sales growth outlook by 200 basis points to 18%, or 21% excluding currency (see IBO 10/15/15). During the company’s earnings call on October 20, it lowered its 2015 adjusted EPS guidance from $3.39–$3.45 to $3.29–$3.31. Mizuho downgraded Illumina on October 6 from “Buy” to “Neutral.”

Prices for a number of other companies in the Index were influenced by earnings results. On the positive side, Fluidigm jumped 46.5% on October 30 following better-than-projected third quarter sales (see page 12) and adjusted EPS results. It also narrowed its 2015 revenue guidance by $1 million to $111–$114 million. Shares ended the month up 33.3%. However, given the previous weak revenue results for the first half of the year, shares remain down 68.0% for the year.

Thermo Fisher Scientific and Waters climbed 7.0% and 8.1% for the month, respectively, after beating analysts’ third quarter sales and adjusted EPS estimates. On October 21, Thermo raised the lower end of its 2015 adjusted EPS outlook by $0.05 to $7.33–$7.41. Waters lifted its 2015 adjusted EPS outlook on October 27 from $5.75–$5.90 to $5.83–$5.93 due to strong demand from life science markets and new products.

Enzo Biochem jumped 17.4% for the month. On October 13, the company reported strong Clinical Labs sales for the fiscal fourth quarter ending July 31. On the same day, the company announced a $10 million patent infringement settlement with Affymetrix (see page 6).

Affymetrix posted mixed financial results on October 28, as it beat analysts’ third quarter adjusted EPS estimates but missed on sales. Despite reiterating its 2015 mid-single-digit revenue growth estimate and raising its EBITDA guidance by 100 basis points to 18%–20% due to strict cost control measures, shares fell 7.6% the next day. The firm announced on October 28 a new senior secured five-year, $100 million revolving credit facility. In spite of the price correction, shares finished the month up 7.7%.

Bio-Techne, FEI, Harvard Bioscience and QIAGEN reported disappointing quarterly results this month, as all four companies missed analysts’ third quarter sales and adjusted EPS consensus. FEI fell 8.2% on October 28 after reporting slower-than-expected demand from semiconductor customers. Shares rebounded slightly to end the month down 1.2%. Bio-Techne dropped 8.8% on October 28, as fiscal first quarter results were negatively impacted by continued destocking of inventory in Japan and delayed orders within the Clinical Controls segment. Shares contracted 4.6% for the month.

On October 28, QIAGEN reported slower-than-expected Molecular Diagnostics revenue growth in Japan and China. The company projected 2015 adjusted EPS of $1.16 excluding currency, which was at the low range of its previous guidance. Shares fell 8.4% the next day and were down 6.3% for the month. On October 29, Harvard Bioscience slumped 17.8% after reporting weak third quarter results due to lower sales of GE-branded products. GE informed Harvard that it would discontinue sales of its spectrophotometer products by the end of the year. While Harvard lowered it 2015 revenue projections, adjusted EPS guidance was unchanged at $0.13–$0.15. Shares fell 22.2% for the month.

Diversified Instrumentation

The Index jumped 9.9% in October to 187.72 and is up 2.0% year to date. All companies increased in value with the exception of Teledyne Technologies, which slipped 1.2% for the month. On October 5, the company preannounced slower-than-expected third quarter sales and GAAP EPS due to weak Instrumentation revenue. It also lowered its 2015 GAAP EPS to $5.10–$5.17 from $5.60–$5.65. Shares dropped 3.8% the same day. However, on October 29, the company slightly revised its 2015 GAAP guidance to $5.13–$5.18, primarily on account of another planned share repurchase of roughly $100 million.

Roper Technologies led the Index for the month, climbing 18.9%. While the company missed analysts’ third quarter revenue projections on October 26, adjusted EPS were above expectations. It also raised the bottom range of its 2015 adjusted EPS outlook by $0.08 to $6.69–$6.75, boosted by acquisitions and improving margins.

Danaher and Xylem both topped analysts’ third quarter sales and adjusted EPS expectations. Driven by strong demand from clinical and pharmaceutical markets, Danaher narrowed its adjusted EPS outlook from $4.25–$4.33 to $4.28–$4.32 on October 22. Shares climbed 9.5% for the month.

On October 29, Xylem maintained its 2015 adjusted EPS of $1.82–$1.87 but highlighted improving public utility end-markets, a strong backlog and continued cost management measures to accelerate growth. Shares climbed 10.8% for the month.

Conversely, AMETEK, Corning, Honeywell and Illinois Tool Works (ITW) all either met or exceeded analysts’ third quarter adjusted EPS estimates but missed on revenues. Sales were impacted by currency or slower-than-projected segment performances, while EPS were generally less affected due to ongoing restructuring, cost control initiatives and share repurchases.

Honeywell lowered its 2015 sales outlook on October 16 but maintained the midpoint of its adjusted EPS outlook of $6.10 because of stronger margins. Shares advanced 9.1% for the month. On October 21, ITW lowered its 2015 outlook from $5.07–$5.23 to $5.05–$5.15, yet shares advanced 11.7% for the month.

On October 27, AMETEK lowered it 2015 adjusted EPS outlook by roughly $0.05 to $2.55. Despite sliding 4.5% for the day, shares ended the month up 4.8%. Bank of America upgraded the company on October 29 from “Neutral” to “Buy.”

Finally, Corning offset its weak revenue results by announcing a massive $10 billion share repurchase plan on October 27. It also committed another $10 billion to R&D and acquisitions. Shares jumped 5.4% for the day and ended the month up 8.6%.

International

All Asia Pacific markets expanded in October, led by China’s Shanghai Composite and Japan’s Nikkei 225, which climbed 10.8% and 9.7%, respectively. However, Japan’s economy continued to struggle as the Bank of Japan lowered its fiscal 2016 growth outlook from 1.7% to 1.2%.

Prices for most of the Pacific Region companies in the IBO Stock Table advanced this month, led by Hitachi High-Technologies, which jumped 27.1%. On October 26, the company reported fiscal 2015 second quarter EPS grew 26% to ¥66.97 ($0.55), which was well above the itd previous forecast. However, the company lowered its fiscal 2016 EPS forecast by 6% to ¥235.58 ($2.05) because of slowing demand for construction machinery and from Chinese automotive markets.

Both HORIBA and Shimadzu increased in double digits for the month, climbing 10.1% and 10.5%, respectively. In contrast, Techcomp recorded the sharpest decline for the month, falling 17.6%.

All European equity markets also traded higher in October. The London FTSE 100 and German XETRA DAX grew 4.9% and 12.3%, respectively. Despite the positive market momentum, European companies in the IBO Stock Table were mixed. Four of the six UK-based companies in the Table declined, led by Horizon Discovery, which slumped 14.4%. Halma recorded the largest gain, rising 5.8%.

Among the other European companies in the Table, Datacolor had the highest return, climbing 16.7%. On October 30, it preannounced that fiscal 2015 sales declined 6% but grew 2% in local currency. Biotage, which climbed 11.5% for the month, reported on October 30 that third quarter EPS grew 65% to SEK 0.28 ($0.03) due to currency tailwinds and increased organic growth.

On October 20, Sartorius reported that adjusted third quarter EPS nearly doubled to €1.73 ($1.92). The company raised its 2015 currency-natural revenue growth outlook from 12% to 15%. Yet shares declined 3.6% for the month.