All Four IBO Indexes Follow Market’s Decline

On Monday, September 29, the US House of Representatives rejected the $700 billion bailout package, sending the Dow Jones Industrial Average, S&P 500 and NASDAQ down 7.0%, 8.8% and 9.1%, respectively. It was the largest single-day point decline for the Dow Jones in its history. The plan, which would provide immediate short-term credit relief, was deemed fundamentally flawed with ambiguous consequences to US taxpayers. Due to forthcoming elections, many House members were pressured to vote against the bill, as constituents believed the interests of Wall Street were being primarily catered to. Meanwhile, the credit markets continue to tighten as more banks face insolvency, putting a stranglehold on the global economy. Without some type of resolution the epidemic of bad debt will continue to spread, threatening further bankruptcies and deteriorating assets in both pension and retirement plans. This month, a number of companies were either seized by the US government or acquired by other firms to prevent liquidation. Reactions on Wall Street were mixed, causing extreme volatility in the stock market. On September 7, the government was forced to take control of Fannie Mae and Freddie Mac following a continuing surge of mortgage defaults. The following day, the Dow and S&P 500 climbed 2.6% and 2.1%, respectively, while the NASDAQ edged higher by 0.6%, as the government’s action averted the failure of the US’s largest mortgage holders. On September 15, due to the diminishing value of capital, Lehman Brother’s filed for bankruptcy, while Merrill Lynch and insurance giant AIG frantically searched for alternatives. AIG received an $85 billion emergency loan from the Federal Reserve, while Bank of America quickly acquired Merrill. Over the three days beginning September 15, the Dow, S&P 500 and NASDAQ declined 7.1%, 7.6% and 7.2%, respectively. The markets managed to regain stability on September 18 and 19 as hopes of a government rescue plan and a temporary ban on short-selling financials was called into action. Over these two days, the Dow, S&P 500 and NASDAQ gained 7.3%, 8.5% and 8.3%, respectively. However, investors’ optimism was short lived. On September 25, JP Morgan Chase acquired Washington Mutual in a deal arranged by the federal government, while Citigroup stepped in to acquire Wachovia on September 29. Evidently, the severity of the current situation is dire. Aside from the credit markets, the economy continues to sputter. On September 26, the US Commerce Department revised the second-quarter GDP growth rate downward from 3.3% to 2.8%. In addition, sales of existing and new US homes, personal income and durable goods orders continued to decline, while unemployment rates rose. On September 6, the US Department of Labor reported that August unemployment rose to 6.1% from 5.7% in July. In September, the Dow, S&P 500 and NASDAQ declined 6.0%, 9.1% and 12.0%, respectively. Equally volatile was the price of crude oil, which finished the month sharply lower, down 22.3% to $96.3 a barrel. For the year, the Dow, S&P 500 and NASDAQ have lost 18.2%, 20.6% and 21.5%, respectively For the month, all four IBO Stock Indexes traded lower. The Laboratory Instrumentation, Process/Metrology/Motion Instrumentation, Lab Consumables/Equipment and Diversified Instrumentation Stock Indexes fell 8.2%, 6.6%, 9.5% and 13.3%, respectively. Laboratory Instrumentation Stock Index In September, the Laboratory Instrumentation Index dropped 8.2% to close at 590.45. Twenty companies traded lower, while only three companies improved. CombiMatrix led all decliners, falling 26%, while Sequenom gained 17%. For the year, the Index has lost 10.1%. Sequenom leads the Index, up 179%, and X-Rite is down 70%. On September 10, Illumina’s shareholders approved a 2-for-1 split and increase of common shares from 120 million to 320 million. Shares finished marginally higher. On September 12, Thermo Fisher Scientific announced a $500 million buyback plan, leading shares up 1.9%. Sequenom jumped 35.0% on September 24, following the announcement of the results of its second noninvasive prenatal Down syndrome trial test (see page 2). The test resulted in 100% accuracy with no false positives or negatives. On September 29, Cepheid received FDA approval for its fast antibiotic-resistant infections test, yet shares declined 8.6% due to negative market conditions. Analysts’ recommendations were mixed this month. On September 3, Dawson James initiated coverage of CombiMatrix with a “Buy” rating, sending shares up 4.1%. On September 25, Edward Jones upgraded Thermo Fisher Scientific to “Buy” from “Hold,” leading shares up 3.2%. However, on September 10, Piper Jaffray downgraded Cepheid to “Neutral” from “Buy,” leading shares down 3.6%. Process/Metrology/Motion Instrumentation Stock Index The Process/Metrology/Motion Instrumentation Stock Index declined 6.6% to in September to 354.63, with six companies losing ground and two companies improving. Nanometrics led the Index lower, falling 42%, while Zygo gained 20%. Year to date, the Index has declined 10.4%, with seven companies in negative territory and Zygo up 1%. On September 5, Nanometrics announced the resignation of its CFO, leading shares down 2.9%. On September 25, Brean Murray upgraded FEI to “Buy” from “Hold,” sending shares up 4.6%. Lab Consumables/Equipment Stock Index In September, the Laboratory Consumables/Equipment Stock Index lost 9.5% to 462.95. All seven companies declined, led by Kewaunee Scientific, which dropped 21%. For the year, the Index has fallen 8.4%, with six companies trading lower and Techne up 9%. On September 15, Millipore announced plans to close four of its manufacturing facilities due to declining Bioprocess sales. The announcement sent shares down 2.5%. On September 16, Pall announced adjusted fiscal fourth-quarter EPS of $0.61 (see page 12), $0.01 better than expectations. The company anticipates 2009 EPS growth of 9%–17% to $2.15–$2.30. Shares climbed 5.8% following the announcement. On September 17, Leerink Swann initiated coverage of QIAGEN with a “Market Perform” rating, yet shares declined 3.3%. On September 23, Cowen & Company initiated coverage of Invitrogen with an “Outperform” rating, leading shares up 1.2%. Diversified Instrumentation Stock Index The Diversified Instrumentation Stock Index fell 13.3% to 98.32 this month. All six companies declined, with AMETEK losing the most value, falling 16%. Year to date, the Index is down 17.7%, with five companies losing ground, and Teledyne Technologies up 7%. On September 8, Janney Montgomery Scott upgraded Roper Industries to “Buy” from “Neutral,” leading shares up 3.2%. On September 12, Deutsche Securities downgraded Danaher to “Hold” from “Buy,” sending shares down 1.6%. On September 17, AMETEK completed a private placement of $350 million in senior notes. Shares declined 3.8%. International In September, three Pacific Region companies declined, while Hitachi High-Technologies and Horiba improved, up 3% and 4%, respectively. For the year, all five companies finished lower, with Horiba down 45%. The European companies also suffered significant losses, with 12 companies declining and only Oxford Instruments and Millbrook Scientific Instruments trading higher, as each improved 3%. Cybio leads all decliners for both the month and the year, down 36% and 74%, respectively. Year to date, Oxford Instruments and Renishaw are the only two European companies in the IBO stock table that are in positive territory, up 16% and 20%, respectively. On September 18, Sartorius completed two long-term financing packages for a total of €400 million ($570 million). The company’s shares fell 3.1% that day. Chart: IBO Instrument Industry Stock Market Lab Instrument Stock Index S&P 500 Sep-06 487.70 320.28 Oct-06 530.09 330.37 Nov-06 535.19 335.81 Dec-06 539.64 340.05 Jan-07 564.40 344.83 Feb-07 537.67 337.29 Mar-07 553.46 340.66 Apr-07 568.74 355.41 May-07 576.11 366.98 Jun-07 573.08 360.44 Jul-07 584.65 348.91 Aug-07 604.22 353.40 Sep-07 648.03 366.05 Oct-07 678.52 371.47 Nov-07 654.48 355.11 Dec-07 656.46 352.05 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

< | >