The US equity markets enjoyed another relatively unabated month as the Dow Jones Industrial Average, S&P 500 and NASDAQ climbed 5.1%, 5.9% and 7.1%, respectively. The Dow hit an 18-month high on March 30, not far from the 11,000 mark.

While there are a number of positive economic data to support the recovery, such as increased manufacturing and consumer spending, sustainability remains in question. Bank lending continues to be constrained and businesses are still reluctant to add to payrolls. Given the large spending deficits, central banks around the world are looking to reverse quantitative easing programs, which have spurred government stimulus spending. On March 26, the US’s fourth-quarter GDP rate was revised down to 5.6% from previous guidance of 5.9% due to lower consumer spending. For the first quarter, the Dow, S&P 500 and NASDAQ were up 4.1%, 4.9% and 5.7%, respectively.

All four of the IBO Stock Indexes experienced sharp gains in March. The Process/Metrology/Motion Instrumentation Stock Index jumped 11.7%. The Diversified Instrumentation, Lab Consumables/Equipment and Laboratory Instrumentation Stock Indexes grew 8.2%, 6.7% and 3.5%, respectively.

Laboratory Instrumentation Stock Index

Starlims was removed from the Index following its acquisition by Abbott on March 22 (see IBO 12/15/09). For both the month and year, the Laboratory Instrumentation Index rose 3.5% to close at 585.87, with 19 companies trading higher and four declining. Bruker led the Index in March, climbing 17%, while Caliper Life Sciences is up 54% for the quarter. Helicos Biosciences recorded the largest decline for both the month and year to date, falling 22% and 23%, respectively.

Many smaller companies in the Index reported mixed quarterly results. OI announced fourth-quarter EPS of $0.14 (see page 12), compared to $0.18 a year ago. Shares rose 2.4% the following day. On March 4, MOCON reported fourth-quarter EPS of $0.21, compared to $0.19 a year ago. Shares rose 3.8%. On March 9, Caliper reported EPS of $0.05 a share, compared to a loss of $0.02 a year ago, leading shares down 5.1%. On March 15, Sequenom reported a quarterly loss of $0.30 a share, $0.05 below expectations, and stated that it would need more funding in 2010. Shares dropped 21.6% the next day. On March 16, X-Rite reported breakeven EPS for the fourth quarter, compared to a loss of $1.02 a year ago, leading shares up 1.3%.

On March 1, Waters jumped 3.4%, as Pittcon began and there was takeover speculation following Millipore’s acquisition (see IBO 2/28/10). The latter would also explain a 4.2% increase in Waters’s share price on March 5. Moody’s Investors Service projected stable growth on March 2 for the medical products and device sector over the next 12–18 months, leading Beckman Coulter up 1.6%. However, on March 23, Beckman reported regulatory issues with its AccuTnI troponin test kits, and affirmed that the company’s 2010 bottom line may be negatively impacted. Shares fell 7.1%. On March 9, Bruker announced it would purchase several Varian product lines (see IBO 3/15/10), yet shares were relatively unchanged. During the month, Bruker CEO Frank H Laukien sold two million shares for $25.9 million, but purchased 200,000 shares for $2.8 million. Thermo Fisher Scientific completed the purchase of Finnzymes on March 9 (see IBO 2/15/10). Shares rose 1.8%. The following day, Illumina announced the sequencing of actress Glenn Close’s genome, boosting shares 2.2%. Sequenom climbed 6.7% on March 30 due to rumored developments related to its noninvasive prenatal genetic test.

Cantor Fitzgerald upgraded Sequenom to “Buy” from “Hold” on March 2 with a price target of $14, leading shares up 15.3%. On March 23, Lazard upgraded Sequenom to “Buy” from “Hold” with a $13 price target. Shares grew 20.1%. Brean Murray initiated coverage of Bruker on March 3 with a “Buy” rating, yet shares traded only marginally higher. On March 12, Jefferies initiated coverage of Luminex with a “Buy” rating, leading shares up 5.7%.

Process/Metrology/Motion Instrumentation Stock Index

In March, the Process/Metrology/Motion Instrumentation Stock Index grew 11.7% to 383.90, with six companies improving and two declining. Veeco Instruments led the Index, climbing 28%, while RAE Systems fell 11%. The Index has gained 4.2% this quarter, with half the companies improving and the others trading lower. SDIX (formerly Strategic Diagnostics) recorded the largest gain, up 40%. ICx Technologies fell 27%.

II-VI withdrew its bid for Zygo on March 9, citing the company’s unwillingness to enter into discussions (see IBO 1/31/10). Zygo tumbled 15.6%. RAE Systems announced on March 10 fourth-quarter EPS of $0.01, $0.02 ahead of expectations, but projected a small net loss for 2010 with flat to 2% revenue growth. Shares fell 6.5% the following day. ICx reported a fourth-quarter loss of $0.06 a share on March 18, $0.03 wider than expected, and projected 2010 EPS of $0.06–$0.25, compared to a loss of $0.31 a share in 2009. Shares fell 4.4% the following day. On March 23, the company announced a $3 million contract with Tennessee Valley Authority for remote terminal units. Shares rose 2.6%.

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index grew 6.7% for the month to 548.61. Seven companies finished in positive territory, led by Enzo Biochem, which was up 15%. Techne slipped 1%. Year to date, the Index has grown 9.5%, with six companies improving and two losing ground. Millipore ended the quarter with the largest gain, climbing 43%, while Techne is down 7%.

Millipore soared 11.1% on March 1, following Merck KGaA’s agreement to acquire the company for roughly $7.2 billion, including debt. Millipore was downgraded the following day by UBS to “Neutral” from “Buy.” Life Technologies introduced its single molecular sequencing technology on March 1, leading shares up 2.4%. On March 5, the company announced a research collaboration with the Translational Genomics Research Institute and US Oncology. Shares climbed 2.2%. Also on March 1, Enzo Biochem received a favorable judgment by the US Patent and Trademark Office against Bayer HealthCare for its nucleic acid signal amplification system, sending shares up 16.1%. On March 12, the company reported fiscal second-quarter revenue growth of 11% (see page 12), but a loss of $0.17 a share, $0.09 below estimates. Shares were flat the following trading day. Pall announced fiscal second-quarter EPS of $0.42 on March 11 (see page 12), $0.05 worse than consensus, and lowered its full-year EPS by an average of 5% to $1.95–$2.05. Shares dropped 4.8% the following day.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index improved 8.2% to 109.54, with all six companies advancing. Mettler-Toledo and Teledyne Technologies led the Index, each gaining 10%. For the first quarter, the Index is up 7.7%. All companies are trading higher, led by Agilent Technologies, which is up 11%. Danaher raised its first-quarter EPS guidance on March 29 to a minimum of $0.90, leading shares up 4.5% the following day. The previous guidance was for earnings at or above the high-end range of $0.77–$0.82 a share.

International

All five Pacific Region companies traded higher for the month and quarter, led by Techcomp, which gained 24% and 83%, respectively.

Eleven European companies improved in March, while one traded flat and two declined. Scientific Digital Imaging doubled its share price, while Exiqon fell 5%. For the year, 12 firms recorded gains, led by Biohit, which is up 80%. Alpha MOS is unchanged and Datacolor has declined 2%.

Scientific Digital Imaging reported on March 2 that full-year profits would exceed market expectations, sending shares up 29.6%. On March 4, Tecan reported adjusted full-year EPS growth of 2.1% to CHF 4.77 ($4.63), yet shares were unchanged. On March 25, Analytik Jena projected fiscal 2010 EPS of €0.70–€.0.85 ($1.00–$1.22), compared to €0.51 ($0.73) in 2009. Shares traded slightly lower. On March 30, Robotic Technology Systems reported roughly breakeven EPS (see page 12), compared to a loss of £0.07 ($0.13) a year ago. Shares fell 25.8%.

Lab Instrument Stock Index S&P 500

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

Feb-10 566.22 264.81

Mar-10 585.87 280.38