Despite the US government’s approval of a stimulus plan and the infusion of additional capital into the financial system, the markets failed to rally in February. The housing market further deteriorated and unemployment claims reached record highs. On February 27, fourth-quarter 2008 US GDP was revised downward to an annualized contraction of 6.2%, the worst performance in over 26 years. Consumer spending fell at an annualized rate of 4.3% in the fourth quarter, the lowest rate in 28 years. With no economic recovery in sight, the Dow Jones Industrial Average and NASDAQ fell 11.7% and 6.7% in February. The S&P declined 11.0%, closing at its lowest level in 12 years. Year to date, the Dow has lost 19.5%, the S&P 500 has dropped 18.6% and NASDAQ is down 12.6%

All IBO Stock Indexes traded lower. The Process/Metrology/Motion Instrumentation Stock Index declined 16.1%. The Diversified Instrumentation and Laboratory Instrumentation Stock Indexes dropped 13.3% and 5.1%, respectively. The Lab Consumables/Equipment Stock Index lost 2.9%.

Laboratory Instrumentation Stock Index

For the month, the Laboratory Instrumentation Index fell 5.1% to close at 376.99. Seventeen companies declined, four companies improved and Harvard Bioscience was unchanged. Helicos BioSciences weighed the most on the Index, falling 40%, while Illumina climbed 15%. Year to date, the Index has fallen 3.4%, with 16 companies trading lower and 6 companies up. Transgenomic has declined the most, falling 41%, while Helicos is up 41%.

Most companies’ earnings came in above analysts’ expectations, but with lowered projections. On February 4, Varian reported fiscal first-quarter EPS of $0.54, $0.03 better than expectations, but lowered its full-year EPS to $2.15–$2.55 from $2.80–$3.00. Shares declined 7.0%. On the same day, Thermo Fisher Scientific beat fourth-quarter earnings estimates by $0.05, reporting $0.88 a share for growth of 16%. The company projected 2009 EPS of $3.00–$3.30, compared to expectations of $3.32 a share. On February 5, Cepheid reported a fourth-quarter loss of $0.10 a share, $0.06 ahead of expectations, leading shares up 7.8% the following day. The company forecasted a loss of $0.11–$0.17 a share for 2009. Beckman Coulter announced on February 9 fourth-quarter EPS grew 19% to $1.29, $0.08 ahead of consensus, yet shares fell 1.5% the following day. The company anticipated 2009 EPS to grow 8% to $3.85–$4.05. On February 12, Life Technologies reported fourth-quarter EPS of $0.83, $0.29 ahead of analysts’ expectations, sending shares up 9.4%. The company lowered its 2009 EPS estimate by an average of 6.5% to $2.40–$2.55. Illumina defied the negative sentiment. On February 3, it reported fourth-quarter 2008 earnings of $0.24 a share, beating expectations by $0.07. The company also projected first-quarter and full-year EPS ahead of consensus by an average of $0.6 and $0.27 to $0.23–$0.26 and $1.10–$1.20, respectively. Shares closed up 21.2%.

Other companies reported mixed results. On February 5, Luminex increased its 2009 revenue forecast to $130–$140 million for growth of 25%–34%. However, the company reported fourth-quarter EPS of $0.05, $0.01 below expectations, leading shares down 5.8% the following day. Sequenom reported on February 11 a fourth-quarter loss of $0.25 a share, $0.07 greater than expected. The company forecasted 2009 revenues to grow 15% for the Genetic Analysis business. On February 26, Bio-Rad Laboratories reported fourth-quarter EPS of $0.76, $0.14 below analysts’ expectations.

On February 3, Sequenom revised downward the number of positive results for its SEQureDx Down syndrome test and “unresolved” cases, causing shares to fall 7.2%. The following day, Oppenheimer downgraded Sequenom to “Perform” from “Outperform.” On February 12, Brean Murray initiated coverage of the firm with a “Sell.” Canaccord Adams upgraded Illumina on February 5 to “Buy” from “Hold.”

Process/Metrology/Motion Instrumentation Stock Index

For February, the Process/Metrology/Motion Instrumentation Stock Index fell 16.1% to 184.76, with seven companies declining and RAE Systems up 14%. Zygo, the worst performer, lost 28%. Year to date, the Index is down 23.6%, with ICx Technologies leading all decliners, down 42%, and only Nanometric and Strategic Diagnostics trading higher, up 12% and 2%, respectively.

On February 5, FEI Company reported fourth-quarter earnings of $0.21 a share, beating expectations by $0.04, and projected first-quarter EPS of $0.10–$0.15. Shares climbed 6.3% the following day. Veeco Instruments reported on February 9 fourth-quarter EPS grew 57% to $0.11, $0.03 better than analysts’ consensus. However, the company forecasted a loss of $0.25–$0.17 a share for the first quarter, compared to EPS of $0.09 a year ago. Shares fell 17.5% the following day. The same day, Citigroup downgraded Veeco to “Hold” from “Buy.”

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index slipped 2.9% to 337.76 in February, with seven companies lower and one company improving. For the year, the Index is down 7.2%, with six companies lower and two companies in positive territory. Enzo Biochem led the Index lower for both the month and year, declining 25% for each period. Life Technologies recorded the largest gain for both the month and year, climbing 14% and 25%, respectively.

On February 5, Millipore reported fourth-quarter adjusted EPS of $0.95 (see page 12), $0.05 ahead of consensus, leading shares up 2.2% the following day. The company provided full-year EPS guidance of $3.70–$3.85. On February 9, QIAGEN announced fourth-quarter EPS grew 37% to $0.22, in line with expectations. The company projected 2009 EPS of $0.88–$0.94. Sigma-Aldrich reported on February 11 fourth-quarter EPS grew 6% to $0.68, $0.03 better than expectations, and increased its dividend by 11.5% to $0.15 a share. Earnings forecasted for 2009 were equal to or greater than $2.65 a share, compared to expectations of $2.23–$2.62 a share, sending shares up 2.1%. Credit Suisse downgraded QIAGEN to “Neutral” from “Outperform” on February 12.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index fell 13.3% for the month to 61.44, with five companies declining and Roper Industries up 1%. Agilent Technologies declined the most, falling 23%. For the year, the Index is down 12.8%, led by Teledyne Technologies, which is down 49%. On February 5, Roper Industries reported fourth-quarter EPS of $0.80 (see page 12), $0.07 above expectations, but forecasted first-quarter EPS of $0.55–$0.60, which was below the consensus of $0.62 a share. Shares climbed 10.7% the following day. On February 5, Mettler-Toledo announced fourth-quarter EPS grew 16% to $2.00 (see page 12), $0.08 ahead of expectations. However, the company lowered both its first-quarter and 2009 EPS guidance by 4%–8% to $0.80–$0.90 and $4.80–$5.30, respectively. Shares declined 9.3% the following day. Agilent Technologies reported on February 17 a 41% decline in adjusted quarterly EPS to $0.20, $0.08 below expectations. The company projected flat revenue growth for the fiscal second quarter and a decline of 20% for the fiscal year. Shares declined 9.1% the following day. Teledyne Technologies announced a stock repurchase program on February 25 of 1.5 million shares, yet shares closed down 2.1%. On February 6, Wall Street Access downgraded Mettler-Toledo to “Hold” from “Buy.”

International

In February, three Pacific Region companies improved and two declined. Shimadzu led all companies, climbing 12%. For the year, two companies are trading lower, two companies have improved and one company is unchanged. Hitachi High-Technologies has declined 14%, while Horiba has gained 30%. On February 17, Horiba reported full-year earnings of ¥142.71 a share ($1.38) (see page 12), compared to ¥204.39 a share ($1.74), leading shares down 5.8%.

This month, nine European companies declined, five improved and Alpha MOS was flat. Robotic Technologies Systems gained 22%, while Tecan fell 16%. For the year, seven companies are show gains, seven are down and one is unchanged. Millbrook Scientific Instruments leads all companies, up 49%, while Renishaw has fallen 38%.

On February 10, Sartorius reported preliminary year-end revenue of €611.6 million ($899.4 million), compared to €622.7 million ($853.0 million) a year ago. However, on an adjusted currency basis sales improve 0.9%. Shares were unchanged. On the same day, Biotage reported fiscal 2008 EPS of SEK 3.38 ($0.50), compared to SEK 1.12 ($0.17) a year ago, with approximately SEK 2.7 ($0.41) a share attributed to the sale of Biosystems (see IBO 10/15/08). Analytik Jena reported on February 12 first-quarter EPS of €0.36 ($0.47) (see page 12), compared to €0.27 ($0.39) a year ago, sending shares up 5.2%. On February 24, Spectris reported adjusted full-year EPS of £0.73 ($1.33) (see page 12), compared to £0.58 ($1.16), yet shares declined 11.7%. Biohit reported on February 13 full-year EPS of €0.07 ($0.10), compared to a loss of €0.12 ($0.16) in 2007. Shares traded only modestly higher.

Chart: IBO Instrument Industry Stock Index

Lab Instrument Stock Index S&P 500

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

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