Bloated Markets Inflate IBO Indexes
Despite extreme market volatility, the Dow Jones Industrial Average, S&P 500 and NASDAQ ended the month up 2.3%, 3.6% and 5.6%, respectively. For most of September, the US equity markets were bolstered by the declining US dollar and optimistic statements by the Federal Reserve. In addition, several economic indicators for August, such as industrial production, business inventories and retail sales, were also encouraging. However, at 9.7%, unemployment has yet to ease. Furthermore, existing home sales and durable goods orders for August were worse than expected, leaving investors increasingly nervous about recent market gains. For the quarter ending September 30, the Dow jumped 15.0%, the highest gain in over a decade, while the S&P 500 and NASDAQ climbed 15.0% and 15.7%, respectively. For the year, the Dow, S&P 500 and NASDAQ are up 10.7%, 17.0% and 34.6%, respectively.
All four IBO Stock Indexes ended the month in positive territory, with the Diversified Instrumentation Stock Index gaining the most ground, climbing 9.2%. The Process/Metrology/Motion Instrumentation, Lab Consumables/Equipment and Laboratory Instrumentation Stock Indexes gained 7.5%, 5.7% and 2.8%, respectively.
Laboratory Instrumentation Stock Index
For September, the Laboratory Instrumentation Index rose 2.8% to close at 543.19, with Caliper Life Sciences recording the largest gain, rising 54%. Year to date, the Index has gained 39.2%, led by Helicos Biosciences, which has climbed 633%. For both the month and year, 18 companies have improved, while four companies have traded lower. Sequenom has led all decliners for both periods, falling 49% and 84%, respectively.
Luminex received FDA approval on September 4 for its cystic fibrosis test, leading shares up 3.3%. Cepheid reported on September 9 that it expects to deliver its 45-minute flu test by January 2010. Shares gained 7.2%. On September 17, Sequenom announced the launch of its SensiGene cystic fibrosis screening test, sending shares up 4.4%. Then, on September 24, Cepheid announced FDA approval for its thrombosis Xpert HemosIL FII & FV test, yet shares declined 5.6%.
It was a busy month for Helicos Biosciences. On September 3, the company reported that it had hired Thomas Weisel to help evaluate certain strategic options (see IBO 9/15/09). Shares jumped 8.2%. Helicos soared 16.0% on September 8 when it announced the sale of four systems. On September 16, the company reported a private placement agreement of common stock and warrants valued at approximately $10 million, sending shares down 9.6%. But, on September 24, Helicos jumped 11.9%, following release of a study in which its technology was used to sequence individual RNA molecules.
On September 10, PerkinElmer received a contract valued at over $15 million to work on a GPS satellite program, sending shares up 4.3%. Thermo Fisher Scientific announced on September 15 the resignation of CEO Marijn E. Dekkers, who will be succeeded by Marc N. Casper (see IBO 9/15/09). Shares declined 4.5%. The following day, Bruker reported a public secondary stock offering of 13 million shares priced at $9.85 by two Laukien family members. Shares declined 3.9%. On September 28, Sequenom released details regarding the investigation into its prenatal Down syndrome test (see page 2), sending shares plummeting 39.2% the following day.
On September 21, Barclays Capital upgraded Waters to “Overweight” from “Equal weight,” citing an increase in industrial demand for life science tools. On September 25, Thomas Weisel initiated coverage of Waters with an “Overweight” recommendation. On the same day, Robert W. Baird downgraded Cepheid to “Neutral” from “Outperform.” On September 29, Hapoalim downgraded Sequenom to “Underperform” from “Neutral.”
Process/Metrology/Motion Instrumentation Stock Index
For the month, the Process/Metrology/Motion Instrumentation Stock Index jumped 7.5% to 328.45, with seven companies improving and RAE Systems down 5%. For the year, the Index is up 35.8%. Six companies are in positive territory, and ICx Technologies and Zygo are down 25% and 2%, respectively.
On September 1, Dougherty & Company initiated coverage of ICx with a “Buy” rating. Two days later, Piper Jaffray initiated coverage of Nanometrics with an “Overweight” rating. On September 8, D.A. Davidson & Company downgraded Veeco Instruments to “Neutral” from “Buy,” but increased its price target to $25 from $22.
Lab Consumables/Equipment Stock Index
The Laboratory Consumables/Equipment Stock Index gained 5.7% in September to 480.60, as all eight companies improved. Enzo Biochem led the Index, gaining 39%. For the year, the Index is up 31.9%, with seven companies gaining ground and Techne down 3%. Life Technologies leads the Index, having gained 100%.
On September 14, Pall reported adjusted fiscal fourth-quarter EPS of $0.57 (see page 12), $0.05 better than expectations, sending shares up 1.9% the following day. QIAGEN reported on September 9 the release of its new Influenza A/H1N1 test, yet shares slipped 1.0%. Following the market close on September 22, the company announced a common stock offering of 27.5 million shares to help finance its DxS acquisition (see page 2). Shares fell 4.4% the following day.
On September 9, Leerink Swann upgraded Millipore to “Outperform” from “Market Perform,” leading shares up 4.6%. On September 21, Barclays upgraded its outlook on the life science instrument sector to “Positive” from “Neutral,” and listed Life Technologies as a top pick, sending shares up 1.5%. On September 23, Rodman & Renshaw initiated coverage of Enzo Biochem with a “Market Outperform” rating.
Diversified Instrumentation Stock Index
The Diversified Instrumentation Stock Index gained 9.2% for the month to 91.52, with all six companies improving. AMETEK and Danaher led the Index, each climbing 11%. Year to date, the Index is up 29.9%, with five companies in positive territory and Teledyne Technologies down 19%. Agilent Technologies leads the Index, having gained 78%.
Danaher reported on September 2 the acquisition of MDS’s life science instrument business (see IBO 9/15/09) and announced a new restructuring plan. Shares climbed 2.8%. Two days later, Barclays Capital raised its target on Danaher to $70 from $69. Shares jumped 2.5%. On September 8, Agilent announced a senior note offering of $750 million for general corporate purposes, sending shares up 2.8%.
On September 3, Danaher was upgraded by both Sterne Agee and FBR Capital to “Neutral” from “Sell” and to “Outperform” from “Market Perform,” respectively. On the same day, Longbow initiated coverage of Agilent with a “Buy” rating, while on September 21, Barclays Capital upgraded the company to “Overweight” from “Equal weight.”
International
In September, three Pacific Region companies traded higher, while two companies declined. Techcomp had the biggest move, gaining 25%, while Shimadzu declined 6%. Year to date, all five Pacific Region companies are up in double digits, led by Horiba, which gained 88%.
This month, eight European companies improved, while seven companies lost ground. Millbrook Scientific Instruments led all companies, climbing 51%, while Robotic Technology Systems traded down 25%. For the year, 13 European companies have positive returns, while Exiqon and Alpha MOS are down 30% and 4%, respectively. Scientific Digital Imaging has the largest gain, up 68%.
Robotic Technology confirmed on September 1 that discussions regarding an offer for its remaining shares by Industrial Acquisition Vehicle had been discontinued. Shares fell 21.6%. On September 14, Scientific Digital Imaging reported EPS for fiscal 2009 ended April 30 slightly above break even, compared to £0.01 ($0.02) a year ago. However, revenues climbed nearly 18% to £6.8 million ($10.8 million) due to acquisitions, leading shares up 10%. On September 29, Renishaw reported improved orders and monthly sales of £12 million ($19.6 million), a 15% increase over the average previous five-month figure, leading shares up 1.6%.
Chart: IBO Instrument Industry Stock Index
Lab Instrument Stock Index S&P 500
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
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