For the third consecutive month, the markets closed in positive territory, as the Dow Jones Industrial Average, S&P 500 and NASDAQ climbed 4.1%, 5.3% and 3.3%, respectively. Despite the major US stock indexes trading within a narrow range for most of May, investors turned bullish during the final two trading days of the month due to better-than-expected consumer confidence levels, higher durable goods orders and revised GDP figures. On May 29, the Commerce Department revised US first-quarter GDP to a 5.7% contraction, compared to previous estimates of a 6.1% decline. Markets were also supported by another successful auction of Treasury Notes on May 28 and a declining US dollar. Commodity prices jumped 14% to new multi-month highs, led by gold and crude oil, which climbed over 20% in May to finish the month at $61.21 per barrel. Year to date, crude oil has climbed 58%. Unfortunately, rising commodity prices and a declining dollar could lead to higher interest rates and further hinder a long-term economic recovery. Year to date, the Dow is down 3.1%, while the S&P 500 and NASDAQ have gained 1.8% and 12.5%, respectively.

For the month, all four of the IBO Stock Indexes traded higher, led by the Process/Metrology/Motion Instrumentation Stock Index, which jumped 21.9%. In a distant second, the Lab Consumables/Equipment Stock Index climbed 5.6%, followed by the Laboratory Instrumentation and Diversified Instrumentation Stock Indexes, which improved 4.1% and 2.3%, respectively.

Laboratory Instrumentation Stock Index

For May, the Laboratory Instrumentation Index grew 4.1% to 446.23. Thirteen companies traded higher, eight companies declined and Symyx Technologies traded flat. Harvard Bioscience led the Index, climbing 18%, while Helicos Biosciences declined 12%. For the year, the Index has gained 14.3%, with 16 companies in positive territory and six companies declining. Starlims has gained the most, up 66%, while Sequenom has lost 88% of its value.

This month’s earnings releases were again mixed. On the positive side, on May 5, Bio-Rad Laboratories reported EPS of $1.10, $0.12 ahead of consensus, leading shares up 2.3% the following day. Helicos BioSciences reported on May 14 a loss of $0.10 a share, $0.27 better than expectations, yet shares traded marginally lower. On the same day, Starlims announced EPS of $0.16 (see page 12), $0.04 ahead of consensus, leading shares up 2.0%.

Other companies fared less favorably. On May 6, MOCON announced EPS of $0.07, compared to $0.16 a year ago, leading shares down 6.1%. Luminex reported on May 7 EPS of $0.04, $0.01 below expectations, and lowered its revenue outlook by 4% to $125–$135 million, sending shares down 8.5% the following day. On May 13, Transgenomic reported a loss of $0.02 a share, compared to break even earnings a year ago, leading shares down 15.8% the following day.

Illumina filed a patent infringement suit against Affymetrix on May 5 (see IBO 5/15/09), yet Affymetrix traded modestly lower, while Illumina declined 3.1%. On May 18, Illumina released the HumanOmni1-Quad BeadChip for DNA analysis, leading shares up 3.1%. On the same day, Beckman Coulter announced a $250 million stock offering and a placement of $500 million in senior notes to help finance a portion of its recent acquisition of Olympus’s Life Science business. Shares traded marginally higher. On May, Bio-Rad Laboratories sold $300 million in senior subordinated notes for working capital, general corporate purposes or possible acquisitions. Shares traded marginally lower. Affymetrix announced on May 29 the repurchase of $69.1 million of senior convertible notes due 2038.

On May 15, Auriga U.S.A initiated coverage of Illumina with a “Hold” rating. On May 19, Leerink Swann downgraded Helicos to “Market Perform” from “Outperform.” Lazard Capital Markets upgraded Sequenom on May 27 to “Hold” from “Sell.”

Process/Metrology/Motion Instrumentation Stock Index

For the month, the Process/Metrology/Motion Instrumentation Stock Index soared 21.9% to 246.16. Seven companies improved and Nanometrics fell 1%. RAE Systems led all Index companies for the month and year, climbing 88% and 172%, respectively. Year to date, the Index is up 1.8%, with five companies trading higher and three companies trading lower, led by ICx Technologies, which has lost 46%.

On May 5, FEI Company announced EPS of $0.19, $0.05 ahead of consensus, and projected second-quarter EPS of $0.10–$0.14, leading shares up 16.6%. The following day, RAE Systems reported a loss of $0.02, $0.02 better than analysts’ expectations, and projected positive EPS for the year. Shares climbed 3.7%. On May 14, ICx Technologies announced a loss of $0.10, $0.10 ahead of analysts’ consensus, but lowered revenue guidance for the second quarter by 3% to $190–$200 million. Shares declined 1.4% the following day. On May 28, Stifel Nicolaus and Company initiated coverage of FEI and Veeco Instruments each with a “Buy” rating.

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index grew 5.6% in May to 414.57. Seven companies improved, led by Sigma-Aldrich, which was up 11%, while Pall declined 3%. For the year, the Index has improved 13.8%, with five companies gaining ground and three companies reporting losses. Life Technologies leads the Index, up 66%, while Enzo Biochem is down 14%.

On May 4, QIAGEN reported EPS of $0.20, in line with expectations, and confirmed its full-year outlook, yet shares declined 2.9%. On May 25, the company released a product aimed at noninvasive prenatal diagnostics and cancer detection, sending shares up 5.3%. Millipore announced on May 7 EPS of $0.84, in line with expectations, and raised its full-year EPS estimate by 1% to $3.75–$3.90, sending shares up 7.8% the following day. On May 11, UBS upgraded the company to “Buy” from “Neutral.”

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index climbed 2.3% for the month to 74.88, with half the companies improving and the other half trading lower. Mettler-Toledo reported the largest gain, up 16%, while Roper Industries declined 6%. Year to date, the Index has grown 6.3%, with four companies in negative territory and two companies having gained ground. Agilent has improved the most, climbing 17%, while Teledyne Technologies is down 26%.

On May 10, Mettler-Toledo announced a cash tender offer for $150 million in outstanding Senior Notes due November 2010. Shares declined 1.9% on May 12, the day the offer expired, with half the principal amount tendered. On May 14, Agilent reported EPS of $0.13, in line with estimates, and projected EPS of $0.65 for the fiscal year. Shares declined 3.7% the following day. On May 1, Robert W. Baird upgraded Metter-Toledo to “Outperform” from “Neutral.” UBS upgraded Millipore to “Buy” from “Neutral” on May 11.

International

This month, all five Pacific Region companies traded higher, with Horiba leading the way, up 28%. For the year, four companies have positive returns, with Horiba up 86% and Techcomp down 13%.

On May 8, Horiba reported first-quarter EPS of ¥22.88 ($0.24), compared to ¥23.60 ($0.22) a year ago. Shares jumped 15.8% the following trading day. Analytik Jena reported on May 14 fiscal second-quarter EPS of €0.22 ($0.29), compared to €0.01 ($0.02) a share in the previous year, leading shares up 2.0%. On May 12, Shimadzu reported fiscal 2009 EPS of ¥28.92 ($0.29) (see page 12), compared to ¥46.36 a share ($0.41) one year ago. Shares climbed 1.4%.

In May, nine European companies improved, four companies declined and both Scientific Technology Systems and Genetix traded flat. Robotic Technology Systems led all firms, climbing 67% due to the May 13 announcement of acquisition talks. Spectris, the largest decliner, fell 20%. For the year, 11 companies remain in positive territory and four have declined. Millbrook Scientific Instruments has improved the most, gaining 80%, while Exiqon is trading 13% lower.

Chart:

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

Mar-09 393.81 191.29

Apr-09 428.75 209.26

May-09 446.23 220.37