Contrary Direction for IBO Stock Indexes

If an inflated stock market is the path to making “America Great Again,” the US markets are certainly pushing a self-fulfilling prophecy. Following President-elect Donald Trump’s victory on November 8, the Dow Jones Industrial Average, S&P 500 and NASDAQ charted a steady climb, rallying 5.4%, 3.4% and 2.6% for the month, respectively. While valuations are not trading at bubble levels as experienced in the past, equity prices are clearly factoring future economic stimulus, which will be needed to support higher market gains. However, the US economy is already showing signs of economic acceleration due to robust consumer spending in the fourth quarter. For the year, the Dow, S&P 500 and NASDAQ are up 9.7%, 7.6% and 6.3%, respectively.

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Laboratory Instruments and Products

Despite most companies trading higher, the Index declined 0.7% in November to close at 243.76. Following a significant drop in the previous month, Fluidigm climbed 38.9% in November to lead the Index. The company posted adjusted third quarter EPS ahead of expectations on November 3 despite its preannounced sales short fall last month (see IBO 10/15/16). While the company did not provide fourth quarter guidance due to an ongoing business review, it projected a slightly optimistic tone during its conference call.

Likewise, Illumina, which also preannounced a revenue shortfall in October (see IBO 10/15/16), likewise, reported better-than-expected third quarter adjusted EPS due to lower SG&A expenses. However, the company cut its 2016 adjusted EPS guidance on November 1 from $3.48­–$3.58 to $3.27–$3.32 because of slower HiSeq demand. Furthermore, on November 29, the company filed an 8-K with the SEC stating that Executive Vice President, Clinical Genomics Tristan Orpin will resign in January 2017 and that a successor has already been selected. Shares contracted 2.5% the following day, resulting in a 2.2% decline for the month.

Several other companies posted stronger-than-expected financial results, including Bio-Rad Laboratories and Mettler-Toledo International. On November 1, Bio-Rad posted third quarter sales (see Third Quarter Financial Results) and adjusted EPS well ahead of consensus due to strong demand for its Digital PCR products, process chromatography an  d diagnostic instruments. The company raised its full-year currency-neutral sales growth outlook from 2.5%–3.0% to more than 4.0%, leading shares up 9.8% for the month.

Led by strong organic growth and margin improvements, Mettler readily topped third quarter revenue and adjusted EPS expectations on November 3. The company also raised its 2016 adjusted EPS from $14.40–$14.50 to $14.61–$14.66 for growth of roughly 13%. Fourth quarter adjusted EPS is expected to grow 9%–10% to $5.08–$5.13. Shares improved 2.0% for the month.

Similar to Bio-Rad, shares for both QIAGEN and NanoString Technologies benefited from positive earnings reports, as shares rallied 12.1% and 13.1% for the month, respectively. However, both companies maintained their previous guidance. On November 3, Bank of America upgraded QIAGEN from “Underperform” to “Neutral.”

MTS Systems climbed 13.2% for the month despite announcing on November 29 that it would delay its fiscal fourth quarter and year-end filing due to an internal investigation (see MTS Investigates Its Chinese Operations). However, the company preannounced a stronger-than-projected fiscal 2016 sales range of $645–$650 million, and estimated GAAP EPS of $1.65–$1.70 compared to its previous guidance of $1.35–$1.50.

Although fiscal fourth quarter earnings results were strong for both Agilent Technologies and Becton Dickson (BD), shares improved a modest 0.9% and 0.7% for the month, respectively. BD reported 9% adjusted EPS growth on November 3, and projected fiscal 2017 EPS of $9.45–$9.55, for growth of 10.0%­–11.0%. The company also raised its quarterly dividend by 11% on November 21 to $0.73 per share.

Meanwhile, on November 15, Agilent reported that adjusted EPS grew 18% as the company benefited from stronger-than-expected biopharmaceutical demand and sales in Europe. The company projected a more conservative adjusted EPS growth of 8% to $2.10–$2.16 for fiscal 2017. Fiscal first quarter adjusted EPS is projected to be $0.48–$0.50. On November 17, the company raised its quarterly dividend by 15% to 13.2 cents.

Bruker reported mixed financial results on November 2, with sales below expectations but earnings significantly higher due to restructuring measures. The company slightly lowered its 2016 organic sales growth outlook, but raised its adjusted EPS guidance from $0.97–$1.02 to $1.07–$1.11. Despite the softer topline projection, sales advanced 10.7% for the month.

As expected, several companies were negatively impacted by earnings results or outlooks. Pacific Biosciences recorded the largest monthly decline in the Index, falling 10.5%. On November 2, the company quantified lower Sequel instrument orders and cut its projected 2016 sales target from $93 million to $86–$90 million.

PerkinElmer and VWR, which tapered 0.3% and 1.1% for the month, respectively, both missed third sales projections due to weak academic funding in Europe. On November 7, PerkinElmer condensed the top-end of its 2016 adjusted EPS range by $0.08 to $2.75–$2.77. VWR maintained its 2016 adjusted EPS guidance of $1.68–$1.74, but projected sales to reach the low end of its range.

Several other larger companies, such as Thermo Fisher Scientific and Waters, recorded notable declines for the month, sliding 4.7% and 3.3%, respectively.

Similar to both Illumina and Fluidigm, top line growth for a number of companies reporting financial results this month were negatively impacted by weak academic and government funding, as well as muted industrial demand. However, in spite of these challenges, most companies managed to beat analysts’ EPS expectations due to cost saving measures, margin improvements, share repurchases and overall modest projections.


Diversified Instrumentation

The Index grew 5.0% in November to 205.28 and is up 9.4% for the year. Except for Danaher, which slipped 0.5%, all other companies traded higher. Teledyne Technologies recorded the largest gain, climbing 16.0%. Despite missing revenue projections, the company easily beat third quarter adjusted EPS consensus on November 3. In addition, the company raised its 2016 adjusted EPS outlook from $5.10–$5.20 to $5.26–$5.31.

Similar to Teledyne, both AMETEK and Xylem missed third quarter sales expectations on November 1, but reported earnings slightly ahead of consensus. Xylem narrowed its adjusted EPS range from $2.00–$2.06 to $2.02–$2.04, yet shares climbed 6.7% for the month. AMETEK lowered its 2016 adjusted EPS range by $0.01to $2.29–$2.31. However, on November 3, the company raised its share repurchase plan by $400 million, leading shares up 7.4% for the month.

In ratings news, on November 2, Janney Montgomery Scott upgraded Xylem from “Neutral” to “Buy” and set a $52 price target. Cowen and Company upgraded Danaher on November 11 from “Market Perform” to “Outperform.”


While Asia Pacific equity markets were mixed in November, sharp declines were recorded by certain Southeast Asian Indexes. In contrast, Japan’ Nikkei 225 and China’s Shanghai Composite advanced 5.1% and 4.8%, respectively

Prices for all Pacific Region companies in the IBO Stock Table traded higher in November, except for Techcomp, which was unchanged. GL Sciences rocketed 25.6% to lead all companies, as the company reported on November 4 that fiscal second quarter EPS jumped more than threefold to ¥31.23 ($0.31).

Shimadzu surged 14.0% for the month. However, the company reported on November 7 that fiscal 2017 second quarter net income slipped 3.3% to ¥7.27 billion ($71.0 million), primarily due to currency.

Precision System Science, which climbed 9.4% for the month, reported on November 14 that fiscal first quarter EPS loss narrowed 12% to ¥8.64 ($0.08).

Following a weak performance in the first half of the year, HORIBA recorded strong third quarter EPS growth of 48% to ¥74.52 ($0.73). The company maintained its 2016 EPS guidance of ¥256.40 ($2.40). Shares improved 1.4% for the month.

On November 11, JEOL reported an EPS loss of ¥26.57 ($0.25) for the fiscal half-year 2017 compared to a profit of ¥13.45 ($0.11) in the previous year. Yet shares advanced 2.7% for the month.

Most European equity markets traded lower in November, led by the Spain IBEX 35 and London FTSE 100 Indexes, which eased 5.0% and 2.5%, respectively. However, Sweden’s OMX Stockholm 30 expanded 2.4%.

Prices for European companies in the IBO Stock Table were mixed. Scientific Digital Imaging recorded the largest gain for the month, climbing 25.0%, while Horizon Discovery sank 12.0%.

Two other UK firms, Oxford Instruments and Halma declined for the month, sinking 7.8% and 10.0%, respectively. On November 14, Oxford reported that adjusted EPS was unchanged at 21.3 pence ($0.29) for the fiscal 2016 half year. Halma reported a stronger result on November 22, as adjusted EPS for the fiscal half year grew 13% to 17.23 pence ($0.24). However, much of the growth was attributed to currency. The company also raised its interim dividend by 7% to 5.33 pence ($0.07).

Benefiting from the acquisition of Sigma-Aldrich (see IBO 9/30/14) and strong Life Science sales, adjusted third quarter EPS for Merck KGaA climbed 29% to €1.70 ($1.47), as reported on November 16. The company also raised its adjusted 2016 EPS outlook by 5% to €6.15–€6.40 ($6.83–$7.11). However, shares improved only 0.9% for the month.

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