US equity markets soared in September following positive corporate results, renewed M&A activity, lower unemployment claims, increased consumer spending and better-than-expected manufacturing data. In addition, on September 20, the National Bureau of Economic Research officially confirmed that the US recession ended in June 2009, further arousing investors’ optimism. As a result, the Dow Jones Industrial Average, S&P 500 and NASDAQ ended the month up 7.7%, 8.8% and 12.0%, respectively. Yet, despite gradually improving economic data and rising equities, the housing market and unemployment rate remains anemic. Furthermore, recent manufacturing data reveal rising inventories and declining new orders, suggesting a possible sluggish fourth quarter. For the year, the Dow, S&P 500 and NASDAQ are up 3.5%, 2.3% and 4.4%, respectively.

Following depressed returns in August, all four IBO Stock Indexes ended September with double-digit gains. The Diversified Instrumentation Stock Index posted the highest return, climbing 14.7%. The Process/Metrology/Motion Instrumentation, Lab Consumables/Equipment and Laboratory Instrumentation Stock Indexes gained 13.1%, 11.7% and 11.4%, respectively.

Laboratory Instrumentation Stock Index

For September, the Laboratory Instrumentation Index rose 11.4% to close at 556.95, with all companies improving in double digits, except for Helicos BioSciences, which fell 4%. OI Corporation recorded the largest gain, rising 59%. Year to date, the Index is down 1.6%, with 14 companies in positive territory, one company trading flat and six companies losing ground. X-Rite enjoys the largest price increase, having gained 74%, while Helicos BioSciences is down 53%.

Acquisitions and strategic initiatives helped elevate stock prices in the Laboratory Instrument Index. On September 3, Bruker filed for an IPO for its Energy & Supercon Technologies unit of up to $100 million in common stock (see IBO 9/15/10). Proceeds will be used to repay debt, expand production and invest in R&D. Shares climbed 5.0%. Thermo Fisher Scientific announced on September 9 an additional $750 million share repurchase program. The company had previously authorized a similar buyback, of which $188 million remains. Shares climbed 2.9%. On September 14, OI soared 45.7% following a definitive agreement to be acquired by ITT (see IBO 9/15/10).

In other news, Cepheid jumped 9.5% on September 2 following a study in the New England Journal of Medicine that concluded that its Xpert MTB/RIF test successfully detected 98% of all patients with a form of tuberculosis. On September 7, amid several class action lawsuits filed against Beckman Coulter for breach of fiduciary responsibilities, Chairman, President and CEO Scott Garrett resigned (see IBO 9/15/10). Shares fell 4.1%. Finally, on September 21, PerkinElmer CEO Robert Friel provided bullish comments regarding the second half of the year and for 2011, lifting shares 1.3%.

On September 7, Auriga USA initiated coverage of Waters with a “Buy” recommendation and rated Thermo Fisher Scientific with a “Hold.” On September 10, Becton Dickinson received an initial “Average” rating from Caris & Company, and on September 27 was upgraded by Goldman Sachs to “Neutral” from “Sell.” JMP Securities initiated coverage of Bruker on September 17 with a “Market Outperform” recommendation. The following day, Zacks Equity Research initiated coverage of Beckman Coulter with an “Underperform” rating.

Process/Metrology/Motion Instrumentation Stock Index

The Process/Metrology/Motion Instrumentation Stock Index jumped 13.1% to 365.19. Six companies gained in value and two companies traded lower. RAE Systems recorded the largest increase, climbing 76%, while SDIX dropped 12%. For the year, the Index is down 0.9%, with six companies in positive territory and two with negative returns. Zygo leads the Index, up 46%, while ICx Technologies is down 21%.

On September 3, shareholders for ICx Technologies received a tender offer of $7.55 a share from FLIR Systems (see IBO 9/15/10). Shares slipped 1.0%. RAE Systems jumped 50.0% on September 20 as the company agreed to be acquired for $1.60 a share (see page 2). On the same day, FEI Company announced a stock repurchase program for up to four million shares, sending shares up 4.8%.

On September 1, Veeco Instruments received an initial “Buy” rating from Kaufman Brothers. However, the company was downgraded on September 8 by Avian Securities to “Neutral” from “Positive.”

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index expanded 11.7% in September to 549.71. Six companies traded higher, led by Pall, which gained 22%, while QIAGEN declined modestly. For the year, the Index is up 9.7%, with five companies gaining ground and two companies losing value. Sigma-Aldrich has improved the most, climbing 19%, while Enzo Biochem is down 29%.

On September 1, QIAGEN launched its QIAsymphony RGQ system, a new automated modular testing platform for molecular diagnostics. Shares climbed 2.8%. Pall reported on September 14 fiscal fourth-quarter EPS of $0.72 (see page 12), $0.08 above consensus, and projected 2011 EPS of $2.35–$2.55. Shares increased 6.3% the following day. On September 17, Kewaunee Scientific reported fiscal first-quarter EPS of $0.25, compared with $0.42 a share a year ago, yet shares soared 15.5%. On September 20, Enzo Biochem announced that is has streamlined operations to reduce annual operating expenses by $4 million, and as a result projected positive cash flow in 2011. Shares climbed 6.9%.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index jumped 14.7% for the month to 112.53, with all six companies gaining in double digits. Agilent Technologies experienced the largest return, climbing 24%. Year to date, the Index is up 10.6%. All companies are in positive territory, led by AMETEK, which is 25% higher.

Auriga USA initiated coverage of Mettler-Toledo on September 7 with a “Hold” rating. On September 13, Danaher received an initially “Buy” recommendation from Longbow and on September 15 was rated a “new Buy” by Citigroup. On September 29, Danaher announced it would acquire Keithley Instruments. Shares slipped 2.1%.

International

In September, four Pacific Region companies traded higher, but JEOL declined 1%. Techcomp recorded the largest increase, climbing 14%. Year to date, three Pacific Region companies are trading higher, and two have negative returns. Techcomp leads all companies with a 33% return, while JEOL is down 25%.

This month, seven European companies improved, five declined and two were unchanged. Robotic Technology Systems sustained the biggest decline, contracting 13%. Oxford Instruments enjoyed the largest price increase for both the month and year, climbing 40% and 147%, respectively. Year to date, nine companies increased in value, while five have negative returns, led by Cybio, which has dropped 15%.

On September 9, Renishaw reported roughly £20 million ($31 million) in sales for the months of July and August each, and acknowledged that sales in Japan and the rest of Asia have doubled compared with a year ago. The company also announced booking orders of £25 million ($38 million) at the end of August. Shares jumped 14.5%. Oxford Instruments reported on September 14 that adjusted profit before tax for the first half of the year ending September 30 would exceed £10 million ($15 million), compared with £2.8 million ($4.4 million) a year ago. Shares jumped 17.3%. On September 23, Robotic Technology Systems reported a loss of £0.01 ($0.01) a share for the first half of the year ended June 30 (see page 12), compared with slightly above breakeven a year ago. Shares fell 6.7%.

Line Graph: IBO Instrument Industry Stock Index

Lab Ins. S&P 500

Stock Index

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

Apr-10 596.47 284.51

May-10 557.61 261.19

Jun-10 531.11 247.12

Jul-10 513.20 264.12

Aug-10 499.94 251.58

Sep-10 556.95 273.61