US equity markets surged in early June due to lower unemployment claims, strong Chinese exports and subsiding anxieties over the European debt crisis. However, conflicting economic data, including weak home and retail sales, along with a cautious outlook from the Federal Reserve shifted market sentiment. In addition, the first-quarter US GDP growth rate was again revised downward on June 25 to 2.7% from the previously revised estimates of 3.0% in May. The significant decline from the fourth quarter’s 2009 5.6% GDP growth rate suggests a fading recovery and the likelihood of a challenging second half of the year. For the month, the Dow Jones Industrial Average, S&P 500 and NASDAQ tumbled 3.6%, 5.4% and 6.5%, respectively. For the first half of the year, the Dow, S&P 500 and NASDAQ are down 6.3%, 7.6%, and 7.0%, respectively.

Following suit, all four of the IBO Stock Indexes traded lower in June. The Diversified Instrumentation, Laboratory Instrumentation, Lab Consumables/Equipment and Process/Metrology/Motion Instrumentation Stock Indexes declined 7.0%, 4.8%, 4.2% and 3.9%, respectively.

Laboratory Instrumentation Stock Index

In June, the Laboratory Instrumentation Index contracted 4.8% to close at 531.11. Seventeen companies declined in value, while five companies improved. Symyx Technologies recorded the largest decline, falling 22%, while Caliper Life Sciences grew 11% and 68% for the month and year, respectively. For the first half of the year, the Index is down 6.2%, despite 14 companies in positive territory and eight companies trading lower. Helicos Biosciences sustained the largest fall, declining 57%.

Illumina announced on June 7 that it had sold 51 HiSeq 2000s high-throughput next-generation sequencing systems to the Broad Institute. Shares climbed 2.0%. On June 8, Cepheid received FDA clearance for its rapid Xpert SA Nasal Complete test for staphylococcus, sending shares up 1.7%.

On the same day, Becton Dickinson and Company (BD) reported the sale of its ophthalmic systems business and several product lines to the private equity firm RoundTable. According to BD, these businesses accounted for roughly $200 million in annual revenue. Shares slipped 0.5%. BD Director Henry P. Becton, Jr. sold 77,106 shares in June for a value of $5.3 million and has sold year to date over half a million shares valued at approximately $46 million.

Caliper was added to the Russell 3,000 Index on June 24, leading shares up 1.6%. Consequently, the trading volume surged over 32 times the average three-month daily volume. Symyx Technologies fell 7.2% on June 16, following a revised bid from Certara. On June 30, Symyx shareholders approved the merger with Accelrys (see page 2). Affymetrix jumped 3.9% on June 25, following the FDA’s clearance of Pathwork Diagnostics’ oncology test, which is based on Affymetrix’s microarray technology. On the same day, Helicos announced it would launch a diagnostics business, with the first commercial test expected in the second quarter of 2011. Shares soared 18.6%.

William Blair upgraded Luminex on June 1 to “Outperform” from “Market Perform.” Auriga U.S.A upgraded Sequenom on June 11 to “Buy” from “Hold.” Gleacher & Company initiated coverage of Beckman Coulter on June 10 with a “Buy” rating.

Process/Metrology/Motion Instrumentation Stock Index

The Process/Metrology/Motion Instrumentation Stock Index slipped 3.9% to 342.59 in June, with half the companies gaining ground and the other half in negative territory. ICx Technologies improved the most, gaining 10%, while Veeco Instruments fell 10%. Year to date, the Index has contracted 7.0%, with half the companies trading higher and the other half losing ground. SDIX has recorded the highest growth, up 33%, while RAE Systems has lost 27% of its value.

ICx Technologies was awarded two advanced technology demonstration contracts valued at $9.1 million by the Defense Threat Reduction Agency on June 17. Shares climbed 2.7%.

Lab Consumables/Equipment Stock Index

This month, the Laboratory Consumables/Equipment Stock Index fell 4.2% to 499.51, with six companies trading lower and two companies gaining ground. QIAGEN led the Index with a modest 1% gain, while Enzo Biochem dropped 23% and 24% for the month and year, respectively. For the first two quarters, the Index is down 0.3%, with seven companies in negative territory and Pall up 47%.

Wedbush initiated coverage of Pall on June 1 with a “Neutral” rating. The company reported fiscal third-quarter EPS of $0.58 on June 8 (see page 12), $0.08 higher than consensus and projected full-year EPS at the upper end its range of $1.95–$2.05. Shares jumped 9.0% the following day. Later in the month, on June 14, Pall announced a joint venture with New Brunswick Scientific to develop disposable bioreactor systems. Shares declined modestly. On June 15, the company initiated a $375 million public debt offering, which will primarily be used to repay higher interest-carrying senior notes. Shares climbed 2.9%.

On June 9, Enzo Biochem reported a fiscal third-quarter loss of $0.12, $0.01 wider than expected (see page 12). Yet shares climbed 5.3% the following day, most likely due to positive comments regarding the company’s patent for nucleic acid signal amplification and regulatory approval for its chronic autoimmune uveitis treatment. On June 23, Kewaunee Scientific reported fiscal fourth-quarter and full-year EPS of $0.20 and $1.39, compared to $0.36 and $1.66 a year ago, respectively. Shares declined 4.3% the following day. In other news, on June 3, Millipore shareholders approved the acquisition by Merck KGaA, which is expected to close in the third quarter (see IBO 2/28/10). Shares traded modestly higher.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index slumped 7.0% in June to 100.00. All six companies declined, led by AMETEK, which fell 12% and 8% for the month and year, respectively. The second quarter ended with the Index down 1.7%. Two companies regressed, while four companies advanced, led by Roper Industries, which is up 7%.

On June 2, Danaher raised its second-quarter revenue forecast to a double-digit increase from its previous range of high single-digit to low double-digit growth. Shares climbed 3.1%. In addition, the company’s two-for-one stock split was effective June 11.

International

In June, three Pacific Region companies declined, while two companies improved. Horiba declined the most, sliding 7%. Techcomp jumped 22% and 30% for the month and year, respectively. For the year, three companies have higher values, but Hitachi High-Technologies and JEOL are down 11% and 7%, respectively.

In the May 31 issue, IBO incorrectly calculated the market value for Techcomp. The company issued bonus shares on May 18, which increased the number of shares outstanding to 232.5 million from 155.0 million. Accordingly, the price declined over 50% due to dilution.

For the month, six European companies traded higher, six companies declined and two companies were flat. Oxford Instruments improved the most, gaining 8%, while Alpha MOS fell 7%. For the first half of the year, nine European companies are in positive territory, four companies are down and Alpha MOS is unchanged. Biohit has experienced the largest price increase, up 69%, while Tecan is down 12%.

On June 15, Oxford Instruments announced preliminary full-year adjusted EPS ended March 31 of £0.18 ($0.25), compared to £0.15 ($0.23) a year ago, leading shares up 7.4%. In addition, analysts at JP Morgan Cazenove increased their 2011 fiscal EPS estimates for Oxford by 22% to £0.23 ($0.35) and anticipate 2012 EPS of £0.25 ($0.38). On June 30, Biotage repurchased 56,000 shares, yet the share price was unchanged.

Chart: IBO Instrument Industry Stock Index

Lab Instrument Stock Index S&P 500

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

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