June began with renewed economic optimism as data for May came in slightly better than expected. The markets were even reassured following the bankruptcy filing of GM on June 1. Although some market euphoria can be attributed to positive financial media spin, many observers believe the macroeconomic environment is improving and that the US will exit the recession in the second half of the year. While plausible, economic data is conflicting. Reports on June 15 and 16 revealed slower-than-expected regional manufacturing and industrial production, leading the Dow Jones Industrial Average, S&P 500 and NASDAQ down 3.3%, 3.6% and 3.4%, for the two days, respectively. In addition, the World Bank forecasted on June 22 that the global economy will contract 2.9% in 2009 and suggested a peak in commodity prices. Yet, despite a decline in consumer-confidence levels and higher unemployment rates, the markets continued to rebound following optimistic testimony by Federal Reserve Chairman Ben Bernanke on June 25. Short of suggesting any market manipulation, every downturn has been met with pronounced buying. As such, the markets recovered to end the month with mixed results. The NASDAQ and S&P 500 improved 3.4% and less than 0.1%, respectively, while the Dow closed down 0.6%. For the first-half of the year, the NASDAQ and S&P 500 are up 16.4% and 1.8%, respectively, while the Dow is trading lower by 3.8%.

All four of the IBO Stock Indexes traded higher in June, with the Laboratory Instrumentation Stock Index leading the way, improving 7.5%. The Lab Consumables/Equipment, Diversified Instrumentation and Process/Metrology/Motion Instrumentation Stock Indexes followed closely behind with gains of 5.6%, 5.4% and 4.5%, respectively.

Laboratory Instrumentation Stock Index

In June, the Laboratory Instrumentation Index gained 7.5% to close at 479.85. Sixteen companies improved, while six declined. For the year, the Index is up 22.9%. Bruker led the Index for both the month and year, climbing 42% and 129%, respectively, while PerkinElmer declined 29% and 46% for the month and year, respectively.

Most Index companies enjoyed strong gains. Bruker jumped 9.2% following the introduction of three MS platforms at the ASMS Conference on June 2 (see IBO 6/15/09). Illumina climbed 4.4% on June 11 when the company announced consumer services for personal genome sequencing (see IBO 6/15/09). On June 26, MOCON reported a new $2 million common stock share-repurchase program, leading shares up 1.8%.

However, not all news was well received by investors. Bruker declined 5.6% on June 16 following a shelf-registration statement to sell 70 million shares. The potential $550 million offering includes a primary offering of 35 million shares by Bruker and a secondary offering of an equal amount by three members of the Laukien family. Dirk Laukien, director and senior vice president, alone registered up to 14.2 million shares. Upon completion of the offering, ownership in the company for the three Laukien family members would decline to 9.5% from 32.9%.

On June 30, Sequenom announced that the SEC has initiated an investigation into the company’s Down Syndrome test SEQureDx, which sent shares down 7% in after-hours trading. The company was the target of speculation this month about information regarding the test’s mishandled data (see IBO 4/30/09). Expectations were also attributed to a large options purchase on June 9, which helped shares climb 58.2% on more than 10 times the average volume. However, shares retracted as rumors appeared to be unfounded.

Robert W. Baird upgraded Waters on June 22 to “Outperform” from “Neutral.” The following day, Barclays Capital downgraded PerkinElmer to “Underweight” from “Equal Weight,” citing growth concerns due to high expose to the industrial markets. Shares fell 2.9%.

Process/Metrology/Motion Instrumentation Stock Index

The Process/Metrology/Motion Instrumentation Stock Index grew 4.5% to 257.35 this month, with half the companies trading in positive territory. ICx Technologies recorded the largest gain, up 41%, while Strategic Diagnostics fell 18%. For the first half of the year, the Index has improved 6.4%, with five companies trading higher and three in negative territory. RAE Systems led the Index, up 156%, while Zygo was down 33%.

Veeco Instruments announced on June 15 the retirement of CFO John F. Rein Jr., who served for 15 years. Shares declined 6.3%. However, the company rebounded 6.6% the following day due to a “Buy” recommendation from Merriman. Concurrently, Merriman initiated coverage of FEI Company with a “Buy” rating. On June 17, Nanometrics and ZYGO announced an exclusive OEM supply agreement and the sale of Zygo’s Semiconductor Solutions business to Nanometrics, sending shares up 7.7% and 2.2%, respectively.

Lab Consumables/Equipment Stock Index

For the month, the Laboratory Consumables/Equipment Stock Index climbed 5.6% to 437.95. All eight companies improved, led by Kewaunee Scientific, which rose 15%. For the year, the Index has climbed 20.2%, with five companies trading higher and three companies in negative territory. Life Technologies gained the most, increasing 79%, while Enzo Biochem lost 9%.

There were several mixed earning reports this month. After the market close on June 8, Pall reported fiscal third-quarter EPS of $0.42, in line with analysts’ expectations, and announced a contract to build a water treatment system in the Philippines worth $14.7 million. Shares climbed 7.8% the following day. Nonetheless, Barclays Capital downgraded Pall on June 10 to “Equal Weight” from “Overweight,” leading shares down 7.2%. On June 15, Enzo Biochem announced a fiscal third-quarter loss of $0.11 (see page 12), compared to a loss of $0.06 in the previous year. Shares fell 11.6% the following day. Kewaunee Scientific reported on June 24 fiscal fourth-quarter EPS of $0.36, compared to $0.17 in the previous year (see page 12), leading shares up 8.6% the following day. In other news, Enzo announced positive data on June 2 from its Phase II clinical trial for treatment of Crohn’s disease. Shares climbed 9.0%.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index improved 5.4% in June and 12.0% for the year to 78.92. For both the month and the year, five companies finished higher, while Teledyne Technologies declined less than 1% and 26%, respectively. Agilent Technologies led the Index for both the month and year, improving 11% and 30%, respectively. Oppenheimer upgraded Roper Industries on June 3 to “Outperform” from “Perform,” with a price target of $52. On June 30, Longbow initiated coverage of AMETEK with a “Buy” rating.

International

In June, all five Pacific Region companies improved, with Shimazdu gaining the most ground, climbing 19%. For the year, four companies have increased in value, led by Horiba, which is up 88%, while Techcomp is down 4%. Horiba issued a statement on June 2 stating that the impact of GM’s bankruptcy filing would have minimal effect on the company’s earnings. Shares rose 4.0%.

For the month, nine European companies traded higher, while six companies declined. Millbrook Scientific Instruments declined the most, falling 35%. For the first half of the year, 11 European companies are higher, while four companies are down, led by Renishaw, which has lost 31%. Robotic Technology Systems (RTS) led all companies for both the month and year, up 57% and 120%, respectively. On June 5, Millbrook reported declining orders for its MiniSIMS. As a result, the company is exploring strategic options for the business in order to help lower costs and conserve cash. Shares declined 29.4%.

On June 9, Oxford Instruments announced preliminary adjusted EPS for fiscal 2009 ended March 31 of £0.15 ($0.25), compared to £0.12 ($0.23). However, the company estimated flat to negative revenue growth for fiscal 2010, leading shares down 7.1%. RTS jumped 7% on June 4 after it announced that holding company Industrial Acquisitions Vehicle had acquired of 24.5% of its outstanding stock and is in acquisition talks with the company.

Chart: IBO Instrument Industry Stock Index

Lab Instrument Stock Index S&P 500

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

Jun-09 479.85 220.41