IBO Indexes Take Off

US equity prices flourished to start the year as fears over the fiscal cliff diminished. The US Congress agreed on income tax rates and temporarily resolved the debt ceiling issue. In addition, economic figures continued to advance and corporate earnings were mostly ahead of expectations. Despite a negative 0.1% fourth-quarter US GDP due to lower government spending and inventory investment, other economic data such as employment, consumer sentiment, manufacturing and durable orders improved. As a result, the Dow Jones Industrial Average, S&P 500 and NASDAQ climbed 5.8%, 5.0% and 4.1% in January, respectively. All four IBO Stock Indexes traded higher this month, led by the Lab Consumables/Equipment Stock Index, which climbed 13.7%. The Process/Metrology/Motion Instrumentation, Laboratory Instrumentation and Diversified Instrumentation Stock Indexes improved 9.0%, 8.7% and 6.5%, respectively. Laboratory Instrumentation Stock Index The Index gained 8.7% to close at 720.21 for the month. Fourteen companies increased in value and four declined. Pressure BioSciences jumped 105% to lead the Index, while Transgenomic fell 18%. Earnings started off on a positive note as Cepheid preannounced on January 8 better-than-expected fourth-quarter EPS. The company also affirmed manufacturing improvements, which had previously delayed orders, leading shares up 3.6%. On January 24, the company reported a narrower-than-expected adjusted full-year EPS loss of $0.04, and projected adjusted 2013 EPS of $0.01–$0.07. Shares jumped 6.6%. Other companies such as Affymetrix, Illumina, Thermo Fisher Scientific and Waters also beat fourth-quarter EPS estimates. On January 22, Waters reported that full-year adjusted EPS grew 3% to $4.93, and forecast 2013 EPS to grow 9% to $5.30–$5.40. Shares slipped 0.7%. Illumina reported on January 28 that full-year adjusted EPS grew 22% to $1.59 due to stronger-than-expected sequencing revenues (see page 12). Including a $0.20 per share dilution from the acquisition of Verinata (see IBO 1/15/13), Illumina projected full-year 2013 EPS in a similar range of $1.55–$1.62. Shares dropped 2.8% the next day. Earlier in the month, on January 7, Illumina fell 7.0% as Roche refuted speculation over any new takeover offer (see page 9). Thermo reported on January 31 that full-year adjusted EPS grew 19% to $4.94, and projected adjusted 2013 EPS to grow 8%–11% to $5.32–$5.46, which was in line with expectations. Shares climbed 2.5%. On the same day, after the market close, Affymetrix narrowed its full-year adjusted EPS loss by 44% to $0.10. On January 31, PerkinElmer reported that full-year EPS climbed 13% to $2.06, but projected 2013 EPS of $2.24–$2.32, which was at the low range of analysts’ estimates. Sequenom reported on January 6 that preliminary fourth-quarter sales more than doubled to $33 million, including robust sales growth in the Molecular Diagnostic segment and stable demand for the Genetic Analysis business. However, shares fell 2.9% the next day, as Illumina signed a definitive agreement to acquire one of its competitors, Verinata Health. On January 9, Verinata and PerkinElmer completed a marketing and sales agreement to expand Verinata’s non-invasive prenatal test. As a result, Sequenom slumped 6.0% on heavy volume. On January 15, Luminex received FDA approval for its molecular diagnostic assay test, xTAG GPP, for gastrointestinal pathogen infections. Shares gained 1.9%. Transgenomic dropped 32.9% on January 28 following an $8.3 million private placement, which included 16.6 million shares at $0.50 per share and additional warrants for up to 8.3 million shares at $0.75 per share. There were a number of ratings changes this month. Becton Dickinson was upgraded by Morgan Stanley on January 3 from “Underweight” to “Equal Weight,” but downgraded by Mizuho on January 22 from “Buy” to “Neutral.” On January 4, Piper Jaffray upgraded Illumina to “Overweight” from “Neutral.” On the same day, Morgan Stanley upgraded PerkinElmer from “Equal Weight” to “Overweight.” On January 7, ISI Group upgraded Bruker from “Neutral” to “Buy.” On January 17, Credit Agricole upgraded Bio-Rad Laboratories from “Underperform” to “Outperform,” and PerkinElmer from “Outperform” to “Buy.” On the downside, on January 4, Piper Jaffray downgraded Cepheid from “Overweight” to “Neutral.” Wedbush downgraded Illumina on January 4 from “Outperform” to “Neutral.” On the same day, Waters was downgraded by JPMorgan Chase from “Overweight” to “Neutral,” and initiated by Morgan Stanley with an “Equal Weight” rating. Waters was also downgraded by both Leerink Swann and Wells Fargo from “Outperform” to “Market Perform” on January 4 and January 17, respectively. Cowen downgraded Luminex on January 14 from “Neutral” to “Underperform.” Process/Metrology/Motion Instrumentation Stock Index The Index rose 9.0% for the month to 617.40, with all seven companies in positive territory. MTS Systems recorded the largest increase, rising 12%. MKS Instruments beat adjusted full-year 2012 EPS expectations on January 30, despite a 59% decline to $1.00. On an adjusted basis, the company projected a first-quarter EPS loss of $0.06 to a gain of $0.08, which was in line with estimates. On January 31, MTS reaffirmed its full-year 2013 EPS growth outlook of 5%–10% to a mid-range of $5.30. MKS was upgraded by Barclays on January 3 from “Underweight” to “Equal Weight,” and by Bank of America on January 8 from “Neutral” to “Buy.” Piper Jaffray downgraded Veeco Instruments on January 15 from “Overweight” to “Neutral.” On January 28, Dougherty downgraded FEI from “Buy” to “Neutral.” Lab Consumables/Equipment Stock Index In January, the Index grew 13.7% to 745.42. All seven companies increased in value, led by Life Technologies, which climbed 32% due to speculation over a potential buyout (see page 2). Pall raised its share repurchased authorization by $250 million on January 17, leading shares up 1.6% the next day. QIAGEN posted strong fourth-quarter EPS on January 29 due to better-than-expected sales of the QIAsymphony system (see page 12). The company projected adjusted 2013 EPS of $1.16–$1.18, which was above analysts’ estimates of $1.12. Shares climbed 6.1% the next day. On January 4, Macquarie upgraded Pall to “Neutral” from “Underperform.” Life Technologies was upgraded by Credit Agricole on January 18 to “Buy” from “Outperform,” but downgraded by William Blair on January 22 from “Outperform” to “Market Perform.” On January 22, Credit Agricole downgraded Techne from “Outperform” to “Underperform.” Diversified Instrumentation Stock Index The Index advanced 6.5% to 168.47, with all eight companies in positive territory. Mettler-Toledo recorded the highest return, climbing 10%. The diversified water technology company Xylem, which was spun off from ITT in October 2011 (see IBO 1/15/11), was added to the Index. AMETEK, Danaher, Illinois Tool Works (ITW), Roper Industries and Teledyne Technologies each posted double-digit adjusted full-year 2012 EPS growth. On January 24, AMETEK projected adjusted 2013 EPS to grow 10%–13% to $2.07–$2.12, and Teledyne estimated 2013 EPS to grow 2%–3% to $4.42–$4.46. Roper forecasted adjusted 2013 EPS of $5.60–$5.82 on January 28, which was above consensus. On January 29, ITW predicted adjusted 2013 EPS to grow 13% on a pro forma basis to $4.13–$4.37. On the same day, Danaher adjusted its 2013 EPS outlook to 3.32–$3.47, following the pending sale of its Apex Tool Group joint venture. On January 17, Agilent Technologies increased its quarterly dividend by 20% to $0.12 per share and approved a $500 million stock buyback. On the same day, Credit Agricole downgraded the company from “Buy” to “Outperform.” Yet shares rose 2.9%. In other analysts’ opinions, ITW was upgraded by ISI Group on January 2 from “Neutral” to “Buy,” but downgraded by JPMorgan on January 8 from “Neutral” to “Underweight.” Mettler-Toledo was upgraded by Macquarie on January 4 from “Neutral” to “Outperform,” and by Bank of America on January 7 from “Neutral” to “Buy.” ISI Group upgraded Danaher on January 7 from a “Neutral” to “Buy.” Needham initiated Teledyne with a “Buy” recommendation on January 8. The next day, CL King initiated Xylem with a “Buy” rating. International In January, six Pacific Region companies recorded positive returns, led by Precision System Science, which soared 228%. Techcomp declined 10%. GL Sciences, a Japanese provider of HPLC and GC consumables, was added to the list of Pacific Region companies. Hitachi High-Technologies reported on January 25 fiscal third-quarter EPS of ¥2.11 ($0.03), compared to ¥41.10 ($0.53) a year ago. The company lowered its full-year EPS by 39% to ¥89.43 ($1.12) due to lower customer capital spending and R&D. Shares fell 10.1% the following trading day. This month, nine European companies increased in value and five declined. Oxford Instruments recorded the largest gain, rising 15%, while Alpha MOS fell 11%. Porvair, a provider of filtration equipment systems and consumables, was added to the list of European companies. On January 18, Spectris preannounced full-year 2012 organic sales growth of 3%, and a 40 basis point increase in adjusted operating margin to 18.6% of sales. Shares jumped 8.3%. Abcam stated on January 22 that half-year sales ending December 31, 2012, grew 28% or 12% organically. Shares rose 1.0%. For the fiscal year ending November 30, 2012, Porvair reported on January 28 that EPS grew 36% to £0.10 ($0.16). However, shares fell 3.9% as the company projected a more moderate sales growth for fiscal 2013. Sartorius announced on January 29 that full-year adjusted EPS increased 19% to €3.68 ($4.71), and projected 2013 EBITA to climb 50 basis points to 16.5% of sales. Shares rose 2.0%. On January 30, Renishaw reported that adjusted EPS grew 38% to £0.48 ($0.77) for the first six months of fiscal 2013 primarily due to large orders from Chinese consumer electronics customers. Yet shares fell 5.1%.

 Line Graph: IBO Instrument Industry Stock Index             Lab Instrument Stock Index     S&P 500 Jan-11      657.02                         308.36 Feb-11      661.02                         317.14 Mar-11      661.90                         317.88 Apr-11      703.32                         326.93 May-11      721.22                         322.52 Jun-11      712.55                         316.63 Jul-11      676.63                         309.83 Aug-11      635.47                         292.24 Sep-11      577.75                         271.27 Oct-11      602.13                         300.49 Nov-11      569.85                         298.97 Dec-11      565.27                         301.52 Jan-12      628.98                         314.66 Feb-12      634.89                         327.43 Mar-12      644.38                         337.69 Apr-12      637.19                         335.16 May-12      593.81                         314.16 Jun-12      605.89                         326.59 Jul-12      608.43                         330.70 Aug-12      622.96                         337.24 Sep-12      645.40                         345.41 Oct-12      635.37                         338.57 Nov-12      652.47                         339.54 Dec-12      662.53                         341.94 Jan-13      720.21                         359.18
 .                         2012                                 2011 Cos.   Date Rept.  FQ   Adj.EPS   Consensus  Vs.Est.   Grw.   Adj.EPS Laboratory Instrumentation    AFFX   31-Jan      4Q   ($0.02)   ($0.03)    $0.01     83%    ($0.12) CPHD   24-Feb      4Q    $0.11     $0.00     $0.11     83%     $0.06  ILMN   28-Feb      4Q    $0.42     $0.41     $0.01     20%     $0.35  PKI    31-Jan      4Q    $0.65     $0.65     $0.00      5%     $0.62  TMO    31-Jan      4Q    $1.36     $1.28     $0.08     15%     $1.18  WAT    22-Jan      4Q    $1.59     $1.58     $0.01      2%     $1.56  Process/Metrology/Motion Instrumentation  MKS    30-Jan      4Q    $0.10     $0.00     $0.10    -74%     $0.38  MTS    31-Jan      1Q    $0.87     $0.78     $0.09    -11%     $0.98  Lab Consumables/Equipment    QGEN   29-Jan      4Q    $0.34     $0.30     $0.04     17%     $0.29  Diversified Instrumentation    AME    24-Jan      4Q    $0.49    $0.48     $0.01     17%      $0.42  DHR    29-Jan      4Q    $0.87    $0.86     $0.01      7%      $0.81  ITW    19-Jan      4Q    $0.89    $0.89     $0.00     -1%      $0.90  ROP    28-Jan      4Q    $1.48    $1.46     $0.02     20%      $1.23  TDY    24-Jan      4Q    $1.17    $1.08     $0.09     18%      $0.99
 .                                Market Value     52 Week     Price  Change Change        EPS     EPS   LTD/    FY   R&D/ Company:  Exchange                 (US $000s)    Low   High  1/31/13 1Month  YTD   P/E  12Month   FY   Equity  ROE  Sales Laboratory Instrumentation             Accelrys: o                          $531,250   7.12   9.87   $9.42    4%    4%    NM   -0.26   -0.44    4%    1%    24% Affymetrix: o                        $267,790   2.96   5.50   $3.79   20%   20%    NM   -0.15   -0.15   69%    NM    20% Becton, Dickinson and Company: n  $17,012,974  71.56  85.00  $84.04    7%    7%    15    5.59    5.59  127%   28%     6% Bio-Rad Laboratories: n            $3,259,515  91.52 118.00 $113.79    8%    8%    18    6.34    6.26   48%   10%     9% Bruker: o                          $2,822,351   9.91  17.35  $16.87   11%   11%    27    0.62    0.55   60%   15%    11% Cepheid: o                         $2,491,465  28.12  46.00  $36.22    7%    7%    NM   -0.30   -0.30    5%    NM    22% Fluidigm: o                          $371,976  12.53  17.23  $16.50   15%   15%    NM   -0.84   -1.81    1%    NM    33% Harvard Bioscience: o                $143,126   3.45   5.04   $4.97   13%   13%    71    0.07    0.13   21%    4%     5% Illumina: o                        $6,854,948  37.77  57.00  $50.63   -9%   -9%    45    1.13    1.13   71%   11%    20% Luminex: o                           $769,883  15.58  25.79  $18.38    9%    9%    68    0.27    0.34    4%    6%    18% MOCON: o                              $78,766  13.71  20.40  $13.86   -4%   -4%    30    0.46    0.98   24%   16%     6% Pacific Biosciences: o               $138,575   1.06   5.27   $2.48   46%   46%    NM   -1.72   -2.03    5%    NM   225% PerkinElmer: n                     $4,032,866  23.73  35.84  $35.24   11%   11%    58    0.61    0.61   72%    4%     6% Pressure BioSciences: o                $4,458   0.15   0.97   $0.41  105%  105%    NM   -0.61   -0.77   -1%    NM    98% Sequenom: o                          $476,055   2.65   5.83   $4.15  -12%  -12%    NM   -0.97   -0.75  194%    NM    96% Thermo Fisher Scientific: n       $26,093,038  48.14  72.48  $72.14   13%   13%    22    3.21    3.21   63%    8%     3% Transgenomic: o                       $35,823   0.46   1.39   $0.50  -18%  -18%     6    0.09   -0.04   16%    NM     7% Waters: n                          $8,044,516  74.12  94.47  $91.57    5%    5%    18    5.19    5.19   82%   31%     5% Process/Metrology/Motion Instrumentation            FEI Company: o                     $2,546,360  41.52  64.74  $60.96   10%   10%    22    2.79    2.51    7%   15%     9% MKS Instruments: o                 $1,479,433  22.45  34.99  $27.80    8%    8%    31    0.90    0.90    4%    5%     9% MTS Systems: o                       $900,788  36.85  59.00  $56.85   12%   12%    18    3.10    3.21    9%   24%     4% Nanometrics: o                       $370,894  12.39  20.99  $15.61    8%    8%    49    0.32    1.22    6%   14%    10% SDIX: o                               $24,480   0.87   2.13   $1.19   11%   11%    NM   -0.09   -0.01    1%    NM    15% Veeco Instruments: o               $1,231,865  25.51  38.39  $31.45    7%    7%    20    1.61    3.11    1%   17%    10% Zygo: o                              $303,038  13.14  20.44  $15.91    1%    1%     8    2.08    2.30    4%   25%    10% Lab Consumables/Equipment             Enzo Biochem: n                      $113,178   1.33   3.16   $2.89    7%    7%    NM   -1.01   -1.01    0%    NM     6% Kewaunee Scientific: o                $32,174   7.90  13.45  $12.37    2%    2%    13    0.94    0.40   36%    3%     1% Life Technologies: o              $11,466,820  39.73  65.84  $64.69   32%   32%    27    2.40    1.99   61%    8%    10% Pall: n                            $7,929,425  49.97  69.05  $68.30   13%   13%    14    5.04    2.71   56%   21%     3% QIAGEN: o                          $5,072,964  14.42  21.31  $20.98   16%   16%    39    0.54    0.54   28%    5%    10% Sigma-Aldrich: o                   $9,434,260  66.52  77.66  $77.33    5%    5%    21    3.70    3.72   24%   21%     3% Techne: o                          $2,644,634  63.08  76.02  $71.68    5%    5%    24    3.00    3.04    1%   17%     9% Diversified Instrumentation             Agilent Technologies: n           $15,807,340  35.32  46.28  $44.78    9%    9%    14    3.27    3.27   67%   22%    10% AMETEK: n                         $10,054,273  29.86  41.55  $40.99    9%    9%    22    1.88    1.88   70%   18%     3% Danaher: n                        $42,526,328  49.18  61.49  $59.93    7%    7%    18    3.36    3.36   51%   13%     6% Illinois Tool Works: n            $29,096,573  49.07  65.60  $62.83    3%    3%    10    6.06    6.06   58%   27%     1% Mettler-Toledo Int'l: n            $6,715,753 143.60 214.68 $212.53   10%   10%    24    8.72    8.21   89%   35%     5% Roper Industries: n               $11,695,201  90.98 120.67 $117.45    5%    5%    27    4.34    4.34   62%   13%     4% Teledyne Technologies: n           $2,566,576  56.46  72.31  $68.26    5%    5%    16    4.39    4.39   66%   14%     5% Xylem: n                           $5,203,359  22.43  28.87  $27.93    3%    3%    19    1.47    1.50   85%   15%     3% Laboratory Instrumentation Stock Index                       720.21  8.7%  8.7%    21                   71%   11%     7% Process/Metrology/Motion Instrumentation                     617.40  9.0%  9.0%    19                    5%   13%     9% Lab Consumables/Equipment Stock Index                        745.42 13.7% 13.7%    20                   42%   12%     7% Diversified Instrumentation Stock Index                      168.47  6.5%  6.5%    19                   59%   18%     4% Dow Jones Industrial Average                              13,860.58  5.8%  5.8%       S&P 500                                                    1,498.11  5.0%  5.0%       NASDAQ Composite                                           3,142.13  4.1%  4.1%       .                            Price          Region                      Market Value  Market Value    1/31/13 Change Change        EPS        EPS    LTD/    FY   R&D/ Company                      (US $000s)   (Local 000s)    (Local) 1Month   YTD  P/E  12Month      FY    Equity  ROE   Sales Pacific Shares              GL Sciences: t                  $55,642     ¥5,104,502      ¥995    10%   10%    8   ¥126.88   ¥118.87   12%     4%    4% Hitachi High-Technologies: t $2,731,089   ¥250,546,750    ¥1,819     2%    2%   21    ¥88.11   ¥103.71   11%     6%    4% HORIBA: t                    $1,239,744   ¥113,732,579    ¥2,674     7%    7%   17   ¥161.47   ¥204.41   16%     9%    9% JEOL: t                        $300,199    ¥27,539,863      ¥347    51%   51%   NM  -¥115.60  -¥115.60  102%    N/A    5% Precision System Science: os   $105,944     ¥9,719,190  ¥106,500   228%  228%   NM   -¥3,546   -¥2,072   43%     NM   12% Shimadzu: t                  $1,967,846   ¥180,527,760      ¥612     4%    4%   21    ¥29.29    ¥30.79   19%     5%    3% Techcomp: hk                    $54,744 HKD 424,575.00  HKD 1.80   -10%  -10%   48     $0.04     $0.04    7%    13%    1% European Shares (London)               Abcam: I                     $1,132,981       £714,369     £3.90     1%    1%   29     £0.13     £0.13    9%    17%    4% Halma: l                     $2,756,266     £1,737,886     £4.60     0%    0%   20     £0.24     £0.23   58%    22%    5% Oxford Instruments: l        $1,433,162       £903,640    £16.40    15%   15%   33     £0.49     £0.45   42%    20%    8% Porvair: l                     $118,332        £74,611     £1.72    10%   10%   12     £0.14     £0.10   42%     9%   N/A Renishaw: l                  $2,157,606     £1,360,418    £18.69   -10%  -10%   17     £1.13     £0.96   25%    28%   15% Scientific Digital Imaging: l    $6,337         £3,996     £0.21    12%   12%   18     £0.01     £0.00    0%     1%   10% Spectris: l                     $41,540     £2,619,162    £22.14     8%    8%   20     £1.11     £1.07   64%    21%    7% European Shares (Other)             Alpha MOS: c                     $6,633        € 4,881    € 1.25   -11%  -11%   NM   -€ 0.05   -€ 0.14   60%     NM   20% Analytik Jena: g                $79,998       € 58,875   € 10.80    -2%   -2%   18    € 0.59    € 0.59   81%     7%    8% Biotage: st                        $991      SEK 6,300   SEK 8.6     4%    4%   15  SEK 0.56  SEK 0.42    5%     6%    8% Datacolor: s                    $67,401     CHF 61,348 CHF 402.0    -2%   -2%   20 CHF 20.07 CHF 21.48    7%     0%   12% Exiqon:  no                     $50,366    DKK 276,556   DKK 7.5    -9%   -9%   NM -DKK 0.35 -DKK 0.71    1%     NM   21% Sartorius: g                 $1,869,556    € 1,375,920   € 73.50    13%   13%   20    € 3.68    € 3.68  110%    11%    5% Tecan: s                     $1,083,867    CHF 986,522  CHF 86.2    13%   13%   23  CHF 3.83  CHF 4.36    5%    18%   12%
< | >