Equities endured bearish sentiment in early March following Japan’s nuclear malfunction, civil unrest in Libya and rising energy costs. For the three days ending March 16, the Dow Jones Industrial Average, S&P 500 and NASDAQ each fell 3.6%. Yet despite global uncertainties, investors refocused on strong US corporate forecasts and positive economic data, including improved manufacturing, lower jobless claims and a better-than-expected fourth-quarter GDP figure. On March 25, US real GDP growth was revised up to 3.1% annualized growth from 2.8%. The Dow and S&P 500 rebounded to finish the month up 0.8% and 0.2%, respectively, while the NASDAQ traded flat. For the first quarter, the Dow, S&P 500 and NASDAQ were up 6.4%, 5.4% and 4.8%, respectively.

All four IBO Stock Indexes rose in March. The Diversified Instrumentation, Process/Metrology/Motion Instrumentation, Lab Consumables/Equipment and Laboratory Instrumentation Stock Indexes improved 2.3%, 1.6%, 0.6% and 0.1%, respectively.

Laboratory Instrumentation Stock Index

In March, the Laboratory Instrumentation Stock Index rose 0.1% to close at 661.90. Fourteen companies traded higher. Nine declined, led by Helicos BioSciences, which fell 19%. For the quarter, the Index appreciated 0.3%, with 17 companies gaining ground, five contracting and one unchanged. Harvard Bioscience recorded the largest growth for the month and year, leaping 31% and 39%, respectively. Sequenom has lost the most value, sliding 21% for the year.

Several smaller companies in the Index reported positive EPS results. On March 1, X-Rite topped analysts’ fourth-quarter outlook and projected double-digit revenue growth for the first quarter, yet shares slipped 0.9%. The next day, MOCON reported record fourth-quarter earnings, leading shares up 1.9%. Sequenom announced a narrower-than-expected loss on March 8, but also notified investors of potential civil injunctions by the SEC for previous violations, leading shares slightly lower. On March 9, Fluidigm reported a narrower adjusted EPS loss, excluding stock-based compensation expense and depreciation (see page 12). The firm forecast 2011 product revenue to grow 25%–27% to $38 million. Shares fell slightly the next day.

On March 3, Accelrys reported fourth-quarter EPS in line with forecasts, yet shares dropped 5.2%. The company projected 2011 EPS of $0.34–$0.37. The same day, SDIX reported a slightly wider EPS loss for the fourth quarter, leading shares down 6.7% on March 4. Transgenomic reported a loss on March 10, yet shares climbed 2.6% the following day.

On March 14, Illumina announced an offering of $800 million in 0.25% convertible senior notes due in 2016 to be used for stock repurchases, debt conversion and potential acquisitions. Shares traded slightly lower. On March 30, X-Rite entered into a $225 million senior secured credit facility to redeem all outstanding preferred stock.

Sequenom was rated a “Hold” on March 11 by Jeffries with a $7.00 price target and “Outperform” with a $9.00 price tag on March 17 by Oppenheimer. Jeffries also initiated coverage of Luminex on March 11 with a “Hold” recommendation and a $16.00 price target. Cepheid received an initial “Buy” rating and $30.00 price target from Jeffries on March 11. On March 17, the company received an “Outperform” rating and $33.00 price target from Oppenheimer. On the same day, Oppenheimer initiated coverage of both Affymetrix and Pacific Biosciences with an “Outperform” recommendation. On March 22, Fluidigm received an initial “Outperform” rating from Cowen and Leerink, as well as an “Overweight” rating from Piper Jaffray. The following day, Deutsche Bank started coverage of Fluidigm with a “Buy” rating and a $19.00 price target. Wells Fargo initiated coverage of Bruker and Waters on March 30 with an “Outperform” and “Market Perform” rating, respectively. On March 28, Auriga upgraded Illumina from “Hold” to “Buy” and set a $75.00 price target.

Process/Metrology/Motion Instrumentation Stock Index

The Process/Metrology/Motion Instrumentation Stock Index grew 1.6% in March to 552.58. Five companies traded higher, and two declined. Veeco Instruments led the Index, improving 7%, while MTS Systems contracted 2%. For the quarter, the Index has gained 22.8%, with all seven companies in positive territory. Nanometrics boasts the highest return, up 41%.

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index improved 0.6% to 637.34, despite six companies trading lower and only Pall gaining 6%. Kewaunee Scientific lost the most value, declining 15%. Year to date, the Index has grown 1.8%, with four companies losing ground and three having positive returns. Pall leads the Index, having gained 16%, while Enzo Biochem is down 21%.

Kewaunee dropped 14.2% on March 2 following an 88% decline in fiscal third-quarter EPS due to order delays. The company anticipates improved fourth-quarter earnings as stalled orders are expected to ship. Enzo Biochem missed fiscal second-quarter EPS consensus on March 14, sending shares down 4.1% the next day. Pall crushed fiscal second-quarter EPS expectations on March 10 and increased full-year EPS by 12% to $2.80–$2.90. Shares jumped 6.2% the following day. On March 31, GARP Research downgraded QIAGEN from “Buy” to “Neutral.”

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index grew 2.3% to 144.19 this month. Five companies advanced and two declined in value. Agilent Technologies led the Index, gaining 6%, and Teledyne Technologies slipped 1%. For the first quarter, the Index is up 7.5%, with all companies trading higher, led by Teledyne, which is up 18%.

Agilent climbed 9.2% on March 4 following a report from JPMorgan Chase that the company increased its long-term sales and operating margin forecasts during an analysts meeting. On March 21, Illinois Tool Works (ITW) preannounced first-quarter revenue growth of 11%, slightly below its forecast of 12%–15%. ITW maintained its earnings outlook for the quarter and year, leading shares up 1.9%. ITW was downgraded on March 30 by Bank of America/Merrill Lynch from “Buy” to “Neutral.” Shares fell 1.6%.

International

Japan’s major equity markets were vulnerable following the earthquake and tsunami on March 11. On March 15, the Nikkei 225 dropped 10.6% due to radiation threats from nuclear power plants. For the month, three Pacific Region companies finished lower, and two improved. Hitachi High-Technologies suffered the largest decline, falling 13%, and Techcomp gained 7%. For the quarter, three companies increased in value, and two subsided. Shimadzu leads all companies with a 17% increase, while JEOL is down 15%.

Six European companies improved in March, and eight declined. Oxford Instruments enjoyed the largest return, up 14%, but Exiqon fell 18%. For the year, eight firms have gained, five are lower and Biotage is flat. Cybio maintains the largest return, up 45%. Tecan is down 7%. For continuing operations, Tecan reported on March 10 a 2.9% decline in 2010 EPS to CHF 4.43 ($4.73). Shares fell 7.6%.

 Line Graph: IBO Instrument Industry Stock Index

           Lab Instrument Stock Index       S&P 500

 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

 Oct-10    579.40                           283.69

 Nov-10    589.00                           283.04

 Dec-10    660.07                           301.53

 Jan-11    657.02                           308.36

 Feb-11    661.02                           317.14

 Mar-11    661.90                           317.88

 2010                                             2009

          Date Rept.    4Q Adj.EPS   Consensus Vs.  Est.   EPS Growth    4Q Adj.EPS

 Cos.       

 Laboratory Instrumentation Index

 ACCL     3-Mar         $0.08          $0.08      $0.00         0%          $0.08   

 FLDM     9-Mar        ($0.63)         NA         NA            NA         ($1.22)

 MOCO     2-Mar         $0.84          NA         NA            58%         $0.53

 SDIX     3-Mar        ($0.01)         NA         NA            NA         ($0.00)

 SQNM     8-Mar        ($0.19)        ($0.21)     $0.02         NA         ($0.30)

 TBIO    10-Mar        ($0.02)         NA         NA            NA          $0.00

 XRIT     1-Mar         $0.05          $0.03      $0.02         NA          NA

 Process/Metrology/Motion Instrumentation Index

 RAE     22-Mar         $0.04          NA         NA            300%        $0.01

 Lab Consumables/Equipment Index

 ENZ     14-Mar        ($0.15)        ($0.10)    -$0.05         NA         ($0.30)

 PLL     10-Mar         $0.68          $0.57      $0.11         62%         $0.42

 KEQU    2-Mar          $0.03          NA         NA           -88%         $0.24