After nine years of a bullish market, the US markets showed great volatility throughout the month of October. The month started off strong for the Dow Jones Industrial Average, S&P 500 and NASDAQ due in part to the revision of the NAFTA accord amongst the US, Mexico and Canada. Also, investors were optimistic about the upcoming third quarter corporate earnings reports. But the market began to turn starting October 3, as investors sold off riskier assets such as technology stocks due to concerns about various geopolitical events and signs of a slowing US economy. These concerns caused many investors to be risk averse and buy more stable assets, such as defensive utility stocks and US Treasury Bonds. Even though the US major stock indexes experienced minor upswings during the weeks of October 12 and October 22 due to reported corporate earnings, the US market experienced its worst performance since May 2010.

One of the major geopolitical concerns that made investors risk averse was the ongoing US-China trade issue. On October 1, an annual security meeting between the two countries scheduled for mid-October was canceled. The two nations are expected to discuss the trade issue at the upcoming G20 summit meeting. Other geopolitical and economic events such as Italy’s populist government contending with the EU about its budget and the ongoing Brexit talks in the UK have majorly impacted foreign markets. Currently, Europe, Japan, Shanghai, Hong Kong, Argentina, and Canada are in correction territory—a drop of at least 10% from a recent high from earlier in the year.

Monthly US oil prices went down 12% because of investors’ concerns about the upcoming Iran sanctions that could tighten the global oil supply. However, according to the US Energy Information Administration, inventory for the US is at 6.5 million barrels which is 2% above analysts’ expectations.

On October 26, the Commerce Department announced the first estimate of the third quarter GDP, which increased 3.5%, a decline from the second quarter figure of 4.2%. Financial analysts state that despite the decline and other factors such as a low unemployment rate (4.2%), higher wages and rising government spending, there are no signs of accelerated inflation and an imminent recession. However, the Federal Reserve has stated that rising inflation could occur and it still plans to raise interest rates later in the year and in 2019.

For the month, all three major stock indexes experienced losses. The Dow Jones Industrial Average was down 5.1%, the S&P 500 was down 6.9% and the NASDAQ was down 9.2%. Year to date, the Dow is up 1.6%, the S&P 500 up 1.4%, and the NASDAQ up 5.8%.

Click to enlarge

Laboratory Instruments and Products Stock Index

The Index declined 9% in October to 384.91, but is up 14.1% for the year. The Index’s performance was poor with all companies experiencing losses. The worst performing company for the month was Harvard Bioscience, declining 24.6%. The company that experienced the least loss was Waters, with only a 2.6% decline.

In other news for Waters, on October 23, the company reported fiscal third quarter financials and forecast its fourth quarter EPS of $2.55–$2.65. For fiscal full-year 2018, the company decreased its earnings guidance by 0.63% of $8.00–$8.10.

Harvard Bioscience, on October 25, reported fiscal third quarter financials and forecast fiscal fourth quarter adjusted EPS guidance to be $0.07–$0.09. The company revised its fiscal full-year EPS guidance to $0.20–$0.22, compared to the previous guidance of $0.20–$0.23.

On October 14, Enzo Biochem reported fiscal fourth quarter financials. For the quarter, adjusted EPS decreased from $94,000 to a loss of $5.8 million. The company did not provide an adjusted EPS forecast for fiscal full-year 2019.

On October 23, Illumina reported its fiscal third quarter financials. The company forecasted fiscal fourth quarter adjusted EPS of $1.30–$1.35 and fiscal full-year EPS guidance of $5.70–$5.75, a 52.8% upside. In analyst ratings news, UBS gave Illumina a “neutral” rating and a $340 analyst price target, a 4% upside from the October 9 price of $323.86.

Reporting a consistently strong operational performance, on October 24, Thermo Fisher Scientific increased its fiscal full-year 2018 guidance to $11–$11.06 resulting in a 16%–17% growth.  The guidance was adjusted to reflect a less favorable foreign exchange (a 1% headwind) and cover any potential impact of the US-China trade issue.

QIAGEN announced its third quarter results on October 29, posting an adjusted EPS of $0.35, a $0.01 decrease of its third quarter guidance. In addition, the company forecasted its fourth quarter adjusted EPS of $0.39–$0.40. For the fiscal full-year 2018, QIAGEN increased its guidance to $1.33–$1.34 because of the company’s strong sales and revenue growth throughout 2018.

Click to enlarge

On October 30, Bio-Techne reported its fiscal first quarter 2019 results, posting a 9.0% increase in its adjusted EPS to $0.98. The company did not provide forecast guidance for subsequent fiscal quarters. In rating news, on October 17, Goldman Sachs initiated coverage for Bio-Techne and set a “neutral” rating and a $190 price target, a 4% upside from the current price of $182.72.

On October 31, PerkinElmer announced its third quarter results, posting an adjusted EPS of $0.90, a decrease of $0.02 of its guidance. The adjusted EPS guidance was missed because of the negative impact of foreign exchange on the company’s organic sales growth. For the fiscal full-year, PerkinElmer forecasted an adjusted EPS of $3.60. In ratings news, UBS gave PerkinElmer a “neutral” rating and a $100 price target, a 10% upside from the October 9 price of $90.87.

In other analyst ratings news, on September 20, Morgan Stanley initiated coverage of Bio-Rad Laboratories. It set an “equal weight” rating and a $335 price target, an 11.0% increase from the then current price of $301.85. On October 17, Goldman Sachs also initiated coverage of Bio-Rad Laboratories with a “buy” rating and a $350 price target, a 21.6% increase from the October 17 price of $287.78.

On October 9, UBS initiated coverage for various life science companies. Nanostring Technologies was given a “buy” rating and a $23 analyst price target, a 47% increase from the October 9 price of $16.65. Bruker was given a “sell” rating and a $30 analyst price target, a 10% downside risk of the October 9 price of $32.49. On October 19, Cowen initiated coverage of Pacific Biosciences and set the company with an “outperform” rating and a $6.50 price target, a 46.1% upside of the October 19 price of $4.45.

On October 15, Nanostring Technologies entered a new $100 million Term Loan Facility with CR Group (CRG). Proceeds of the term loan facility will be used to refinance the company’s earlier loan from CRG.

Diversified Laboratory Stock Index

The Index declined 10.7% in October to 257.96 and is down 5.1% year to date. All the companies in the Index experienced losses. Roper Technologies experienced the least, declining only 4.5%. In other news, on October 26, Roper Technologies increased its fourth quarter adjusted EPS guidance to $3.10–$3.14. The company’s fiscal full-year 2018 EPS guidance forecast is $11.69–$11.73, a 2.5% increase.

Xylem experienced the greatest loss for the Index during the month, declining 17.9%. In ratings news, Credit Suisse initiated coverage for Xylem, with an “outperform” rating and a $86 analyst price target, a 24.7% increase of the October 12 price of $68.96.

On October 6, Illinois Tool Works announced its fourth quarter and full-year 2018 guidance. For the quarter, the company forecasted a GAAP EPS range of $1.78–$1.88. The full-year 2018 GAAP EPS guidance expectations increased 15.0% to $7.55–$7.65.

On October 19, Honeywell increased its 2018 EPS forecast to $7.95–$8.00, a 5.3% increase from its previous guidance. This change reflects the strong operational performance of the company. In ratings news, on October 12, Credit Suisse Group AG initiated coverage for Honeywell with a “neutral” rating and analyst price target of $170, a 10.1% increase from the then current price of $154.44. In addition, on October 22, Royal Bank of Canada gave Honeywell a “positive” rating with an analyst price target of $156, a 1.4% increase from the October 22 price of $153.81.

Teledyne Technologies reported its third quarter earnings on October 24. The company provided a fourth quarter GAAP EPS guidance of $2.15–$2.20. For the fiscal full year, Teledyne increased its GAAP EPS guidance by $0.53 to $8.71–$8.76.

On October 18, Danaher reported third quarter financials and forecasted fiscal fourth quarter adjusted EPS of $1.25–$1.28. The company also raised its fiscal full-year EPS guidance by $0.06 to $4.49–$4.52.

Corning reported its third quarter 2018 results on October 23. Adjusted EPS increased 28% due to expansion project investments and currency hedges. The company did not provide an adjusted EPS forecast for the fourth quarter and year end.

On October 30, Xylem’s narrowed its full-year 2018 EPS guidance of $2.87–$2.89 due to the company being impacted by a $0.05 negative foreign exchange effect throughout the year.

International Stocks

For the month, the Asia Pacific markets were down. India’s Sensex was the least affected, down 4.26%, but Japan’s Nikkei was impacted the most with a 9.1% decline, respectively.

Prices for most of the Pacific region companies in the IBO Stock Table decreased this month with the most significant decline for JEOL, sliding 24.7%. In contrast, Hitachi High-Technologies is the only Japanese company in the Table with gains, rising 8.7%.

European equity markets were also down in October. Italy’s FTSE MIB experienced the biggest loss with an 8.1% decline. The indexes that experienced the least losses were London’s FTSE 100 and Spain’s IBEX 35 which each contracted 5.1% and 5.0% respectively.

Prices for the European stocks in the IBO Stock Table were mixed, with many companies showing declines in October. Merck KGaA was the biggest winner with a 7.3% increase. In contrast, Abcam was the biggest loser, registering a 16.2% decrease.

Sartorius announced its third quarter results on October 23, posting a 22% increase in adjusted EPS to €1.84 ($2.04).

In ratings news, on October 15, Bank of America upgraded Spectris to a “buy” rating. It did not give a specific analyst price target. On October 29, Credit Suisse upgraded Merck KGaA from a “neutral” rating to an “outperforming” rating with no price target.