The Dow Jones Industrial Average and S&P 500 traded at record highs in July as the Federal Reserve reassured investors that its quantitative easing policy would continue until the economy improves. On July 31, first quarter US GDP growth was revised down from 1.8% to 1.1%, and second quarter GDP growth was estimated at 1.7%. For the month, the Dow, S&P 500 and NASDAQ climbed 4.0%, 4.9% and 6.6%, respectively. Year to date, the Dow, S&P 500 and NASDAQ are up 18.3%, 18.2% and 20.1%, respectively.

All four IBO Stock Indexes increased in July to reach record highs due to mostly positive earnings from industry leaders. The Laboratory Instrumentation and Lab Consumables/Equipment Stock Indexes grew 5.2% and 3.2%, respectively. The Diversified Instrumentation and Process/Metrology/Motion Instrumentation Stock Indexes each rose 5.0%.

Laboratory Instrumentation Stock Index

NanoString Technologies was added to the Index following its IPO on June 25 (see IBO 6/30/13). In July, the Index improved 5.2% to close at 859.28. For the year, the Index is up 29.7%. For both the month and year, 14 companies posted higher returns and five declined. Harvard Bioscience recorded the largest increase for the month, climbing 14%. Pacific Biosciences has the highest return for the year, having gained 52%. Sequenom lost the most value for both the month and year, having falling 29% and 36%, respectively.

Illumina, Thermo Fisher Scientific, Luminex, Affymetrix and Bruker each beat second quarter adjusted EPS estimates. On July 23, Illumina raised its 2013 adjusted EPS guidance by 7% to $1.68–$1.72, leading shares to rise 10.6% the next day. On July 24, Thermo increased the bottom range of its 2013 adjusted EPS forecast by $0.02 to $5.29–$5.39. Shares rose 1.2%. On July 29, Luminex projected its 2013 revenue outlook to be at the lower end of its range of $220–$230 million due to reimbursement issues for certain diagnostic tests. Shares fell 12.5% the next day. On July 31, Bruker maintained its full-year adjusted EPS guidance of $0.80–$0.83. On the same day, Affymetrix reported improved financial results, including better-than-expected second quarter sales and stronger cash flow. The company continues to expand its Genetic Analysis business and accelerate efforts to prepay some of its outstanding debt.

However, a number of companies in the Index missed second quarter adjusted EPS expectations and lowered their full-year outlooks. Cepheid fell 4.5% on July 12 after the company preannounced weaker-than-expected EPS due to inventory reserves and slower US sales growth. On July 18, the company cut its 2013 adjusted EPS outlook from $0.01–$0.07 to a loss of $0.21–$0.24. Shares fell 4.4% the next trading day. Waters lowered its full-year adjusted EPS outlook by 3% on July 23 to $5.00–$5.15 due to currency headwinds and slower instrument sales. Shares slumped 5.9%. Sequenom dropped 29.6% on July 25 after the company missed adjusted EPS estimates due to timing of and concerns over reimbursements for certain diagnostic tests.

Piper Jaffray downgraded Illumina on July 2 to “Neutral” from “Overweight” due to valuation and set a price target of $70.00 per share. On July 18, William Blair initiated coverage of Waters with a “Market Perform” rating. Sequenom was downgraded to “Neutral” from “Buy” by both Ladenburg Thalmann and Lazard Capital on July 24 and July 25, respectively, and to “Market Perform” from “Outperform” by William Blair on July 24. On July 30, UBS downgraded Luminex to “Neutral” from “Buy.”

Process/Metrology/Motion Instrumentation Stock Index

The Index grew 5.0% to 694.57 this month. Shares for four companies traded higher, while shares for two declined. MTS Systems recorded the largest price increase, rising 11%, while Veeco Instruments fell 2%. For the year, the Index has jumped 22.7%, with five companies trading higher and Zygo marginally lower. FEI has recorded the largest gain, having climbed 40%.

On July 24, MKS Instruments projected third quarter adjusted EPS of $0.14–$0.26, which was below the consensus of $0.27 a share. Shares were marginally lower the next day. Veeco climbed 2.6% on July 29 after the company reported a 21% sequential increase in second quarter bookings to $85 million. On July 30, Nanometrics projected a third quarter adjusted EPS loss of $0.03–$0.14, which was significantly below the consensus for a profit of $0.04. Yet shares were up 1% the next day.

Lab Consumables/Equipment Stock Index

Cellular Dynamics International was added to the Index following its IPO on July 25 (see page 2). The Index grew 3.2% this month to 793.05. Excluding Cellular Dynamics, all seven companies increased in value, led by Techne, which gained 7%. Year to date, the Index is up 20.9%, with six companies improving and Enzo Biochem down 19%. Life Technologies has the highest return, having gained 52%.

On July 23, Sigma-Aldrich lowered its full-year adjusted EPS range by $0.05 to $4.05–$4.10 due to currency effects. Shares fell 1.2%. On July 30, QIAGEN maintained its full-year sales outlook and projected third quarter adjusted EPS of $0.27. The company also announced a $100 million share repurchase program. Shares were slightly higher the next day. Earlier in the month, on July 12, the company jumped 4.9% after announcing that it received FDA approval for its therascreen EGFR companion diagnostic tests for Boehringer Ingelheim’s GILOTRIF targeted therapy for lung cancer patients. On July 31, Life Technologies beat second quarter adjusted EPS estimates but with lower-than-expected sales due to weak US demand. The company did not provide a quarterly guidance but expects increased currency headwinds for the year.

Diversified Instrumentation Stock Index

The Index advanced 5.0% to 183.92 this month and is up 16.2% for the year. For both the month and year, seven companies were in positive territory, while Xylem declined 7% and 8%, respectively. Mettler-Toledo had the highest return for the month, having gained 10%. AMETEK leads the Index for the year, having increased 23%.

Danaher, Mettler-Toledo, Roper Industries and Teledyne Technologies all beat analysts’ adjusted EPS expectations. On July 18, Danaher narrowed its 2013 adjusted EPS outlook by $0.05 to $3.37–$3.47. Shares slipped 1.0%. On July 25, Mettler-Toledo raised the lower range of its 2013 adjusted EPS outlook by $0.05 to $10.45–$10.60 and increased its share repurchase program by $750 million. Shares declined 1.6% the next day. Teledyne raised its full-year adjusted EPS by 1% on July 25 to $4.50–$4.55. Shares were modestly higher.

Conversely, on July 29, Roper lowered its 2013 adjusted EPS by 1% to $5.72–$5.86 due to slower organic revenue growth. Shares slid 3.4%. Similarly, on July 23, Illinois Tool Works (ITW) lowered its 2013 adjusted EPS forecast by $0.05 to $4.10–$4.30 as a result of a pension settlement expense. Shares fell 2.8%. Xylem cut its 2013 adjusted EPS outlook by 21% on July 30 to $1.40–$1.50, sending shares down 10.3%.

Teledyne was upgraded by Drexel Hamilton on July 12 to “Buy” from “Hold.” ITW was downgraded by UBS on July 23 to “Neutral” from “Buy.” On July 30, Xylem was downgraded by Brean Capital to “Hold” from “Buy.” Four other investment firms also downgraded the company on July 31, including Wedbush, which lowered its rating from “Outperform” to “Neutral” and cut its price target by 16% to $27.00 a share.

International

This month, five Pacific Region companies were in negative territory and two improved. Techcomp gained the most value, climbing 36%, while Precision System Science (PSS) fell 36%. For the year, all seven companies have increased by double digits, led by PSS, which has soared 411%.

On July 24, Hitachi High-Technologies reported a loss of ¥10.76 ($0.11) per share for the fiscal first quarter 2014, compared with a profit of ¥44.91 ($0.56) a year ago. The company maintained its fiscal full-year 2014 EPS forecast of ¥143.23 ($1.51). Shares fell 1.8%.

For both the month and year, 12 European companies traded higher and two declined. Scientific Digital Imaging (SDI) led all European companies in July, climbing 39%, while Alpha MOS fell 13%. Porvair maintained the highest price increase for the year, having risen 77%, while Renishaw has declined 24%.

On July 22, Abcam announced preliminary fiscal year sales growth ending June 30 of 25%, including 11.8% growth from acquisitions. Yet shares slipped 0.3%. On July 23, Sartorius reported second quarter adjusted EPS growth of 12% to €1.02 ($1.33). The company expects to reach the upper half of its previous full-year sales growth outlook of 6%–9% excluding currency. Shares rose 3.1%. On July 24, SDI reported sales growth of 6.9% for the fiscal full-year ending April 30, and EPS of £0.01 ($0.02) compared with just above breakeven a year ago. Shares soared 36.7%.

Other European companies reported more lackluster financial results. On July 24, Renishaw reported revenue growth for the fiscal year ending June 30 of 4.5%, but an adjusted EPS decline of 4% to £0.91 ($1.43). Shares declined 2.6%. On July 26, Spectris announced that adjusted EPS contracted 12% to £0.48 ($0.75) for the half year ending June 30. The company increased its semi-annual dividend by 9% to £0.15 ($0.23). Shares slipped 0.8%. On July 28, Analytik Jena preannounced lower-than-expected fiscal third quarter sales and earnings. As a result, the company lowered its fiscal full-year EBIT by roughly 20% to €4.5–€5.0 million ($5.8–$6.5 million). Shares contracted 2.7% the next day.