With improving economic data and a potential resolution to the European debt crisis, the Dow Jones Industrial Average, S&P 500 and NASDAQ jumped 9.5%, 10.8% and 11.1% in October, respectively. Economic indicators showed expanding US durable goods orders, outside of transportation, and a slightly improved housing sector. Quarterly earnings were mostly positive, and GDP growth expanded 2.5% sequentially. Year to date, the Dow and NASDAQ are up 3.3% and 1.2%, respectively, while the S&P 500 is down 0.3%.

All four IBO Stock Indexes traded higher this month, led by the Process/Metrology/Motion Instrumentation Stock Index, which soared 23.7%. The Diversified Instrumentation, Lab Consumables/Equipment and Laboratory Instrumentation Stock Indexes improved 16.2%, 8.2% and 4.2%, respectively.

Laboratory Instrumentation Stock Index

For October, the Laboratory Instrumentation Index advanced 4.2% to close at 602.13. Twelve companies rose, and nine declined. Pacific Biosciences had the largest gain, rising 22%. Illumina contracted 25%. Year to date, the Index is down 8.8%, with 13 companies in negative territory and eight were positive. Transgenomic leads the Index this year, having gained 92%, while Pacific Biosciences is down 52%.

Illumina preannounced on October 6 weaker-than-expected third-quarter sales (see IBO 10/15/11) sending shares down 31.9% the following day. Most other life science tool companies traded lower due to industry affiliation. Even after revised estimates, Illumina fell short of analysts’ consensus on October 25 (see page 12), yet shares climbed 7.2%. Waters (see page 12) on October 25 lowered its full-year EPS outlook by 1.5% to $4.75–$4.80. Shares contracted 5.1%. The same day, Thermo Fisher Scientific (see page 12) lowered its full-year EPS outlook by 1.4% to $4.11–$4.17. Shares fell 9.1%. On October 27, Bruker (see page 12) lowered its full-year EPS target. The full-year EPS outlook for Bruker Scientific Instruments was reduced by 12% to $0.87–$0.90, leading shares down 2.3%. Following its report on October 27, Pacific Biosciences’ shares contracted 2.7% the next day. On October 20, Cepheid maintained its full-year EPS outlook of $0.08–$0.11 but guided sharply higher research expenditures in 2012. Shares fell 3.2% the next day. On October 21, Leerink Swann lowered its 2011 EPS estimate on Cepheid by 18% to $0.09 and cut its 2012 EPS forecast by 41% to $0.24.

Sequenom jumped 9.7% on October 4 as it released a new genotyping tool for gene-variation research. On October 17, the firm announced the publication of a clinical validation study and the launch of its MaterniT21 LDT test. Shares jumped 4.5%. On October 21, PerkinElmer placed a $500 million senior notes offering to help fund the acquisition of Caliper Life Sciences (see IBO 9/15/11). Shares rose 2.2%.

On October 5, Deutsche Bank downgraded the Life Science Tools sector to “Market Weight” and lowered its rating on PerkinElmer to “Hold” from “Buy.” On the same day, Oppenheimer initiated coverage of Fluidigm and Thermo with “Outperform” ratings. On October 27, Thermo was downgraded by JPMorgan Chase and Lazard Capital to “Neutral” from “Overweight” and “Buy,” respectively. On October 6, William Blair initiated coverage of Bruker with an “Outperform” recommendation, and Citigroup downgraded Illumina to “Hold” from “Buy.” The following day, Deutsche Bank and Maxim Group each downgraded Illumina to “Hold” from “Buy.” UBS downgraded the company to “Neutral” from “Buy.” On October 18, Piper Jaffray downgraded Sequenom from “Overweight” to “Neutral.”

Process/Metrology/Motion Instrumentation Stock Index

The Index jumped 23.7% to 482.95 for the month. All six companies advanced, led by FEI and Zygo, which each soared 33%. Year to date, the Index is up 7.3%. Three firms are trading higher, and two are down. FEI leads the Index, having gained 51%, while Veeco Instruments has fallen 38%.

Veeco on October 24 projected fourth-quarter EPS of $0.54–$0.86, well below analysts’ consensus of $1.03. Shares declined 5.1% the following day. On October 27, FEI projected fourth-quarter GAAP EPS growth of 20% to $0.60–$0.65, leading shares up 14.2% the following day. The same day, Nanometrics fell 9.4% as it projected fourth-quarter EPS of $0.01–$0.07, compared to analysts’ expectations of $0.36. Zygo reported strong fiscal first-quarter EPS growth on October 27, yet shares slipped 1% the next day. Piper Jaffray downgraded Veeco on October 11 from “Overweight” to “Neutral.” The company was also downgraded on October 17 by Canaccord Genuity from “Hold” to “Sell” and by Sterne Agee from “Buy” to “Neutral.”

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index gained 8.2% in October to 568.06. Six companies increased in value, led by Pall, which gained 21%. QIAGEN declined modestly. For the year, the Index has fallen 9.3%, with five firms losing value and two trading higher. Enzo Biochem has declined the most, falling 46%, while Techne has improved 5%.

Enzo Biochem missed fiscal fourth-quarter EPS on October 14, leading shares down 2.8% the following trading day. On October 25, Sigma-Aldrich (see page 12) raised its full-year EPS outlook by 2.6% to $3.73–$3.81 and projected fourth-quarter EPS of $0.85–$0.93. Shares fell 4.8%. The same day, Life Technologies (see page 12) reaffirmed its full-year EPS of $3.70–$3.80, yet shares traded modestly lower the next day. Pall jumped 4.2% on October 6, as it announced an additional $250 million stock repurchase plan. On October 28, the company was downgraded by JPMorgan Chase from “Overweight” to “Neutral.” Life Technologies was downgraded by Citigroup on October 6 from “Buy” to “Hold.”

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index sprang 16.2% to 130.11. All seven companies grew in double digits, led by AMETEK, which climbed 20%. For the year, five companies have risen in value, and two are down. Teledyne Technologies has appreciated the most, having gained 24%, while Agilent Technologies has slumped 11%.

Agilent and Mettler-Toledo fell 6.5% and 7.9% on October 7, respectively, following Illumina’s profit warning. On October 20, Danaher (see page 12) lifted its 2011 EPS outlook by 1.1% to $2.79–$2.84 and projected fourth-quarter EPS of $0.75–$0.80. Shares rose 2.7%. Roper Industries raised its full-year EPS outlook on October 24 by 1.4% to $4.29–$4.33. Fourth-quarter EPS is projected to be $1.18–$1.22. Shares improved 1.5%. AMETEK raised its 2011 EPS guidance on October 25 by 1.3% to $2.34–$2.36 and projected fourth-quarter EPS of $0.60–$0.62. Shares slipped 2.8%. On the same day, Illinois Tool Works lowered its full-year EPS outlook from continuing operations by 1% to $3.72–$3.79. Fourth-quarter EPS is expected to be $0.86–$0.94. Shares fell 5.3%. On October 27, Teledyne raised its 2011 EPS guidance by 1.9% to $3.66–$3.68, announced a $2.5 million share repurchase program and projected fourth-quarter EPS of $0.84–$0.86. Shares rose 3.3%. UBS initiated coverage of Agilent on October 24 with a “Buy” rating. On October 28, KeyBanc Capital downgraded Teledyne to “Hold” from “Buy.”

International

In October, three Pacific Region firms improved, one fell and one was unchanged. For both the month and year, HORIBA is up the most, up 7% and 10%, respectively, but JEOL has surrendered 5% and 26%, respectively. On October 25, Hitachi High-Technologies reported fiscal second-quarter EPS of ¥42.59 ($0.55) (see page 12), down 6% but almost double its projections. It also announced a ¥10 ($0.13) per share dividend. Shares climbed 3.6% the next day.

For the month, eight European companies declined, and six improved. Tecan recorded the sharpest drop, falling 15%, while Biohit grew 37% and 48% for the month and year, respectively. Year to date, eight companies have lost value, and six have risen. Scientific Digital Imaging has fallen 29%. Renishaw reported preliminarily on October 13 a 9.9% decline in fiscal first-quarter earnings before taxes to £13.6 million ($21.2 million). Shares fell 16.1%. On October 20, Biohit reported third-quarter EPS of €0.03 ($0.04), compared with a €0.01 ($0.01) loss (see page 12). Sartorius reported on October 21 32% adjusted third-quarter EPS growth to €0.82 ($1.11) (see page 12). Shares rose 2.5%. On October 26, Biotage more than doubled third-quarter EPS to SEK 0.15 ($0.02) (see page 12), leading shares up 1.9%.

 Line Graph: IBO Instrument Industry Stock Index

  Lab Instrument Stock Index     S&P 500

 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

 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

 2011                                                 2010
 Cos.      Date Rept.    FQ     Adj. EPS     Consensus      Vs. Est.      Grw.       Adj. EPS
 Laboratory Instrumentation   
 BRKR         27-Oct     3Q       $0.22       $0.23         -$0.01        16%         $0.19 
 CPHD         20-Oct     3Q       $0.03       $0.02          $0.01         NM        ($0.02)
 ILMN         25-Oct     3Q       $0.22       $0.23         -$0.01       -27%         $0.30 
 PACB         27-Oct     3Q      ($0.45)     ($0.59)         $0.14         NA           NA
 TMO          26-Oct     3Q       $1.07       $1.07          $0.00        19%         $0.90 
 WAT          25-Oct     3Q       $1.14       $1.13          $0.01        16%         $0.98 
 Process/Metrology/Motion Instrumentation 
 FEIC         27-Oct     3Q       $0.63       $0.55          $0.08       103%         $0.31 
 NANO         27-Oct     3Q       $0.32       $0.31          $0.01       -40%         $0.53 
 VECO         24-Oct     3Q       $1.33       $1.13          $0.20        -9%         $1.46 
 ZIGO         27-Oct     1Q       $0.35         NA             NA        133%         $0.15 
 Lab Consumables/Equipment   
 ENZ          14-Oct     4Q      ($0.11)     ($0.03)        -$0.08        27%        ($0.15)
 LIFE         25-Oct     3Q       $0.94       $0.86          $0.08         8%         $0.87 
 SIAL         25-Oct     3Q       $0.96       $0.92          $0.04        16%         $0.83 
 Diversified Instrumentation   
 AME          25-Oct     3Q       $0.60      $0.59          $0.01         25%         $0.48 
 DHR          20-Oct     3Q       $0.73      $0.70          $0.03         22%         $0.60 
 ITW          25-Oct     3Q       $1.00      $0.98          $0.02         20%         $0.83 
 ROP          24-Oct     3Q       $1.12      $1.08          $0.04         29%         $0.87 
 TDY          27-Oct     3Q       $0.92      $0.85          $0.07         12%         $0.82 
                                  Market Value     52 Week     Price     Change  Change         EPS     EPS  LTD/   FY   R&D/
 Company:  Exchange                 US $000s)    Low   High  10/31/2011  1Month   YTD    P/E  12Month   FY  Equity  ROE Sales
 Laboratory Instrumentation            
 Accelrys: o                        $371,612    5.68   8.95    $6.63       9%    -20%    N/A   -0.48  -0.44   5%    N/A   28%
 Affymetrix: o                      $388,527    4.04   8.16    $5.59      14%     11%    280    0.02  -0.15  38%    N/A   22%
 Becton, Dickinson and Company:n $17,489,646   69.59  89.75   $78.23       7%     -7%     15    5.38   4.94  69%    24%    6%
 Bio-Rad Laboratories: n          $2,836,677   84.02 126.98   $99.55      10%     -4%     15    6.57   6.59  51%    12%    9%
 Bruker: o                        $2,408,367   12.15  21.65   $14.43       7%    -13%     29    0.50   0.58  25%    23%   11%
 Caliper Life Sciences: o           $549,330    4.35  10.56   $10.48       0%     65%    N/A   -0.17   0.08  13%     5%   15%
 Cepheid: o                       $2,418,922   19.43  42.65   $35.88      -8%     58%    449    0.08  -0.10   3%    N/A   20%
 Fluidigm: o                        $278,851   11.64  20.20   $13.96       0%      0%    N/A   -4.91  -8.94   9%    N/A   39%
 Harvard Bioscience: o              $137,653    3.80   6.26    $4.56       8%     12%      7    0.61   0.65  23%    21%    4%
 Helicos BioSciences: o               $7,682    0.06   0.58    $0.09     -14%    -25%      0    0.78   0.87  78%    10%   20%
 Illumina: o                      $4,163,279   25.57  79.40   $30.62     -25%    -52%     39    0.78   0.87  78%    10%   20%
 Luminex: o                         $932,114   16.38  24.70   $21.96      -1%     20%     84    0.26   0.12   4%     2%   17%
 MOCON: o                            $86,943   11.85  17.67   $15.57      -1%     21%     17    0.92   0.84   1%    16%    7%
 Pacific Biosciences: o             $212,790    2.64  17.45    $3.92      22%    -75%    N/A  -13.78 -14.10   3%    N/A   N/A
 PerkinElmer: n                   $2,348,587   17.48  28.75   $20.67       8%    -20%     22    0.92   1.15  55%     7%    6%
 Pressure BioSciences: o              $2,386    0.62   1.78    $0.83      -6%    -41%    N/A   -1.30  -1.35   2%    N/A   92%
 Sequenom: o                        $492,443    4.40   8.71    $4.97      -3%    -38%    N/A   -0.86  -1.69   6%    N/A   92%
 Thermo Fisher Scientific: n     $19,238,329   47.77  65.86   $50.27      -1%     -9%     15    3.42   2.53  59%     7%    3%
 Transgenomic: o                     $62,611    0.32   1.85    $1.27      -2%     92%    N/A   -0.20  -0.04  62%    N/A   11%
 Waters: n                        $7,375,847   71.12 100.00   $80.12       6%      3%     18    4.53   4.06  75%    36%    5%
 X-Rite: o                          $387,927    3.26   5.08    $4.51      21%     -1%    644    0.01   0.04  79%     2%   11%
 Process/Metrology/Motion Instrumentation           
 FEI Company: o                   $1,671,113   21.28  42.25   $39.76      33%     51%     17    2.32   1.34  20%     8%   10%
 MTS Systems: o                     $578,193   28.00  48.72   $36.62      20%     -2%     13    2.82   1.14  10%    11%    4%
 Nanometrics: o                     $397,119   10.92  21.56   $16.88      16%     32%      7    2.37   2.43   9%    33%   10%
 SDIX: o                             $36,549    1.54   3.13    $1.79       3%      2%    N/A   -0.08  -0.05   1%    N/A   11%
 Veeco Instruments: o             $1,069,442   23.06  57.67   $26.69       9%    -38%      4    5.99   6.13   0%    34%    1%
 Zygo: o                            $281,535    9.40  16.75   $15.34      33%     25%     12    1.25   1.05   3%    15%   10%
 Lab Consumables/Equipment            
 Enzo Biochem: n                    $110,376    2.05   5.83    $2.86      11%    -46%    N/A   -0.34  -0.34   0%    N/A    8%
 Kewaunee Scientific: o              $24,820    8.01  14.25    $9.62       9%    -30%     20    0.48   0.72  29%     6%    0%
 Life Technologies: o             $7,597,644   35.30  57.25   $40.67       6%    -27%     21    1.91   1.99  67%     9%   10%
 Pall: n                          $6,050,801   39.81  59.50   $51.17      21%      3%     19    2.67   2.67  65%    21%    3%
 QIAGEN: o                        $3,320,760   12.47  22.20   $13.78       0%    -30%     25    0.55   0.60  40%     6%   12%
 Sigma-Aldrich: o                 $8,054,040   56.18  76.16   $65.48       6%     -2%     18    3.60   3.12  23%    19%    3%
 Techne: o                        $2,561,424   58.60  86.43   $68.80       1%      5%     23    3.02   3.02   2%    19%    9%
 Diversified Instrumentation            
 Agilent Technologies: n         $13,233,990   28.67  55.33   $37.07      19%    -11%     13    2.87   1.94  73%    20%   11%
 AMETEK: n                        $6,422,553   30.87  47.00   $39.52      20%      1%     18    2.24   1.76  76%    16%    2%
 Danaher: n                      $34,347,985   39.34  56.09   $48.35      15%      3%     16    2.99   2.64  60%    13%    5%
 Illinois Tool Works: n          $23,769,177   39.12  59.27   $48.63      17%     -9%     12    3.99   3.03  49%    16%    1%
 Mettler-Toledo Int'l: n          $5,070,933  126.10 193.56  $153.60      10%      2%     21    7.44   6.80 112%    30%    5%
 Roper Industries: n              $7,972,779   64.90  88.76   $81.10      18%      6%     19    4.22   3.34  54%    12%    4%
 Teledyne Technologies: n         $2,037,178   38.94  60.91   $54.47      11%     24%      8    6.84   3.27  40%    15%    3%
 Laboratory Instrumentation Stock Index                       602.13     4.2%   -8.8%     19                 56%    10%    7%
 Process/Metrology/Motion Instrumentation                     482.95    23.7%    7.3%      9                  9%    22%    5%
 Lab Consumables/Equipment Stock Index                        568.06     8.2%   -9.3%     20                 50%    12%    7%
 Diversified Instrumentation Stock Index                      130.11    16.2%   -3.0%     15                 60%    15%    4%
 Dow Jones Industrial Average                              11,955.01     9.5%    3.3%      
 S&P 500                                                    1,253.30    10.8%   -0.3%      
 NASDAQ Composite                                           2,684.41    11.1%    1.2%      
                                                           Price         
 Region                    Market Value  Market Value  10/31/2011  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             
 Hitachi High-Technologies:t $2,934,567  ¥228,921,769      ¥1662     6%    -12%   14   ¥115.34   ¥129.07   11%    7%    3%
 HORIBA: t                   $1,373,258  ¥107,126,087      ¥2533     7%     10%   12   ¥205.36   ¥187.11   17%    9%    8%
 JEOL: t                       $214,670   ¥16,746,142       ¥211    -5%    -26%   60     ¥3.51     ¥3.51   93%    1%    5%
 Shimadzu: t                 $2,574,263  ¥200,814,929       ¥679     3%      8%   19    ¥35.00    ¥36.00    0%    6%    3%
 Techcomp: si                   $64,211    SGD 80,213   SGD 0.35     0%    -18%    7     $0.04     $0.04    9%   18%    0%
 European Shares            
 Halma: l                    $2,022,648    £1,261,319      £3.35     6%     -7%   17     £0.19     £0.19   46%   20%    5%
 Oxford Instruments: l         $679,823      £423,936      £7.68    -5%      9%   12     £0.64     £0.64   28%   34%    7%
 Renishaw: l                 $1,140,389      £711,144      £9.77    -4%    -21%   11     £0.90     £0.90   35%   33%   10%
 Scientific Digital Imaging:l    $3,052        £1,903      £0.11    -4%    -29%   10     £0.01     £0.01    0%   N/A    5%
 Spectris: l                    $23,714    £1,478,827     £12.72     9%     -3%   13     £0.99     £0.82   32%   19%    8%
 Alpha MOS: c                   $13,177       € 9,411     € 2.41    -9%     -9%  N/A   -€ 0.05   -€ 0.14   15%   N/A   16%
 Analytik Jena: g               $68,757      € 49,109     € 9.38     2%     12%  N/A   -€ 0.04    € 0.34   55%    5%   10%
 Biohit: h                      $59,287      € 42,344     € 3.11    37%     48%   74    € 0.04    € 0.00   70%    2%    6%
 CyBio: g                       $11,996       € 8,568     € 1.19    -5%     17%    9    € 0.14    € 0.14    2%   13%    6%
 Sartorius: g                  $850,248     € 607,277    € 32.44    12%     15%   12    € 2.67    € 2.29   93%   12%    6%
 Tecan: s                      $727,439   CHF 633,399   CHF 55.5   -15%    -29%   11  CHF 5.10  CHF 4.43    5%    7%   10%
 Datacolor: s                   $78,934    CHF 68,730  CHF 409.0     5%     -6%   13 CHF 31.05 CHF 29.26    5%    0%    9%
 Biotage: st                       $650     SEK 4,181    SEK 5.3    -3%    -22%  N/A -SEK 4.82 -SEK 4.91    6%   N/A    9%
 Exiqon:  no                    $60,834   DKK 323,352    DKK 9.7   -11%      2%  N/A -DKK 1.30 -DKK 1.28    4%   N/A   32%