US equity markets were mostly buoyant in August due to a recovery in the consumer and housing sectors, and upwardly revised second-quarter GDP growth of 1.7%. As a result, the Dow Jones Industrial Average, S&P 500 and NASDAQ gained 0.6%, 2.0% and 4.3% for the month, respectively. Despite the modest economic progress in the US, the global economy as a whole remained fragile. International markets were confronted with weaker-than-expected economic data in Japan and China and a decline in second-quarter GDP for the Eurozone. Year to date, the Dow, S&P 500 and NASDAQ are up 7.1%, 11.8% and 17.7%, respectively.

All four IBO Stock Indexes traded higher this month. The Process/Metrology/Motion Instrumentation, Diversified Instrumentation, Lab Consumables/Equipment and Laboratory Instrumentation Stock Indexes gained 7.7%, 3.8%, 3.7% and 2.4%, respectively.

Laboratory Instrumentation Stock Index

In August, the Laboratory Instrumentation Stock Index rose 2.4% to 622.96. Thirteen companies increased in value, and five declined. Sequenom gained the most ground, climbing 31%, while Affymetrix fell 9%. The Index is up 10.2% for the year, with half of the companies trading higher and the other half down. Illumina has retained the largest price increase, rising 38%. Pressure BioSciences is down 52%.

Several companies were rewarded for positive second-quarter financial results. PerkinElmer, which maintained its full-year EPS outlook of $2.00–$2.05, climbed 7.9% on August 3. Bio-Rad Laboratories crushed EPS expectations on August 7 due to lower material costs and operational expenses. Shares rose 5.7% the next day. Fluidigm bounced 8.0% on August 8 after posting a smaller-than-expected EPS loss. On August 14, Pressure BioSciences reported that sales grew 70%, primarily due to grant revenue. Shares jumped 47.6%.

Despite missing second-quarter EPS estimates on August 2, Accelrys and Harvard Bioscience upheld full-year EPS outlooks of $0.32–$0.34 and $0.26–$0.29, respectively. On the same day, Becton Dickinson lowered its fiscal full-year EPS outlook by 6% to $5.33–$5.38 due to the discontinued operations. However, the company’s fiscal 2012 currency-neutral growth outlook of 4%–5% was unchanged.

In other financial news, on August 16, Thermo Fisher Scientific closed a $1.3 billion senior note offering, which will primarily be used to fund its acquisition of One Lambda (see IBO 7/31/12). Shares contracted 1.8%. On August 21, Fluidigm completed a public offering of 4.2 million shares, including a full 15% over-allotment option. Shares were priced at $14.25 for a gross total of roughly $60 million.

Becton Dickinson (BD) was downgraded on August 3 by Leerink from “Outperform” to “Market Perform” and by CLSA from “Outperform” to “Underperform.” Luminex was upgraded by Cowen on August 7 from “Underperform” to “Neutral” and by UBS on August 23 from “Neutral” to “Buy.” Barclays initiated coverage of Illumina, Thermo and Waters on August 21 each with an “Overweight” rating.

Process/Metrology/Motion Instrumentation Stock Index

The Process/Metrology/Motion Instrumentation Stock Index jumped 7.7% to 582.02 this month. Six companies advanced, led by MTS Systems, which rose 17%. Veeco Instruments declined 4%. Year to date, the Index has gained 18.9%, with four companies in positive territory and three with negative returns. Veeco maintains the largest price increase for the year, having gained 65%. SDIX has tumbled 26%.

FEI and MTS beat EPS estimates on August 2, leading shares up 12.4% and 15.1% the next day, respectively. FEI projected third-quarter EPS of $0.63–$0.70. MTS kept its 2012 EPS outlook of growth in the low to mid-teens. On August 21, MTS declared a 20% quarterly dividend increase to $0.30 a share and a $40 million stock repurchase plan. Zygo reported on August 23 a 41% jump in fiscal 2012 adjusted EPS to $1.33. Shares rose 1.3%. Veeco was downgraded by Deutsche Bank on August 13 to “Hold” from “Buy.”

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index improved 3.7% to 629.05 in August. For both the month and year, five companies have increased in value and two have declined. Enzo Biochem recorded the largest increase, surging 25%, but is down 16% for the year. Kewaunee Scientific dropped the most, sliding 4%, but is up 39% for the year.

On August 21, Kewaunee Scientific reported fiscal first-quarter EPS of $0.25 a share compared with $0.01 a year ago due to lower material costs. Yet, shares fell 9.7% the next day. Barclays initiated coverage of Life Technologies and QIAGEN on August 21 with “Equalweight” and “Overweight” ratings, respectively.

Diversified Instrumentation Stock Index

This month, the Diversified Instrumentation Stock Index gained 3.8% to 149.18. Six companies advanced, while Agilent Technologies fell 3%. Year to date, the Index is up 13.8%, with all seven companies trading higher. Illinois Tool Works (ITW) has recorded the largest gain, rising 27%.

ITW raised its quarterly dividend by 6% on August 3 to $0.38 a share. Shares rose 3.6%. On August 21, the company sold $1.1 billion of senior unsecured notes to repay current maturing debts. Agilent cut its full-year EPS outlook by 4% on August 15 to $3.06–$3.08 and projected fiscal fourth-quarter EPS of $0.80–$0.82, which was $0.12 below analysts’ estimates. Shares fell 8.2% the next day. Agilent was initiated with an “Overweight” rating by Barclays on August 21.

International

In August, all six Pacific Region companies traded lower, led by HORIBA, which dropped 17%. Year to date, half of the companies are in positive territory and half are trading lower. Hitachi High-Technologies has sustained the largest gain, rising 16% year to date. Shimadzu is down 17%.

On August 6, Shimadzu narrowed its fiscal first-quarter EPS loss by 58% to ¥0.80 ($0.01) but slashed its fiscal 2013 net income target by 7.7% to ¥12,000 million ($150 million). Shares fell 9.4% the next day. HORIBA reported a 57% decline in second-quarter EPS to ¥21.37 ($0.27) on August 6 and cut its 2012 EPS forecast by 14% to ¥165.50 ($2.07). Shares fell 18.2% the next day. On August 14, Techcomp reported a slight increase in second-quarter EPS to $0.01. Shares rose 1.3%.

This month, eight European companies improved, four worsened and one was unchanged. Biotage led all companies, climbing 13%, while Tecan fell 4%. Year to date, 11 European companies have higher returns and two are in negative territory. Sartorius maintains the largest increase, up 65%, while Alpha MOS has contracted 53%.

On August 9, Analytik Jena reported fiscal third-quarter EPS of €0.05 ($0.06), compared with a loss of €0.04 ($0.05) a year ago. On the same day, Exiqon lowered its second-quarter EPS loss by 69% to DKK 0.11 ($0.02). The company projected EBIT of DKK 10 million ($1.8 million) for the year. Shares fell 2.6%. On August 16, Tecan reported a six-month EPS decline of 24.9% to CHF 1.60 ($1.72) due to an OEM development project. On August 17, Biotage reported a six-fold increase in second-quarter EPS to SEK 0.18 ($0.03). Shares jumped 9.8%.

 Line Graph: IBO Instrument Industry Stock Index

                   Lab Instrument Stock Index     S&P 500

 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            565.27                         301.52

 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

 2012                                        2011

 Cos.        Date Rept.       FQ     Adj.EPS     Consensus    Vs.Est.    Grw.    Adj.EPS

 Laboratory Instrumentation   

 ACCL           2-Aug         2Q      $0.07        $0.08      -$0.01    -13%      $0.08 

 BIO            7-Aug         2Q      $1.69        $1.19       $0.50     20%      $1.41 

 BDX            2-Aug         3Q      $1.52        $1.53      -$0.01      6%      $1.44 

 FLDM           7-Aug         2Q     ($0.22)      ($0.25)      $0.03     -5%     ($0.21)

 HBIO           2-Aug         2Q      $0.06        $0.08      -$0.02    -25%      $0.08 

 MOCO           8-Aug         2Q      $0.21           NA          NA     -9%      $0.23 

 PBIO          14-Aug         2Q     ($0.11)      ($0.17)      $0.06     73%     ($0.41)

 PKI            2-Aug         2Q      $0.53        $0.49       $0.04     26%      $0.42 

 TBIO           1-Aug         2Q     ($0.01)      ($0.02)      $0.01     75%     ($0.04)

 Process/Metrology/Motion Instrumentation 

 FEI            2-Aug         2Q      $0.74        $0.67       $0.07     19%      $0.62 

 MTS            2-Aug         3Q      $1.07        $0.93       $0.14     55%      $0.69 

 SDIX           8-Aug         2Q     ($0.07)          NA          NA   -133%     ($0.03)

 ZYGO          23-Aug         2Q      $0.36           NA          NA      9%      $0.33 

 Diversified Instrumentation   

 A             15-Aug         3Q      $0.79        $0.83      -$0.04      3%      $0.77

 Company:  Exchange               Market Value     52 Week     Price  Change Change      EPS    EPS   LTD/    FY     R&D/

                                    (US $000s)   Low   High   8/31/12 1Month  YTD  P/E 12Month   FY  Equity   ROE   Sales

 Laboratory Instrumentation            

 Accelrys: o                         $427,533   5.68   8.48    $7.69   -5%    14%   NM  -0.31  -0.44    4%     1%    24%

 Affymetrix: o                       $274,008   3.52   5.95    $3.81   -9%    -7%   NM  -0.46  -0.40    5%     NM    24%

 Becton, Dickinson and Company:n  $15,597,934  69.59  80.56   $75.98    0%     2%   14   5.50   5.59  116%    26%     6%

 Bio-Rad Laboratories: n           $2,871,872  84.02 118.00  $100.38    4%     5%   16   6.47   6.26   49%    10%     9%

 Bruker: o                         $2,023,581   9.91  17.10   $12.11    2%    -2%   24   0.50   0.55   56%    15%    11%

 Cepheid: o                        $2,599,116  29.90  46.00   $37.74   18%    10%   NM  -0.07   0.04    3%     1%    21%

 Fluidigm: o                         $321,308  12.05  16.86   $15.64   20%    19%   NM  -0.78  -1.81    3%     NM    33%

 Harvard Bioscience: o               $113,349   3.45   5.25    $3.83    4%    -1%   55   0.07   0.13   10%     4%     5%

 Illumina: o                       $5,597,103  25.57  55.39   $42.08    1%    38%   68   0.62   0.62   73%     8%    19%

 Luminex: o                          $794,178  16.80  25.79   $19.34   13%    -9%   69   0.28   0.34    3%     6%    18%

 MOCON: o                             $80,468  12.94  20.40   $14.70   -6%    -8%   23   0.64   0.98   25%    16%     6%

 Pacific Biosciences: o              $109,646   1.68   6.35    $1.97    9%   -30%   NM  -1.85  -2.03    5%     NM   225%

 PerkinElmer: n                    $3,127,979  17.45  28.24   $27.30    7%    37%  390   0.07   0.06   70%     0%     6%

 Pressure BioSciences: o               $2,957   0.20   1.15    $0.29   -9%   -52%   NM  -0.23  -0.77   -1%     NM    98%

 Sequenom: o                         $420,395   2.65   6.09    $3.67   31%   -18%   NM  -0.89  -0.75   18%     NM    96%

 Thermo Fisher Scientific: n      $21,173,620  43.06  58.37   $57.35    3%    28%   20   2.85   3.46   56%     9%     3%

 Transgenomic: o                      $68,063   0.70   1.45    $0.95   -8%   -26%   10   0.10  -0.04   18%     NM     7%

 Waters: n                         $7,167,462  70.88  94.47   $80.19    3%     8%   17   4.68   4.69   71%    35%     5%

 Process/Metrology/Motion Instrumentation             

 FEI Company: o                    $2,235,088  26.61  56.48   $53.71   13%    32%   20   2.72   2.51    6%    15%     9%

 MKS Instruments: o                $1,442,415  20.01  34.99   $27.11    3%    -3%   15   1.77   2.45    4%    13%     7%

 MTS Systems: o                      $822,970  28.00  54.82   $50.81   17%    25%   16   3.21   3.24   12%    24%     3%

 Nanometrics: o                      $363,647  13.49  20.99   $15.23    0%   -17%   27   0.56   1.22    7%    14%    10%

 SDIX: o                              $28,094   0.95   2.13    $1.37    3%   -26%   NM  -0.08  -0.01    1%     NM    15%

 Veeco Instruments: o              $1,337,288  20.35  38.35   $34.30   -4%    65%   16   2.16   3.11    1%    17%    10%

 Zygo: o                             $367,488  10.00  20.44   $19.37    8%    10%    8   2.30   2.30    3%    25%    10%

 Lab Consumables/Equipment            

 Enzo Biochem: n                      $72,991   1.33   3.12    $1.88   25%   -16%   NM  -0.42  -0.34    0%     NM     8%

 Kewaunee Scientific: o               $29,328   7.90  13.45   $11.35   -4%    39%   18   0.64   0.40   42%     3%     1%

 Life Technologies: o              $8,650,157  36.07  50.84   $47.71    9%    23%   20   2.37   1.99   59%     8%    10%

 Pall: n                           $6,570,053  39.81  64.55   $55.51    4%    -3%   20   2.81   2.67   55%    21%     3%

 QIAGEN: o                         $4,261,698  12.47  18.08   $17.74    1%    28%   43   0.41   0.40   27%     4%    11%

 Sigma-Aldrich: o                  $8,665,660  57.60  74.94   $71.03    3%    14%   19   3.75   3.72   25%    21%     3%

 Techne: o                         $2,529,822  62.04  76.02   $68.57   -1%     0%   23   3.04   3.04    1%    17%     9%

 Diversified Instrumentation            

 Agilent Technologies: n          $13,117,480  28.67  46.28   $37.16   -3%     6%   13   2.87   2.85   57%    23%    10%

 AMETEK: n                         $8,341,482  20.58  35.21   $34.31   11%    22%   14   2.53   2.37   75%    19%     3%

 Danaher: n                       $38,297,729  39.34  56.45   $53.57    1%    14%   16   3.25   3.11   48%    11%     6%

 Illinois Tool Works: n           $27,796,200  39.12  60.45   $59.29    9%    27%   12   4.80   4.19   48%    21%     1%

 Mettler-Toledo Int'l: n           $5,289,947 126.10 190.02  $165.11    7%    12%   19   8.52   8.21   98%    35%     5%

 Roper Industries: n              $10,239,837  64.90 108.89  $102.79    3%    18%   22   4.59   4.34   46%    13%     4%

 Teledyne Technologies: n          $2,406,223  44.86  66.29   $64.51    4%    18%   16   3.92   6.84   44%    15%     5%

 Laboratory Instrumentation Stock Index                       622.96  2.4%  10.2%   19                 64%    11%     7%

 Process/Metrology/Motion Instrumentation                     582.02  7.7%  18.9%   16                  4%    16%     8%

 Lab Consumables/Equipment Stock Index                        629.05  3.7%  10.4%   21                 41%    12%     7%

 Diversified Instrumentation Stock Index                      149.18  3.8%  13.8%   17                 51%    16%     5%

 Dow Jones Industrial Average                              13,090.84  0.6%   7.1%      

 S&P 500                                                    1,406.58  2.0%  11.8%      

 NASDAQ Composite                                           3,066.96  4.3%  17.7%      

     Price         

 Region                      Market Value  Market Value Price 8/31/12 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  $3,405,027   ¥266,662,181      ¥1,936     -2%   16%   14   ¥133.83   ¥103.71   11%    6%   4%

 HORIBA: t                    $1,254,026    ¥98,208,124      ¥2,309    -17%    0%   13   ¥175.40   ¥204.41   16%    9%   9%

 JEOL: t                        $169,242    ¥13,254,055        ¥167     -5%  -13%    1   ¥115.60   ¥115.60  102%   63%   5%

 Precision System Science: os    $34,784     ¥2,724,111     ¥29,850     -2%    3%   NM   -¥3,272   -¥4,018   41%    NM  14%

 Shimadzu: t                  $2,049,041   ¥160,469,120        ¥544    -15%  -17%   16    ¥33.51    ¥30.79   19%    5%   3%

 Techcomp: hk                    $85,150 HKD 660,450.00    HKD 2.80    -10%   14%   75     $0.04     $0.04    7%   13%   1%

 European Shares             

 Abcam: I                     $1,185,763       £747,383       £4.08      1%   12%   29     £0.14     £0.13    1%   32%   4%

 Halma: l                     $2,434,453     £1,534,428       £4.07      3%   23%   18     £0.23     £0.23   35%   22%   5%

 Oxford Instruments: l        $1,144,316       £721,259      £13.09      4%   38%   29     £0.45     £0.45   35%   20%   8%

 Renishaw: l                  $1,807,308     £1,139,141      £15.65      4%   56%   16     £0.96     £0.96   29%   28%  14%

 Scientific Digital Imaging: l    $3,170         £1,998       £0.11      0%    2%  105     £0.00     £0.00    0%    1%  10%

 Spectris: l                     $32,451     £2,045,407      £17.29     12%   34%   16     £1.11     £1.07   64%   21%   7%

 Alpha MOS: c                     $5,160        € 4,100      € 1.05      5%  -53%   NM   -€ 0.05   -€ 0.14   16%    NM  13%

 Analytik Jena: g                $79,708       € 63,346     € 11.62      4%    9%   43    € 0.27   -€ 0.03   19%    NM  15%

 Sartorius: g                 $1,182,486      € 939,744     € 50.20     -4%   65%   19    € 2.66    € 2.44  110%   11%   6%

 Tecan: s                       $781,355    CHF 745,614    CHF 65.2     -4%    3%   17  CHF 3.83  CHF 4.36    5%   18%  12%

 Datacolor: s                    $63,968     CHF 61,042   CHF 400.0     -4%    1%   20 CHF 20.07 CHF 21.48    7%    0%  12%

 Biotage: st                        $874      SEK 5,787     SEK 7.9     13%   52%   12  SEK 0.66  SEK 0.42    6%    6%   8%

 Exiqon:  no                     $56,007    DKK 331,683     DKK 9.5     -3%   -2%   NM -DKK 0.55 -DKK 0.71    2%    NM  21%