IBO Stock Indexes Sparkle in July
Perhaps the most enthralling display of fireworks in July was seen on Wall Street as the equity markets exploded on the upside. The Dow Jones Industrial Average, S&P 500 and NASDAQ ended the month up 8.6%, 7.4% and 7.8%, respectively. The sharp rise was ignited by earnings optimism as Goldman Sachs and Intel announced better than expected results. In addition, reports of declining inventory, stabilizing housing markets and a revised GDP figure for the second quarter lifted the Dow to over 9000 for the first time since early January and to a new high since November 2008. On July 31, the second-quarter GDP was adjusted to a contraction of 1.0%, following a revised 6.4% drop in the first quarter. Despite investors’ enthusiasm, lower personal consumption of consumer goods and rising unemployment rates continue to weigh on the economy. For the year, the Dow, S&P 500 and NASDAQ are up 4.5%, 9.3% and 25.5%, respectively.
All four of the IBO Stock Indexes traded higher in July, led by the Process/Metrology/Motion Instrumentation Stock Index, which climbed 14.2%. The Laboratory Instrumentation, Lab Consumables/Equipment and Diversified Instrumentation Stock Indexes grew 8.8%, 4.6% and 3.5%, respectively.
Laboratory Instrumentation Stock Index
In July, the Laboratory Instrumentation Index climbed 8.8% to close at 522.15. Fourteen companies improved, while eight companies declined. Affymetrix led the Index, soaring 49%, while Illumina fell 7%. For the year, the Index is up 33.8%, making it the best-performing Index. Affymetrix has gained the most ground, rising 196%, while Sequenom is down 71%.
The strength of second-quarter earnings results came into question as Illumina warned on July 2 that revenues would fall short of the company’s expectations due to weaker than expected sales of array products (see IBO 7/15/09). As a result, shares declined 12.3%. However, after the close on July 21, Illumina reported EPS growth of 38% to $0.22 (see page 12), $0.04 ahead of analysts’ expectations. The company also raised third-quarter EPS by an average of $0.09 to $0.26–$0.30, while the full-year earnings outlook was unchanged. The following day, Illumina announced the sale of seven additional Genome AnalyzerIIx systems to the Genomic Medicine Institute at Seoul National University College of Medicine in Korea. Shares jumped 6.8%. Affymetrix reported a loss of $0.13 a share (see page 12) on July 22, $0.06 ahead of expectations, leading shares up 32.7% the following day. On July 23, OI Corporation reported EPS of $0.01 (see page 12), compared to $0.07 last year, yet shares climbed 6.6% due the company’s positive outlook.
On July 27, Varian reported fiscal third-quarter EPS of $0.52 (see page 12), $0.02 ahead of expectations, and announced its planned acquisition by Agilent Technologies (see page 2), leading shares up 29.1%. Symyx Technologies reported a loss of $0.04 on July 29, $0.06 ahead of expectations, and increased its full-year EPS outlook to $0.08–$0.10 from $0.00–$0.05, yet shares traded slightly lower. On July 29, Waters reported EPS of $0.78 (see page 12), $0.01 below consensus, but increased its full-year EPS by an average of 7% to $3.28–$3.38. Shares declined 3.0%. On July 30, Caliper Life Sciences reported a loss of $0.05 (see page 12), $0.06 better than consensus, but shares traded only marginally higher. On the same day, Beckman Coulter beat EPS estimates by $0.18, reporting $0.99 a share, and raised the bottom range of its full-year forecast by $0.05 to $3.76–$3.91 a share. The following day, shares jumped 11.2%
Other earnings reports from Index companies either fell short of expectations or failed to excite investors. On July 29, Bruker announced EPS of $0.08, $0.01 better than expectations, yet shares declined 1.2%. Cepheid reported on July 30 a loss of $0.12 in line with expectations, but lowered its full-year earnings guidance by $0.01 to a loss of $0.43–$0.48 per share, sending shares down 2.1%. On July 30, PerkinElmer reported EPS of $0.28 (see page 12), $0.01 better than expected, but projected full-year earnings of $1.18–$1.24 a share, which was below analysts’ consensus of $1.27. Shares fell 7.8% the following day.
Cepheid received FDA approval on July 13 for its Xpert C.difficile test. Shares climbed 4.3% for the day and 15.8% for the week ended July 17. Sequenom was once again extremely active. The company dropped 5.1% on July 1, following disclosure of an SEC investigation (see IBO 6/30/09). But shares climbed 2.7% on July 14 when the company announced a study showing that its MS-PCR test can detect HPV infections that the standard hybridization test missed. Sequenom jumped 7.8% on July 21 following renewed takeover rumors.
Auriga USA upgraded Illumina on July 9 to “Buy” from “Sell,” leading shares up 4.5%. On July 10, PerkinElmer jumped 4.8%, following an upgraded by Deutsche Securities to “Hold” from “Sell.” Soleil initiated coverage of Bio-Rad Laboratories on July 19 with a “Buy” rating. Morgan Stanley upgraded Affymetrix on July 20 to “Equal Weight” from “Underweight,” citing positive earnings potential. Shares climbed 17.3%. On July 23, Piper Jaffray upgraded Affymetrix to “Overweight” from “Neutral.” Barclays Capital upgraded Varian on July 28 to “Equal Weight” from “Underweight.” On July 31, Robert W. Baird upgraded Beckman Coulter to “Outperform” from “Neutral,” and downgraded PerkinElmer to “Neutral” from “Outperform.”
Process/Metrology/Motion Instrumentation Stock Index
For the month, the Process/Metrology/Motion Instrumentation Stock Index jumped 14.2% to 293.96. Seven companies traded higher, led by Veeco Instruments, which was up 63%, while ICx Technologies fell 16%. Year to date, the Index has improved 21.5%. Five companies are in positive territory, and three companies have lost ground. Nanometrics, the largest gainer, has risen 228%, while ICx is down 36%.
On July 22, MTS Systems reported fiscal third-quarter EPS of $0.24, $0.01 better than consensus, and reaffirmed its full-year forecast. Shares climbed 2.9% the following day. Veeco announced on July 27 a loss of $0.38 a share, $0.18 below estimates, but boosted its third-quarter EPS outlook to $0.02–$0.05, compared to analysts’ estimates of a loss of $0.11. Shares soared 37.1% the following day. Nanometrics reported a loss of $0.25 a share on July 30, beating estimates by $0.01, yet shares traded marginally lower. On the same day, Strategic Diagnostics reported a loss of $0.04, compared to a loss of $0.05 last year, leading share up 2.6% the following day.
On July 15, Veeco acquired DayStar Technologies, a developer of solar photovoltaic products, leading shares up 8.0% the following day. On July 28, Citigroup upgraded Veeco to “Buy” from “Hold.”
Lab Consumables/Equipment Stock Index
The Laboratory Consumables/Equipment Stock Index grew 4.6% in July to 458.01, with seven companies trading higher and Millipore down 1%. Enzo Biochem led the Index, improving 15%. Year to date, the Index has improved 25.7%, with seven companies in positive territory, led by Life Technologies, which is up 95%. Techne is the only company in negative territory for the year, down 1%.
On July 23, Sigma-Aldrich reported EPS of $0.68 (see page 12), in line with expectations, and reaffirmed positive earnings growth for the year, yet shares slipped 2.9%. Life Technologies beat earnings expectations on July 28 by $0.13 a share, reporting EPS of $0.79 (see page 12), and increased its 2009 outlook by 11% to $2.70–$2.80 a share. Shares jumped 7.7% the following day. On July 10, UBS downgraded QIAGEN to “Neutral” from “Buy,” leading shares down 3.3%.
Diversified Instrumentation Stock Index
The Diversified Instrumentation Stock Index rose 3.5% to 81.70, with half the companies trading higher and the other half in negative territory. AMETEK declined the most, falling 6%, while Agilent led the Index for both the month and year, climbing 14% and 49%, respectively. Year to date, the Index is up 15.9%, with five companies trading higher and Teledyne Technologies down 27%.
Teledyne reported EPS on July 23 of $0.69, $0.02 ahead of analysts’ consensus, and reaffirmed its full-year outlook, leading share up 3.5%. Roper Industries announced EPS on July 28 of $0.64, $0.01 better than expected, but lowered the top range of its 2009 forecast by 2.8% to $2.60–$2.72 a share. Shares were relatively unchanged. On the same day, AMETEK reported earnings of $0.48 per share, in line with expectations, but lowered its full-year EPS forecast by 11% to $1.85–$2.00. Shares fell 12.3%. On July 10, Deutsche Securities upgraded Danaher to “Buy” from “Neutral.”
International
This month, two Pacific Region companies improved, with Hitachi High-Technologies leading the way, up 13%, while three companies traded lower. Shimadzu lost the most value, declining 5%. Year to date, all five companies are in positive territory, led by Horiba, which is up 81%.
In July, eight European companies recorded positive returns, five companies declined and two companies traded flat. Renishaw improved the most, climbing 19%, while Scientific Digital Imaging lost 27%. For the year, 11 companies have gained ground, while four companies have negative returns. Robotic Technology Systems leads all European companies, up 83%, while Exiqon is down 23%. On July 27, Sartorius reported EPS of €0.37 ($0.49) for the first half of 2009, compared to €0.56 ($0.86) last year, sending shares down 3.0%. On July 29, Renishaw reported adjusted fiscal EPS for the year ended June 30 of £0.09 ($0.15), compared to £0.46 ($0.92) in 2008. Shares declined 4.5%.
Chart: IBO Instrument Industry Stock Index
Lab Instrument Stock Index S&P 500
Jul-07 584.65 348.91
Aug-07 604.22 353.40
Sep-07 648.03 366.05
Oct-07 678.52 371.47
Nov-07 654.48 355.11
Dec-07 656.46 352.05
Jan-08 583.13 330.52
Feb-08 607.77 319.03
Mar-08 600.29 317.13
Apr-08 600.29 332.20
May-08 622.99 335.75
Jun-08 602.24 306.89
Jul-08 639.07 303.86
Aug-08 643.46 307.57
Sep-08 590.45 279.64
Oct-08 456.82 232.26
Nov-08 416.63 214.88
Dec-08 390.29 216.56
Jan-09 397.41 198.01
Feb-09 376.99 176.24
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