Notwithstanding a strong final trading session, US equity markets were mostly muddled in September due to uncertainty over the Federal Reserve’s shift in interest rate policy. In spite of a favorable market outcome to leave rates unchanged on September 21, investors remained anxious over soft US consumer spending data as well as the financial health of Deutsche Bank. In addition, investors are becoming increasingly concerned over the powers of central bank’s monetary tools to stimulate growth both abroad and domestically. On the positive side, OPEC reached an agreement to cut production, pushing crude oil prices higher. For the month, the Dow Jones Industrial Average and S&P 500 were marginally lower, slipping 0.5% and 0.1%, respectively. The NASDAQ advanced 1.9%. Year to date, the Dow is up 5.1%, and the S&P 500 and NASDAQ have advanced 6.1% each.

Laboratory Instruments and Products

FEI was removed from the Index following the completed acquisition by Thermo Fisher Scientific on September 19 (see IBO 5/31/16). The Index advanced 3.6% in September to 271.28 and is up 10.7% for the year. A majority of companies traded higher this month, led by NanoString Technologies, which jumped 23.6%. Shares reacted favorably to new Board appointee Kirk Malloy, PhD, who previously served as a top executive at Illumina.

Bio-Rad Laboratories was the only other company in the Index to climb in double digits this month, as shares advanced 10.1%. However, sequencing companies Illumina and Pacific Biosciences also recorded strong gains in September, rising 7.9% and 7.6%, respectively.

Thermo Fisher Scientific, which advanced 4.5% for the month, took advantage of the record-low borrowing costs in Europe, issuing €1.0 billion ($1.1 billion) of eight-year bonds at 0.75% and €600 million ($675 million) of 12-year notes at 1.375% on September 7. Proceeds of this offering will be used to finance the acquisition of FEI. The company also issued on September 14 a $1.2 billion senior notes offering at 2.95% due 2026, to help redeem certain maturing debt. Moody’s Investors Service assigned a “Baa2” rating and stable outlook for the US and euro denominated debt offerings. On September 9, Cleveland Research downgraded Thermo Fisher from “Buy” to “Neutral.”

Similar to Thermo Fisher, Agilent Technologies priced a $300 million senior notes offering on September 15 at 3.05% with a maturity date in 2026. Proceeds will be used to repay its revolving credit facility as well as for other general corporate purposes. Agilent also received a “Baa2” rating and stable outlook recommendation from Moody’s Investors Service on September 21.

Earlier in the month, on September 7, Goldman Sachs, which currently has a “Buy” recommendation, increased its price target for Agilent by $3 to $53 per share. The investment firm advocated an attractive valuation for Agilent given its continued organic growth momentum and margin expansion.

Only three companies contracted for the month, led by Fluidigm, which slumped 12.1%. Enzo Biochem and MTS Systems fell 8.5% and 7.5%, respectively. On September 1, Enzo Biochem filed an SEC S-3 registration statement for a security offering of up to $50 million. The date of sale and type of securities issued will be updated through a prospectus supplement.

In other ratings news, UBS downgraded VWR on September 6 from “Neutral” to “Sell,” and lowered its price target by $2 to $27 per share due to slower projected earnings growth. On September 23, Citigroup downgraded Becton, Dickinson from “Neutral” to “Sell,” and lowered its price target by $2 to $165 per share.

Diversified Instrumentation

The Index improved a paltry 0.1% in September to 204.41 but is up 9.0% year to date. A slight majority of the companies increased for the month. Corning recorded the strongest gain, rising 4.2%, while Danaher contracted 3.7%. Danaher trended lower on September 6 after the proposed acquisition of Cepheid for roughly $4 billion (see IBO 9/15/16).

Following a review in August, Moody’s Investor Service confirmed a “Baa2” rating on Xylem’s senior unsecured notes on September 29, but downgraded its outlook to negative due to concerns over the integration of Sensus. Nonetheless, shares advanced 3.1% for the month.

International

Asia Pacific markets were mixed in September, as the Hong Kong Hang Seng and Singapore STI Indexes expanded 1.4% and 1.7%, respectively, but China’s Shanghai Composite and Japan’s Nikkei 225 each declined 2.6%.

Prices for most of the Pacific Region companies in the IBO Stock Table increased this month, led by Precision System Science, which jumped 18.8%. Techcomp recorded the largest decline, sliding 10.2%.

European equity markets were also mixed in September. London’s FTSE 100 and Sweden’s OMX Stockholm 30 expanded 1.7% and 1.5%, respectively. Italy’s FTSE MIB and Germany’s DAX contracted 3.2% and 0.8%, respectively.

Prices for several UK-based companies in the IBO Stock Table were impacted by financial announcements. Abcam, which climbed 15.8% for the month to lead all European companies in the Table, posted positive earnings results. On September 12, the company reported that adjusted EPS for the fiscal year 2016 ending June 30 advanced 13% to 22.35 pence ($0.33). Sales were driven by strong demand for primary and non-primary antibodies, as well as robust growth in China. The company also proposed an 8.5% full-year dividend increase to 8.91 pence ($0.13) per share.

Conversely, Oxford Instruments recorded the largest monthly decline among European companies in the Table, falling 17.5%. Shares fell 6.1% on September 13, as the company announced that currency-neutral sales and profit for the first half of the year were lower due to continued challenges in the industrial markets.

On September 20, Horizon Discovery reported that half-year sales climbed 19% (see Bottom Line), led by strength in the molecular reference standards business and demand for new cell-free DNA products. Adjusted operating loss narrowed 13% to 6.9 pence ($0.10). However, shares contracted 7.2% for the month.