IBO Stocks Stay Afloat Through a Strong, But Cautious Market

Tariffs. This has been the buzzword in the financial news in September, not to mention the entire year thus far. News stories of the US-China trade dispute led many economic experts to believe that the US imposing 10% tariffs on $200 billion worth of Chinese goods this month would significantly impact the US stock market for the worse. The opposite happened. The stock market performed well in ways that were unexpected; however, investors are still cautious. Financial analysts credited the market’s strong performance to the corporate tax rate cuts from last year.

Other positive news for the month included the Federal Reserve voting unanimously to raise short-term interest rates by another quarter-percentage point on September 28. The Fed increased the rate between the range of 2% and 2.25%. This is the first time that the benchmark’s rate has been above 2% since 2008. Despite concerns from businesses about the new US trade tariffs, the Fed’s reasoning for raising the interest rates was the encouraging second quarter GDP (4.2%), a sliding unemployment rate and a promising economic performance forecast for the country. The Fed is expected to also raise interest rates later this year. Another positive development is the current unemployment rate of 3.9% (last calculated in August 2018) throughout 2018. The movement of the unemployment rate has become cyclical throughout 2018, hovering between 3.8% and 4.1%.

On September 28, the Commerce Department released its August US consumer spending report which reported a 0.3% rise from the prior month. Despite being lower than June (0.4%), July (0.4%) and May (0.5%), surveys from the University of Michigan and the Confidence Board reported that US households are confident that the economy will grow.

For the month, both the Dow Jones Industrial Average and S&P 500 had gains, rising 1.9% and 0.4%, respectively. The NASDAQ was the only US major stock index with a loss, slipping 0.8%. Year to date, the Dow is up 7.0%, the S&P 500 is up 9.0% and the NASDAQ is up 16.6%.

Click to enlarge


Laboratory Instruments and Products Stock Index

The Index advanced 1.9% in September to 422.75 and is up 25.3% for the year. The Index‘s performance was mixed with most companies trading higher this month. The top performing company for the month was Quanterix, which jumped 28%.

In other news, Pacific Biosciences, which advanced 8.4% for the month, announced on September 12 a public offering of 14.1 million shares of common stock at $4.25 per share. The company expects to receive gross proceeds of $60 million to use for general corporate purposes, such as capital expenditures and working capital, as well as investing in complementary businesses, technologies, product candidates or other intellectual properties.

On September 7, Thermo Fisher Scientific‘s Board authorized the repurchase of $2.0 billion of shares of its common stock. The company plans to buy back the stock in the open market or through direct negotiations with investors. The repurchase authorization has no foreseen expiration date. Separately, on September 17, Goldman Sachs downgraded Thermo Fisher’s stock from a “buy” rating to a “neutral” rating. The company’s shares slid 1.9% after Goldman Sach’s announcement that day. On that same day, Goldman Sachs removed the company from its American Conviction List and added Agilent Technologies.

In other ratings news, on September 20, Bruker was downgraded from an “equal weight” rating to an “underweight” rating by Morgan Stanley. The analyst target price was $32, a 2.9% downside from the September 20 price of $32.96.

QIAGEN has begun the repurchasing process, announced earlier in the year, of 1.65 million common shares of the company. The company stated the repurchasing of shares would happened between September 5 and November 14 through the Frankfurt Stock Exchange. The purpose of repurchasing the stock is to store them in the company’s treasury and use them for their employee share-based compensation plans. The total purchase price for the stock is expected to be up to $50 million.

On September 25, Kewaunee Scientific announced its Board approved a 12% increase in the company’s quarterly dividend. As a result, stockholders will receive quarterly cash dividends of $0.19 per outstanding share instead of $0.17.

On September 14, Becton Dickinson (BD) entered into a 364-Day Term Loan Agreement with Wells Fargo Bank for $750 million. BD is partially refinancing a previous loan from last year.


Diversified Laboratory Stock Index

The Index advanced 3.8% in September to 288.85 and is up 6.2% year to date. Most of the companies traded higher this month. Corning recorded the most substantial gain, rising 5.3%, while  Xylem followed with a 5.2% gain. On September 5, Raymond James gave Xylem an “Outperform” rating with a $90 price target.

The only company that suffered a loss was Roper Technologies, which slid 0.7%. The company was downgraded from an “overweight” rating to a “neutral” rating by JPMorgan Chase. The analyst target price was $305 on the stock, a 0.3% downgrade from the September 21 price of $305.98. Nonetheless, Roper Technologies has risen 14.4% year to date.

On September 28, Honeywell declared a $0.82 dividend, a 10.1% increase from the prior dividend of $0.75.


International Stocks

For the month, the Asia Pacific markets were mixed. Japan’s Nikkei and China’s Shanghai Composite expanded 6.8% and 3.5%, respectively, but Hong Kong’s Hang Seng and India’s Sensex declined 0.4% and 4.7%, respectively.

Prices for most of the Pacific region companies in the IBO Stock Table decreased this monthwith the most significant decline for HORIBA, sliding 15.2%. In contrast, JEOL recorded the fastest expansion, rising 113.5%.

European equity markets were also mixed in September. France’s CAC 40 Index and Italy’s FTSE MIB expanded 1.8% and 0.9%, respectively. London’s FTSE 100 and Germany’s DAX each contracted 0.1% and 0.10%, respectively.

Prices for the European stocks in the IBO Stock Table were mixed, with many companies showing declines in September. Biotage was the biggest loser this month with a 7.9% decrease. In contrast, Datacolor was the top performing company, registering a 2.5% increase.

On September 17, Horizon Discovery’s six-month interim report showed a net loss per share of 5.1 pence ($0.07), a 40.7% decrease. This improvement is due to the company acquiring Dharmacon (see IBO 7/31/17) and investing in its operations. However, Horizon Discovery still ended the month with a contraction of 3.2%.

On September 10, Abcam reported first-half results of 32.4 pence ($0.43) per share adjusted EPS, a 27.1% increase. On September 11, the company also announced an annual dividend of 8.58 pence ($0.11), a 17.9% increase to 12.00 pence ($0.16) per share. According to Abcam’s report, its strong financial performance was due to various corporate strategies, which included digital marketing, expanding into related growth markets for antibodies and investing in improving operating capabilities. Nonetheless, Abcam ended the month down 5.5%.


< | >