This month, the markets were extremely resilient, as they shrugged off profuse negative economic data to finish the month in positive territory. For the first time since October 2007, the Dow Jones Industrial Average, S&P 500 and NASDAQ all finished higher, improving 4.5%, 4.8% and 5.9%, respectively. Investors seemed primarily focused on several positive earnings reports from the technology sector, while discounting news of inflationary pressure, higher unemployment rates and deteriorating consumer confidence. With a growing disconnect between the economy and the capital markets, it appears there is a general optimism for a recovery in the second half of the year.

Nevertheless, the current economic landscape remains lackluster. On April 30, the Federal Open Market Committee reported first-quarter GDP growth of 0.6%, a figure still wavering near the official measure of a recession. However, as more data emerge, it is more than likely that this GDP growth rate will be revised to a negative number. On the same day, the Federal Reserve cut the interest rate by 25 basis points to 2.0% and indicated a possible end to the rate cutting cycle due to inflationary concerns. Earlier in the month, crude oil prices climbed to a near record high $120 a barrel, but retracted slightly to end the month at $114.90. In spite of the strong market performance in April, year to day, the Dow is down 3.4%, the S&P 500 has lost 5.6% and NASDAQ has dropped 9.0%.

For the month, three of the IBO Stock Indexes improved, while the Laboratory Instrumentation Index traded flat. The Process/Metrology/Motion Instrumentation Stock Index climbed 4.9%, while the Lab Consumables/Equipment and Diversified Instrumentation Stock Indexes improved 2.4% and 3.3%, respectively.

Laboratory Instrumentation Stock Index

For April, the Laboratory Instrumentation Index remained unchanged at 600.29. Thirteen companies declined, nine companies improved and Starlims traded flat. Transgenomic led the Index, climbing 16%, while X-Rite declined 58%. For the year, the Index has lost 8.6%, with 16 companies trading lower and seven companies improving. Combimatrix leads the Index, up 46%, while X-Rite has declined 78%.

While a number of companies benefited from strong earnings, other companies warned of declining revenue growth and profit expectations. On April 3, Sequenom lowered its full-year revenue guidance (see IBO 4/15/08), leading shares down 8.0%. On the same day, X-Rite revised its first-quarter revenue-growth forecast from flat to a 3% decline, sending shares down 16.7%. Additionally, on April 28, news that X-Rite violated a loan covenant on its debt obligation sent shares tumbling 39.4%. After the market closed on April 14, Affymetrix warned it would miss first-quarter earnings expectations and lowered its 2008 revenue guidance (see IBO 4/15/08). Shares declined 32.9% the following day. Bruker warned on April 21, after the market closed, that first-quarter revenues would fall below analysts’ expectations (see page 2). Shares fell 23.1% the following day.

After the close on April 23, Varian announced adjusted EPS of $0.64 (see page 12), $0.02 below analysts’ expectations. Shares traded down 3.1% the following day. Affymetrix officially reported EPS of $0.58 (see page 12), which included a pretax restructuring charge of $0.17 per share and a litigation payment of $90 million, on April 24. Excluding the one-time payment, revenues were flat. Concurrently, Applied Biosystems reported adjusted EPS of $0.44 (see page 12), in line with analysts’ expectations. However, the company reported lower than expected revenues, leading shares down 4.1%. After the market closed on April 30, Sequenom posted a loss of $0.19 a share, $0.03 more than analysts’ consensus. However, shares jumped 13.0% the next day, following analysts’ recommendations.

Despite these negative profit reports, several companies in the Index provided encouraging results. On April 22, Illumina reported adjusted EPS of $0.37 (see page 12), $0.12 ahead of analysts’ forecasts, and raised its full-year earnings guidance by approximately 6% to $1.55–$1.68 per share, sending shares up 10.2%. On the same day, Waters reported adjusted EPS of $0.69 (see page 12), $0.05 better than analysts’ expectations, and increased its full-year earnings range by approximately 3% to $3.20–$3.30 a share, sending shares up 5.0%. PerkinElmer announced adjusted EPS of $0.28 (see page 12), $0.03 better than analysts’ forecasts, on April 24. Shares rose 9.8% the following day. Also on April 24, Thermo Fisher Scientific announced adjusted EPS of $0.74 (see page 12), $0.02 better than analysts’ expectations, and increased its full-year earnings forecast by $0.02 to $3.07–$3.17 per share. Shares traded marginally lower. Beckman Coulter reported adjusted EPS of $0.68 (see page 12) on April 30, beating analysts’ estimates by $0.01, and raised the low-end of its 2008 earnings range to $3.55–$3.65 a share. Shares rose 7.1%. After the market closed on April 30, Dionex announced fiscal third-quarter adjusted EPS of $0.72 (see page 12), $0.04 ahead of expectations, and raised its full-year EPS guidance by 1%–2% to $2.68–$2.72.

Analysts’ recommendations more or less reflected company results. On April 15, following the company’s profit warning, Affymetrix suffered a barrage of downgrades. Bear Stearns, Leerink Swan, and Cowen & Company all downgraded the company’s shares from “Outperform” to the respective “Underperform,” “Market Perform” and “Neutral.” Caris & Company downgraded Affymetrix to “Average” from “Above Average” on April 16. On April 3, following Sequenom’s revenue warning, Oppenheimer & Company recommended buying shares due to the current price decline. Leerink Swann upgraded Beckman Coulter to “Outperform” from “Market Perform” on April 30.

Process/Metrology/Motion Instrumentation Stock Index

For the month, the Process/Metrology/Motion Instrumentation Stock Index gained 4.9% to 330.83, with five companies improving and three companies losing ground. ICx Technologies improved the most, jumping 34%, while RAE Systems led all decliners for the month and year, down 17% and 41%, respectively. Year to date, the Index has lost 16.4%, with seven companies trading lower and only Veeco Instruments in positive territory, up 13%.

Quarterly results for the Index were mixed. After the market closed on April 23, MTS Systems announced adjusted fiscal second-quarter EPS of $0.76, $0.13 better than analysts’ estimates, and projected 2008 EPS to reach the top range of its guidance of $2.43–$2.53. Shares gained 5.0% the following day. Roper Industries posted EPS of $0.68, $0.01 ahead of analysts’ forecasts, on April 24, and increased its full-year EPS guidance by approximately 1% to $3.13–$3.21. After the market closed on April 28, Veeco reported adjusted EPS of $0.09, $0.06 ahead of analysts’ expectations. Shares rose 5.9% the following day.

On the negative side, Zygo reported a loss of $0.02 per share for the fiscal third quarter, $0.02 less than analysts’ expectations, leading shares down 5.5% on April 24. On April 29, FEI missed analysts’ EPS consensus by $0.02 per share, as it reported adjusted EPS of $0.20. The company also lowered its second-quarter EPS forecast by nearly half to $0.12–$0.17, sending shares down 8.9%. In anticipation of positive earnings reports, Janney Montgomery Scott initiated coverage of MTS with a “Buy” rating on April 17. On April 30, Brean Murray downgraded FEI to “Hold” from “Buy.”

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index grew 2.4% in April to 503.45, with five companies improving and two companies declining. Invitrogen led the Index, climbing 9%, while Sigma-Aldrich slipped 4%. For the year, the Index is down 0.3%, with Techne leading the Index, up 10%, and Kewaunee Scientific down 21%.

After the market closed on April 22, Invitrogen reported adjusted EPS of $1.43 (see page 12), topping analysts’ expectations by $0.30. The company also raised its earnings guidance to 1.5 to 2.0 times revenue growth, which is expected to be in the high single digits. Shares rose 6.7% the following day. Also on April 30, Invitrogen announced the approval of a 2-for-1 stock split, which will be distributed on May 27. Sigma-Aldrich reported adjusted EPS of $0.64 (see page 12), $0.01 ahead of analysts’ forecasts, on April 22, and raised its full-year EPS guidance by $0.05 to $2.57–$2.67, yet shares traded marginally lower. On April 29, Techne announced fiscal third-quarter EPS of $0.76, $0.10 better than expectations, sending shares up 7.0%. Prior to the earnings report on April 18, Robert W. Baird downgraded Techne to “Neutral” from “Outperform.” After the close on April 30, Millipore reported adjusted EPS of $0.80 (see page 12), $0.02 better than analysts’ consensus.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index improved 3.3% in April to 106.21, with five companies improving and Mettler-Toledo down 2%. Teledyne Technologies led the Index for both the month and year, rising 25% and 10%, respectively. Year to date, the Index is down 11.1%, with four companies in negative territory and two companies having gained ground.

On April 17, Danaher beat analysts’ estimates by $0.01, reporting adjusted EPS of $0.89. However, shares slipped 3.5%. On April 21, AMETEK announced adjusted EPS of $0.62, $0.04 better than analysts’ expectations, and increased its 2008 EPS growth estimate by approximately 400 basis points to 17%–19%. Shares rose 5.9%. On April 23, Teledyne Technologies beat adjusted earnings estimates by $0.11, as it reported $0.77 per share, and increased its full-year EPS outlook by approximately 4% to $2.98–$3.06, leading shares up 19.3%. After the market closed on April 24, Mettler-Toledo reported adjusted EPS of $1.01, $0.04 ahead of analysts’ view, and raised its full-year adjusted EPS by approximately 2% to $5.43–$5.53, yet shares traded relatively flat.

On April 18, Goldman Sachs upgraded Danaher to “Conviction Buy” from “Neutral,” citing the company’s growth prospects in the water and medical industries, including a strong international presence. On April 22, Friedman Billings downgraded AMETEK to “Market Perform” from “Outperform.”

International

All five Pacific-Region companies traded higher in April, with Techcomp leading the way, up 27%. For the year, four companies remain in negative territory, while Shimadzu has gained 2%.

This month, nine European companies improved and six companies declined. Whatman has been removed from the stock table, as its acquisition by GE Healthcare (see IBO 2/15/08) closed this month. Oxford Instruments led all European companies this month, climbing 15%, while Millbrook Scientific Instruments fell 20%. For the year, nine of the European companies in the stock table are up, while six firms remain in negative territory, with Cybio AG down 56%.

On April 3, Cybio AG reported a wider than expected loss of €4.5 million ($6.2 million), compared to a profit of €0.5 million ($0.7 million) last year, sending shares down 15.2%. On April 23, Tecan announced a share-repurchase program for up to 10% of its share capital in order to improve shareholder value.