Major US equity markets fell in September due to continued geopolitical concerns in the Middle East and Ukraine as well as waning economic growth in China and weak manufacturing data in Europe. In addition, a divergence in monetary policy by major central banks has obscured global economic growth outlooks, as Europe and China are looking to add stimulus measures and the UK and US are winding down stimulus funding. However, in the US, second quarter growth was upwardly revised from 4.2% to 4.6%. In addition, US manufacturing data, corporate financial results and consumer spending were all positive. For the month, the Dow Jones Industrial, S&P 500 and NASDAQ declined 0.3%, 1.6% and 1.9%, respectively. Year to date, the Dow, S&P 500 and NASDAQ are up 2.8%, 6.7% and 7.6%, respectively.

Three of the four IBO Stock Indexes traded lower in September, led by the Process/Metrology Instrumentation Stock Index, which fell 5.7%. The Diversified Instrumentation and Laboratory Instrumentation Stock Indexes slid 2.6% and 1.9%, respectively. The Lab Consumables/Equipment Index soared 12.0% due to the proposed acquisition of Sigma-Aldrich by Merck KGaA (see page 2).

Laboratory Instrumentation Stock Index

The Laboratory Instrumentation Index skidded 1.9% for the month to close at 1,020.75, but is up 4.7% for the year. Prices for a majority of companies in the Index declined in value this month, trading in sync with the general market direction. Three companies recorded double-digit price declines, led by Sequenom, which slumped 19.9%. Pacific Biosciences and Fluidigm contracted 16.2% and 10.0% for the month, respectively.

In contrast, Cepheid climbed 10.0% for the month as the company announced on September 4 that it was recognized by Forbes magazine’s as one of the World’s Most Innovative Growth Companies. The company was upgraded by Cantor Fitzgerald on September 17 from “Hold” to “Buy.” The investment firm set a price target of $52 per share.

In other financial news, on September 8, Morgan Stanley initiated coverage of Illumina with an “Equal Weight” rating and a price target of $190 per share, and initiated both Thermo Fisher Scientific and PerkinElmer with an “Overweight” recommendation with targets of $146 and $52 per share, respectively. On the same day, the investment firm initiated coverage of Waters with an “Underweight” rating and a price target of $92 per share.

Process/Metrology Instrumentation Stock Index

The Process/Metrology Instrumentation Stock Index fell 5.7% to 740.90 in September and is down 4.0% for the year. All five companies declined this month, led by FEI, which tumbled 10.3%. MTS Systems, which fell 4.0% for the month, entered a $200 million senior unsecured five-year revolving credit facility on September 25. The company received an initial “Buy” recommendation on September 23 from Wunderlich.

There were a couple of other ratings changes this month. Nanometrics was downgraded by Canaccord Genuity on September 23 from “Buy” to “Hold.” The company fell 9.7% for the month. On September 15, Goldman Sachs upgraded Veeco Instruments from “Sell” to “Neutral” and raised its price target by 17% to $35 per share.

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index jumped 12.0% to 1,070.37 this month, and is up 18.1% for the year. The sharp increase was attributed to the proposed acquisition of Sigma, which lifted shares 33.2% on September 22. The company ended the month up 30.8%. The remaining six companies in the Index traded lower for the month. Cellular Dynamics recorded the largest price decline among all IBO Stock Indexes in September and for the first nine months, falling 38.5% and 57.4%, respectively.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index fell 2.6% to 216.04 in September but is up 0.1% for the first nine months. All eight companies traded in negative territory this month, led by Mettler-Toledo, which dropped 5.3%.

As part of the company’s 2011 share-repurchase authorization, Teledyne Technologies announced on September 3 that it would repurchase 1,030,000 shares with an estimated value of $100 million. The transaction is expected to be completed by the second quarter of 2015. On September 23, the company announced a private-placement purchase agreement for $125 million in senior unsecured notes to be issued on December 4.

On September 8, Morgan Stanley initiated coverage of Agilent Technologies with an “Equal Weight” rating and a price target of $62 per share. On September 11, Moody’s Investors Service affirmed Agilent’s “Baa2” senior unsecured rating and changed its outlook from negative to stable in anticipation of the spin-off of the Electronic Measurement business and a positive growth outlook. On September 17, Agilent’s Board of Directors approved the separation (see page 2), along with a quarterly cash dividend of $0.13 per share, which was unchanged from the previous quarter. Two days later, the company announced the redemption of $500 million outstanding senior notes due November 2017 in order to moderate its debt holdings. The redemption date is October 20.

International

Despite concerns over global economic growth and slower factory output in China, Japan’s Nikkei 225 climbed 4.9% in September. For the month, prices for the six Pacific Region companies in the IBO Stock Table improved, while Precision System Science fell 22.0%. JEOL recorded the largest price increase, gaining 16.7%.

Most European Indexes traded higher in September, except for the London FTSE 100, which declined 2.9%. Most UK-based companies in the IBO Stock Table declined, led by Oxford Instruments, which fell 13.5%. In addition, six of the eight UK-based companies are down double digits for the year.

Abcam declined 4.8% for the month despite positive financial results. On September 9, the company reported that sales climbed 8.6% excluding currency to £128.0 million ($206.4 million) and adjusted EPS increased 2.8% to £0.18 ($0.29) for the fiscal year ending June 30. On the same day, the company raised its full-year dividend by 10.1% to £0.08 ($0.13) per share and announced the appointment of Alan Hirzel as new CEO. Mr. Alan replaces Jonathan Milner, who will serve as Deputy Chairman and remains the company’s largest shareholder. Abcam was upgraded by N+1 Singer on September 11 from “Sell” to “Hold” with a price target of GBX 414 ($6.72) per share.

On September 23, Horizon Discovery reported that half-year sales climbed 35.9% to £4.1 million ($6.8 million) (see page 12), primarily as a result of the acquisition of CombinatoRx (see IBO 5/15/14). Adjusted net income widened 36.3% to £2.5 million ($4.2 million) due to increased administrative expenses. The company’s adjusted EPS loss of £0.04 ($0.07) was slightly smaller than a year ago as a result of the increased number of shares. Shares traded slightly higher that day but were down 6.7% for the month.

Spectris, which contracted 7.1% for the month was downgraded by BNP Paribas on September 25 from “Outperform” to “Neutral.” The investment firm also lowered its price target by 14% to £20.70 ($33.77) per share.

In contrast, Porvair climbed 9.6% for the month. On September 17, the company reported that sales for the nine months ending August 31 jumped 32% in local currency due to a couple of large projects within the Microfiltration division. Nine-month sales for the Metal Filtration division grew 15% excluding currency.

Other European companies in the IBO Stock Table were mixed this month. Datacolor and Biotage advanced 13.0% and 6.5% in September, respectively. Conversely, Alpha MOS, which began trading again on September 23 following its suspension on November 18, 2013, recorded the largest decline, slumping 46.3%. Last month, the company announced its exit from Chapter 11 and that it secured several millions euros in funding (see IBO 8/31/14).