US equity markets trended lower in May following disappointing economic data, including weaker-than-expected manufacturing and durable goods orders. Other economic threats, such as inflation, unemployment and the European sovereign debt crisis, further soured investor sentiment. For the month, the Dow Jones Industrial Average, S&P 500 and NASDAQ fell 1.9%, 1.4% and 1.3%, respectively. Despite some profit taking and mounting evidence of a US economic slowdown, the equity markets have been resilient due to positive corporate profit outlooks and consumer sentiment. Year to date, the Dow, S&P 500 and NASDAQ are up 8.6%, 7.0% and 6.9%, respectively.

The IBO Stock Indexes were mixed this month. The Process/Metrology/Motion Instrumentation and Laboratory Instrumentation Stock Indexes improved 8.8% and 2.5%, respectively. The Lab Consumables/Equipment and Diversified Instrumentation Stock Indexes declined 2.7% and 2.2%, respectively.

Laboratory Instrumentation Stock Index

Dionex was removed from the Index following its acquisition by Thermo Fisher Scientific on May 17 (see IBO 12/15/10). For May, the Index gained 2.5% to 721.22. Thirteen companies expanded, and nine declined. Fluidigm lost the most value, declining 10%. Transgenomic recorded the largest return for the month and year, climbing 68% and 129%, respectively. Year to date, the Index is up 9.3%, with 17 companies gaining, four trading lower and one unchanged. Pacific BioSciences has shed the most value, sliding 25%.

Caliper Life Sciences reported quarterly results on May 2 (see page 12) and projected a midpoint loss of $0.04 a share for the year, similar to 2010. On May 4, MOCON reported EPS growth, leading shares up 3.0%. The following day, Sequenom jumped 16.0% as it announced results and the completion of a clinical study for its Down syndrome diagnostic test. Also on May 5, PerkinElmer beat first-quarter expectations and raised its full-year EPS outlook by 3% to $1.62–$1.67. Luminex climbed 6.1% on May 9 after it nearly doubled first-quarter EPS expectations. On May 17, Pressure BioSciences announced a narrower-than-expected first-quarter EPS loss. Shares rose 5.7%.

Accelrys, Transgenomic and X-Rite each reported first-quarter EPS in line with expectations. Accelrys slipped 3.1% on May 4, even though it projected full-year EPS of $0.33–$0.35, including acquisitions. Bio-Rad Laboratories missed EPS expectations on May 3. Shares declined 1.9% the following day. On May 10, Fluidigm reported a wider-than-expected first-quarter EPS loss (see page 12). However, the company increased the midrange of its full-year revenue outlook by 2% to $43 million for growth of 27%–30%.

In other news, Cepheid rose 2.6% on May 18 after it announced a distribution agreement with Labsco. Thermo climbed 4.2% on May 19 following the announcement of an agreement to purchase Phadia (see page 2). On May 6, Auriga initiated coverage of Sequenom with a “Buy” rating.

Process/Metrology/Motion Instrumentation Stock Index

For the month, the Process/Metrology/Motion Instrumentation Stock Index climbed 8.8% to 589.17, including 24% and 13% gains for FEI and Veeco Instruments, respectively. RAE Systems also traded higher, while four companies declined. SDIX lost the most value, contracting 12%. Year to date, the Index has gained 30.9%, with all seven companies in positive territory, led by FEI, which is up 52%.

FEI jumped 8.2% on May 4 (see page 12). The company projected second-quarter GAAP EPS to grow more than 160% to $0.55–$0.61. On May 5, Zygo reported EPS growth, leading shares up 8.0% the following day. On the same day, MTS Systems beat EPS estimates, but forecasted lower earnings growth for the second half of the year due to product mix and higher expenses. SDIX reported on May 12 a wider first-quarter loss. Shares fell 3.5% the next day. During the month, RAE Systems made several amendments to its merger agreement with Vector Capital (see IBO 1/31/11). On May 25, shares jumped 9.8% as the company announced an elevated offer of $2.25 a share for unaffiliated stockholders.

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index contracted 2.7% in May to 659.93. Two companies improved, and five declined, led by QIAGEN, which fell 8%. Techne had the only significant gain, gaining 5%. For the year, the Index has improved 5.4%, with four companies trading higher and three showing negative returns. Techne has improved the most, climbing 24%. Kewaunee Scientific and Enzo Biochem are each down 24%. Techne reported on May 3, leading shares up 2.9%. Life Technologies announced on May 11 the redemption of $350 million in convertible senior notes due 2025 through both cash and stock. Shares improved 0.8% the next day.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index grew 2.2% for the month to 151.80. All seven companies traded lower, led by Mettler-Toledo, which fell 11%. Year to date, the Index is up 13.2%, with all companies in positive territory. Agilent Technologies leads the Index with a 20% return. Mettler-Toledo reported on May 4 (see page 12) and raised its full-year EPS outlook by 3% to $7.90–$8.00. The company forecast second-quarter EPS to grow 17%–20% to $1.82-$1.86. Shares fell 7.6% the next day. Agilent announced results on May 13 and increased its full-year outlook by 11% to $2.84–$2.88. The company expects fiscal third-quarter EPS of $0.71–$0.73. Shares climbed 4.5%. On May 6, Illinois Tool Works announced a $4 billion share repurchase program. Shares rose 1.3%.

International

In May, four Pacific Region companies improved, and Techcomp dropped 8%. JEOL expanded the most, gaining 15%. For the year, three companies have positive returns, while Hitachi High-Technologies and JEOL are each down 10%. Shimadzu leads all companies, having gained 14%.HORIBA reported on May 10 first-quarter EPS growth of 56% to ¥51.01 ($0.62), leading shares up 4.5% the following day. Also on May 10, Shimadzu announced a 64% jump in net income to ¥10,046 ($117.2 million) for the fiscal year ending March 31. Shares climbed 4.3% the next day.

This month, six European companies improved, seven traded lower and Exiqon was unchanged. Spectris had the highest return, up 6%, and CyBio slumped 18%. For the year, 12 European companies have recorded gains. Tecan and Datacolor are down 11% and 8%, respectively. Renishaw has risen 38%. Analytik Jena reported on May 12 a quarterly loss of €0.09 ($0.13) a share, compared with a gain of €0.16 ($0.22) last year. Shares fell 3.9%. On May 18, Exiqon narrowed its first-quarter loss by 62% to DKK 0.14 ($0.03).

 Line Graph: IBO Instrument Industry Stock Index

              Lab Instrument Stock Index       S&P 500 

 May-09       446.23                           220.37

 Jun-09       479.85                           220.41

 Jul-09       522.15                           236.75

 Aug-09       528.47                           244.70

 Sep-09       543.19                           253.44

 Oct-09       535.42                           248.43

 Nov-09       548.41                           262.68

 Dec-09       565.94                           267.35

 Jan-10       546.93                           257.47

 Feb-10       566.22                           264.81

 Mar-10       585.87                           280.38

 Apr-10       596.47                           284.51

 May-10       557.61                           261.19

 Jun-10       531.11                           247.12

 Jul-10       513.20                           264.12

 Aug-10       499.94                           251.58

 Sep-10       556.95                           273.61

 Oct-10       579.40                           283.69

 Nov-10       589.00                           283.04

 Dec-10       660.07                           301.53

 Jan-11       657.02                           308.36

 Feb-11       661.02                           317.14

 Mar-11       661.90                           317.88

 Apr-11       703.32                           326.93

 May-11       721.22                           322.52

                       2011                                                   2010

 Cos.     Date Rept.   1Q Adj. EPS   Consensus    Vs. Est.    EPS Growth      4Q Adj. EPS

 Laboratory Instrumentation Index  

 ACCL     3-May        $0.08         $0.08       $0.00        NA              ($0.02)

 CALP     2-May        $0.01        ($0.02)      $0.03        NA              ($0.02)

 BIO      3-May        $1.26         $1.32      -$0.06        2%               $1.24 

 FLDM     10-May      ($0.35)       ($0.29)     -$0.06        NA               NA

 HLCS     13-May      ($0.00)        NA          NA           97%             ($0.08)

 LMNX     9-May        $0.11         $0.06       $0.05        120%             $0.05 

 MOCO     4-May        $0.24         NA          NA           41%              $0.17 

 PBIO     17-May      ($0.34)       ($0.36)      $0.02        31%             ($0.49)

 PKI      5-May        $0.34         $0.31       $0.03        10%              $0.31 

 SQNM     5-May       ($0.13)       ($0.19)      $0.06        52%             ($0.27)

 TBIO     12-May      ($0.01)       ($0.01)      $0.00        0%              ($0.01)

 XRIT     5-May        $0.03         $0.03       $0.00        NA              ($0.03)

 Process/Metrology/Motion Instrumentation Index

 FEIC    3-May         $0.54         $0.46       $0.08        200%             $0.18 

 MTSC    5-May         $0.75         $0.62       $0.13        103%             $0.37 

 RAE     16-May       ($0.05)        NA          NA           NA              ($0.01)

 SDIX    12-May       ($0.03)        NA          NA          -50%             ($0.02)

 ZIGO    5-May         $0.24         NA          NA           500%             $0.04 

 Lab Consumables/Equipment Index  

 TECH    3-May         $0.84         $0.80       $0.04        12%              $0.75 

 Diversified Instrumentation Index  

 A       13-May        $0.74         $0.65       $0.09        72%              $0.43 

 MTD     4-May         $1.45         $1.39       $0.06        28%              $1.13