Stimulus Announcements Lift Most IBO Stock Indexes
US, European and Japanese central banks all implemented new economic stimulus strategies this month. The European Central Bank announced plans to buy unlimited government debt, and the Bank of Japan increased its asset purchase program.
On September 13, the US Federal Reserve agreed to purchase $40 billion of mortgage securities each month until the economy improves and to preserve low interest rates into 2015. US equity markets reacted favorably, as the Dow Jones Industrial Average hit a four-year high, trading just below 13,600, on September 20. However, equity prices retracted slightly toward the end of the month, as second-quarter US GDP growth was revised downward from 1.7% to 1.3%. In addition, apprehensions over European sovereign debt resurfaced, along with concerns over growth in the Eurozone and Asia. For the month of September, the Dow, S&P 500 and NASDAQ climbed 2.6%, 2.4% and 1.6%, respectively. Year to date, the Dow, S&P 500 and NASDAQ are up 10.0%, 14.6% and 19.6%, respectively.
This month, three of the four IBO Stock Indexes benefited from the overall market euphoria. The Process/Metrology/Motion Instrumentation Stock Index fell 2.7%. The Lab Consumables/Equipment, Laboratory Instrumentation and Diversified Instrumentation Stock Indexes climbed 5.4%, 3.6% and 2.5%, respectively.
Laboratory Instrumentation Stock Index
In September, the Laboratory Instrumentation Index rose 3.6% to close at 645.40. Fourteen companies advanced, three declined and one was unchanged. Cepheid recorded the largest decline, falling 9%. Year to date, the Index is up 14.2%, with 12 companies in positive territory and six with negative returns. Illumina leads the Index for both the month and year, having gained 15% and 58%, respectively. Pressure BioSciences has sustained the largest drop for the year, down 50%.
Cepheid preannounced on September 26 lower-than-expected third-quarter sales in the range of $79–$81 million due to supply issues related to Xpert cartridge parts. However, the company expects to fulfill the $5 million in back orders by the end of October. Despite maintaining its full-year guidance of $333–$347 million, shares fell 10.1% the next day.
In other financial news, on September 21, Fitch affirmed PerkinElmer’s Issuer Default Rating at “BBB-.” Shares traded slightly lower. Sequenom fell 7.2% on September 11 after the company proposed a private offering of convertible senior notes to help finance the commercialization of its MaterniT21 PLUS test. However, shares rebounded 7.7% the following day, as the company priced the $110 million debt offering, plus an over-allotment option of $20 million, at 5.0% due 2017. The full $130 million offering was completed on September 17. The company was downgraded on September 24 to “Neutral” from “Overweight” by Piper Jaffray due to its significant increase in spending and growing competition. The next day, Credit Suisse initiated coverage of Sequenom with an “Underperform” rating and a $4.00 price target. The analyst cited increased competition from lower-priced fetal Down syndrome tests.
In other ratings news, Beckton Dickinson was downgraded by Barclays on September 24 from “Equal Weight” to “Underweight” and initiated with a “Sector Perform” rating by RBC Capital on September 27. JPMorgan Chase started coverage of Cepheid on September 26 with an “Overweight” rating and a $47.00 price target.
Process/Metrology/Motion Instrumentation Stock Index
The Process/Metrology/Motion Instrumentation Stock Index contracted 2.7% this month to 566.03. Six companies traded lower, and MTS Systems improved 5%. Veeco Instruments, which fell 13% for the month, leads the Index for the year, having gained 44%. For the first nine months, the Index has advanced 15.7%, with four companies trading higher and three with negative returns. SDIX has lost the most value, having fallen 32%.
Goldman Sachs downgraded Veeco on September 24 from “Neutral” to “Sell” and lowered its price target by 10% to $27.00 per share. The analyst suggested overly optimistic volume expectations and, as a result, cut his 2012 and 2013 EPS estimates by 3% and 18% to $1.50 and $1.65, respectively. Shares slumped 10.2%.
Lab Consumables/Equipment Stock Index
The Laboratory Consumables/Equipment Stock Index climbed 5.4% in September to 663.29, with all seven companies trading higher. Pall recorded the largest gain, rising 14%. Year to date, the Index has improved 16.4%. Six companies have increased in value, while Enzo Biochem is down 9%. Kewaunee Scientific boasts the highest price increase, up 40%.
Pall beat fiscal fourth-quarter EPS expectations on September 12 and projected fiscal 2013 pro forma EPS growth of 9%–16% to $3.05–$3.25. Shares climbed 8.0% the next day. On September 26, the company raised its quarterly dividend by 19% to $0.25 per share. Shares rose 1.3% the next day. On September 13, QIAGEN announced a collaboration with China’s Lepu Medical to provide its ESEQuant Lateral Flow detection system for rapid cardiac testing. Shares rose 1.9% the next day.
Bank of America upgraded Pall on September 18 from “Underperform” to “Neutral” and raised its price target by 25% to $65.00 per share. William Blair initiated coverage of Life Technologies with an “Outperform” rating on September 25. The next day, UBS downgraded Sigma-Aldrich from “Buy” to “Neutral” due to valuation but maintained a $76.00 price target.
Diversified Instrumentation Stock Index
The Diversified Instrumentation Stock Index spiked 2.5% for the month to 152.86. Six companies increased in value, while Teledyne Technologies fell 2%. Roper Industries increased the most, advancing 7%. Year to date, the Index has climbed 16.6%, with all seven companies trading higher, led by Illinois Tool Works, which has gained 27%.
On September 10, Agilent Technologies priced a $400 million public offering of senior notes at 3.2% due 2022. Proceeds are intended for general corporate purposes, including a $250 million repayment of expiring debt. On the same day, Fitch rated the senior notes offering at “BBB+”. Agilent traded slightly lower.
On September 14, Janney Montgomery Scott initiated coverage of Danaher with a “Buy” recommendation and a $66.00 price target. Citigroup initiated coverage of AMETEK with a “Neutral” rating on September 17.
International
For the month of September, three Pacific Region companies declined, two advanced and Techcomp was unchanged. JEOL recorded the largest price increase, rising 5%, while Hitachi High-Technologies dipped 3%. For the first three quarters of the year, half of the companies are trading higher and half are in negative territory. Techcomp has the highest return, having gained 14%. Shimadzu is down 16%.
This month, prices for six European companies increased, five weakened and two were unchanged. Exiqon experienced the largest drop, falling 7%, while Sartorius climbed 13% and 83% for the month and year, respectively. For the year, 10 companies have positive returns and three have contracted in value, led by Alpha MOS, which has fallen 53%.
Abcam announced on September 6 EPS growth of 19.2% to £0.16 ($0.25) for the fiscal year ending June 30. The company also reported a final dividend increase of 14.7% to £0.04 ($0.7), resulting in a full-year dividend payment of £0.06 ($0.10). Shares climbed 5.4%. On September 12, Nomura Code Securities initiated Oxford Instruments with a “Buy” rating.
Line Graph: IBO Instrument Industry Stock Index
Lab Instrument Stock Index S&P 500
Sep-10 556.95 273.61
Oct-10 579.40 283.69
Nov-10 589.00 283.04
Dec-10 565.27 301.52
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
Jun-11 712.55 316.63
Jul-11 676.63 309.83
Aug-11 635.47 292.24
Sep-11 577.75 271.27
Oct-11 602.13 300.49
Nov-11 569.85 298.97
Dec-11 565.27 301.52
Jan-12 628.98 314.66
Feb-12 634.89 327.43
Mar-12 644.38 337.69
Apr-12 637.19 335.16
May-12 593.81 314.16
Jun-12 605.89 326.59
Jul-12 608.43 330.70
Aug-12 622.96 337.24
Sep-12 645.40 345.41
Cos. Date Rept. FQ 2012 Adj.EPS Consensus Vs.Est. Grw. 2011 Adj.EPS
Lab Consumables/Equipment
PLL 12-Sep 4Q $0.86 $0.77 $0.09 13% $0.76
Market Value 52 Week Price Change Change EPS EPS LTD/ FY R&D/
Company: Exchange (US $000s) Low High 09/28/12 1 Month YTD P/E 12 Month FY Equity ROE Sales
Laboratory Instrumentation
Accelrys: o $481,461 5.68 8.91 $8.66 13% 29% NM -0.31 -0.44 4% 1% 24%
Affymetrix: o $312,124 3.52 5.95 $4.34 14% 6% NM -0.46 -0.40 5% NM 24%
Becton, Dickinson and Company: n $16,127,582 69.59 80.56 $78.56 3% 5% 14 5.50 5.59 116% 26% 6%
Bio-Rad Laboratories: n $3,053,259 87.98 118.00 $106.72 6% 11% 16 6.47 6.26 49% 10% 9%
Bruker: o $2,187,339 9.91 17.10 $13.09 8% 5% 26 0.50 0.55 56% 15% 11%
Cepheid: o $2,375,981 29.90 46.00 $34.50 -9% 0% NM -0.07 0.04 3% 1% 21%
Fluidigm: o $349,248 12.05 17.23 $17.00 9% 29% NM -0.78 -1.81 3% NM 33%
Harvard Bioscience: o $125,187 3.45 5.25 $4.23 10% 9% 60 0.07 0.13 10% 4% 5%
Illumina: o $6,409,800 25.57 55.39 $48.19 15% 58% 78 0.62 0.62 73% 8% 19%
Luminex: o $798,284 16.80 25.79 $19.44 1% -8% 69 0.28 0.34 3% 6% 18%
MOCON: o $81,125 13.76 20.40 $14.82 1% -7% 23 0.64 0.98 25% 16% 6%
Pacific Biosciences: o $101,854 1.68 5.27 $1.83 -7% -35% NM -1.85 -2.03 5% NM 225%
PerkinElmer: n $3,376,614 17.45 30.92 $29.47 8% 47% 421 0.07 0.06 70% 0% 6%
Pressure BioSciences: o $3,059 0.20 0.97 $0.30 3% -50% NM -0.23 -0.77 -1% NM 98%
Sequenom: o $404,358 2.65 6.06 $3.53 -4% -21% NM -0.89 -0.75 18% NM 96%
Thermo Fisher Scientific: n $21,720,036 43.06 61.00 $58.83 3% 31% 21 2.85 3.46 56% 9% 3%
Transgenomic: o $68,063 0.70 1.44 $0.95 0% -26% 10 0.10 -0.04 18% NM 7%
Waters: n $7,448,119 70.88 94.47 $83.33 4% 13% 18 4.68 4.69 71% 35% 5%
Process/Metrology/Motion Instrumentation
FEI Company: o $2,226,349 26.61 56.48 $53.50 0% 31% 20 2.72 2.51 6% 15% 9%
MKS Instruments: o $1,356,221 20.01 34.99 $25.49 -6% -8% 14 1.77 2.45 4% 13% 7%
MTS Systems: o $867,349 29.48 54.99 $53.55 5% 31% 17 3.21 3.24 12% 24% 3%
Nanometrics: o $329,741 13.49 20.99 $13.81 -9% -25% 25 0.56 1.22 7% 14% 10%
SDIX: o $25,633 0.95 2.13 $1.25 -9% -32% NM -0.08 -0.01 1% NM 15%
Veeco Instruments: o $1,169,640 20.35 38.39 $30.00 -13% 44% 14 2.16 3.11 1% 17% 10%
Zygo: o $346,998 10.60 20.44 $18.29 -6% 4% 8 2.30 2.30 3% 25% 10%
Lab Consumables/Equipment
Enzo Biochem: n $79,203 1.33 3.12 $2.04 9% -9% NM -0.42 -0.34 0% NM 8%
Kewaunee Scientific: o $29,483 7.90 13.45 $11.41 1% 40% 18 0.64 0.40 42% 3% 1%
Life Technologies: o $8,856,847 36.07 50.84 $48.85 2% 26% 21 2.37 1.99 59% 8% 10%
Pall: n $7,461,281 39.81 65.82 $63.49 14% 11% 20 3.19 3.19 65% 21% 3%
QIAGEN: o $4,446,676 12.47 19.11 $18.51 4% 34% 45 0.41 0.40 27% 4% 11%
Sigma-Aldrich: o $8,780,340 58.60 74.94 $71.97 1% 15% 19 3.75 3.72 25% 21% 3%
Techne: o $2,654,154 62.04 76.02 $71.94 5% 5% 24 3.04 3.04 1% 17% 9%
Diversified Instrumentation
Agilent Technologies: n $13,572,850 28.67 46.28 $38.45 3% 10% 13 2.87 2.85 57% 23% 10%
AMETEK: n $8,618,639 20.58 36.56 $35.45 3% 26% 14 2.53 2.37 75% 19% 3%
Danaher: n $39,427,287 39.34 56.45 $55.15 3% 17% 17 3.25 3.11 48% 11% 6%
Illinois Tool Works: n $27,880,587 39.12 62.09 $59.47 0% 27% 12 4.80 4.19 48% 21% 1%
Mettler-Toledo Int'l: n $5,470,327 126.10 190.02 $170.74 3% 16% 20 8.52 8.21 98% 35% 5%
Roper Industries: n $10,947,132 64.90 111.40 $109.89 7% 26% 24 4.59 4.34 46% 13% 4%
Teledyne Technologies: n $2,364,447 45.59 66.29 $63.39 -2% 16% 16 3.92 6.84 44% 15% 5%
Laboratory Instrumentation Stock Index 645.40 3.6% 14.2% 20 64% 11% 7%
Process/Metrology/Motion Instrumentation 566.03 -2.7% 15.7% 15 4% 16% 8%
Lab Consumables/Equipment Stock Index 663.29 5.4% 16.4% 21 43% 12% 7%
Diversified Instrumentation Stock Index 152.86 2.5% 16.6% 17 51% 16% 5%
Dow Jones Industrial Average 13,437.13 2.6% 10.0%
S&P 500 1,440.67 2.4% 14.6%
NASDAQ Composite 3,116.23 1.6% 19.6%
Price
Region Market Value Market Value 09/28/12 Change Change EPS EPS LTD/ FY R&D/
Company (US $000s) (Local 000s) (Local) 1Month YTD P/E 12 Month FY Equity ROE Sales
Pacific Shares
Hitachi High-Technologies: t $3,326,158 ¥259,362,029 ¥1,883 -3% 13% 14 ¥133.83 ¥103.71 11% 6% 4%
HORIBA: t $1,252,368 ¥97,655,199 ¥2,296 -1% -1% 13 ¥175.40 ¥204.41 16% 9% 9%
JEOL: t $178,118 ¥13,888,980 ¥175 5% -9% 2 ¥115.60 ¥115.60 102% 63% 5%
Precision System Science: os $34,537 ¥2,693,083 ¥29,510 -1% 2% NM -¥2,072 -¥2,072 43% NM 12%
Shimadzu: t $2,069,266 ¥161,354,060 ¥547 1% -16% 16 ¥33.51 ¥30.79 19% 5% 3%
Techcomp: hk $85,173 HKD 660,450.00 HKD 2.80 0% 14% 75 $0.04 $0.04 7% 13% 1%
European Shares
Abcam: I $1,169,031 £736,837 £4.02 -1% 10% 30 £0.13 £0.13 9% 17% 4%
Halma: l $2,538,658 £1,600,109 £4.24 4% 28% 18 £0.23 £0.23 35% 22% 5%
Oxford Instruments: l $1,202,013 £757,625 £13.75 5% 45% 31 £0.45 £0.45 35% 20% 8%
Renishaw: l $1,908,933 £1,203,195 £16.53 6% 64% 17 £0.96 £0.96 29% 28% 14%
Scientific Digital Imaging: $3,170 £1,998 £0.11 0% 2% 105 £0.00 £0.00 0% 1% 10%
Spectris: l $32,376 £2,040,675 £17.25 0% 34% 16 £1.11 £1.07 64% 21% 7%
Alpha MOS: c $5,272 €4,100 € 1.05 0% -53% NM -€0.05 -€ 0.14 16% NM 13%
Analytik Jena: g $76,050 €59,148 € 10.85 -7% 1% 40 €0.27 -€ 0.03 19% NM 15%
Sartorius: g $1,359,923 €1,057,680 € 56.50 13% 83% 21 €2.66 €2.44 110% 11% 6%
Tecan: s $831,495 CHF781,665 CHF 68.3 5% 8% 18 CHF3.83 CHF4.36 5% 18% 12%
Datacolor: s $63,838 CHF 60,012 CHF 393.3 -2% 0% 20 CHF20.07 CHF21.48 7% 0% 12%
Biotage: st $948 SEK 6,227 SEK 8.5 8% 63% 13 SEK 0.66 SEK 0.42 6% 6% 8%
Exiqon: no $53,261 DKK 308,869 DKK 8.8 -7% -8% NM -DKK 0.55 -DKK 0.71 2% NM 21%
