Stormy Market Leads IBO Stock Indexes Lower
Choppy third-quarter corporate earnings along with a generally cautious outlook led the Dow Jones Industrial Average, S&P 500 and NASDAQ down 2.5%, 2.0% and 4.5% in October, respectively. However, other economic data, including better-than-expected new home sales and jobless claims, indicated improved financial conditions. Third-quarter GDP growth, while still tepid at 2.0%, improved from the second-quarter growth of 1.3%. Year to date, the Dow, S&P 500 and NASDAQ are up 7.2%, 12.3% and 14.3%, respectively.
All four IBO Stock Indexes declined this month. The Diversified Instrumentation, Lab Consumables/Equipment, Process/Metrology/Motion Instrumentation and Laboratory Instrumentation Stock Indexes fell 2.3%, 2.2%, 1.9% and 1.6%, respectively.
Laboratory Instrumentation Stock Index
For October, the Index slipped 1.6% to close at 635.37. Fourteen companies declined, and four improved. Pacific Biosciences sustained the largest drop, plunging 29%, while PerkinElmer rose 5%. Year to date, the Index is up 12.4%, with half the companies trading higher and the other half down. Illumina leads the Index, having advanced 56%, while Pressure BioSciences is down 58%.
Inciting concerns over academic spending, Affymetrix preannounced lower-than-expected third-quarter sales on October 8 (see IBO 10/15/12). Shares fell 13.9%. In addition, Cepheid, Luminex and Waters each lowered guidance. On October 18, Cepheid projected an EPS loss of $0.16–$0.18 for the year, compared with its previous outlook for a profit of $0.01–$0.05. Shares slumped 7.4% the next day. On October 29, Luminex lowered its 2012 revenue guidance by 4% to $200–$204 million. Shares dropped 8.1% the next trading day. Waters lowered its upper 2012 EPS range by 3.0% on October 23 to $4.90–$5.10. Shares fell 2.7%.
On the positive side, Illumina, PerkinElmer and Thermo Fisher Scientific all beat third-quarter sales and EPS expectations. On October 23, Illumina tightened its full-year EPS outlook from $1.50–$1.60 to $1.54–$1.59. Shares rose 2.1% the next day. Thermo raised its full-year EPS guidance by 1% on October 24 to $4.81–$4.88. Shares jumped 4.8%. PerkinElmer lifted its 2012 EPS outlook by 2% on October 25 to $2.05–$2.07, leading shares up 9.8% the next day.
PerkinElmer was rated “Neutral” by Cowen on October 2 and “Overweight” by JPMorgan on October 3. Morgan Stanley started Accelrys with an “Outperform” rating and $12 price target on October 4. Thermo was upgraded by Wells Fargo on October 5 to “Outperform” from “Market Perform,” and rated “Neutral” with a $67 price target by JPMorgan Chase on October 8. CLSA downgraded Illumina on October 24 from “Outperform” to “Underperform.”
Process/Metrology/Motion Instrumentation Stock Index
The Index fell 1.9% to 555.01 for the month. Four companies traded lower, and three advanced. FEI improved the most, rising 3%, while SDIX tumbled 9% and 38% for the month and year, respectively. Year to date, the Index has advanced 13.4%, with four companies trading higher and three declining. Veeco Instruments has sustained the largest price increase, having gained 48%.
Depressed LED markets negatively impacted third-quarter result for Veeco and MKS Instruments. On October 22, Veeco lowered its full-year sales outlook by 7% to over $500 million. Yet shares climbed 7.0% the next day. On October 24, MKS projected a loss of $0.08 to a gain of $0.05 for the fourth quarter. Shares contracted 3.4% the next day.
Conversely, FEI and Nanometrics each beat EPS estimates on October 30, leading shares up 9.3% and 6.2% the next day, respectively. FEI projected fourth-quarter EPS of $0.68–$0.76, which was in line with expectations. Nanometrics projected an EPS loss of $0.12–$0.19 for the fourth quarter, compared with analysts’ consensus for a loss of $0.02.
Lab Consumables/Equipment Stock Index
The Index declined 2.2% in October to 648.74. Six companies contracted, led by Techne, which fell 6%, while Life Technologies was marginally higher. For the year, the Index is up 13.8%, with five companies trading higher and two declining. Kewaunee Scientific has the highest return, having gained 38%, while Enzo Biochem is down 11%.
Enzo Biochem announced a restructuring plan on October 16 to reduce operating expenses by roughly $6 million annually. On October 23, Sigma-Aldrich kept its full-year EPS outlook of $3.80–$3.90. On October 25, Techne announced a new $100 million share repurchase plan.
Diversified Instrumentation Stock Index
The Index contracted 2.3% to 149.28, with three companies in positive territory and four with lower returns. Agilent Technologies surrendered the most ground, falling 6%. Illinois Tool Works (ITW) led the Index for the month and year, having gained 3% and 31%, respectively. For the year, the Index is up 13.8%, with all companies trading higher.
On October 23, AMETEK raised its 2012 EPS outlook by $0.02 to $1.85–$1.87, and ITW tightened its full-year EPS range from $4.03–$4.19 to $4.06–$4.14. Similarly, Roper Industries narrowed its 2012 EPS guidance from $4.84–$5.00 to $4.91–$4.97. Shares rose 2.4%. Teledyne Technologies raised its full-year EPS outlook by 6% to $4.22–$4.26.
Danaher lowered its 2012 EPS outlook by 2% on October 18 to $3.14–$3.19, and announced increased restructuring activities for the fourth quarter. Shares fell 4.7%. On October 22, the company’s President and CEO H. Lawrence Culp, Jr. sold 1.1 million shares for proceeds of $59.7 million. The next day, cofounder and Board member Steven M. Rales sold 15 million shares, roughly 25% of his total holdings, in a secondary offering for gross proceeds of $755.6 million.
AMETEK was rated “Equal Weight” by Morgan Stanley on October 4 and a “Hold” by Deutshe Bank on October 12. ITW was downgraded by JPMorgan Chase from “Overweight” to “Neutral” on October 9, and initiated with a “Buy” rating by Deutsche Bank on October 12. Deutsche Bank also rated Danaher a “Hold” on October 12.
International
In October, five Pacific Region companies declined, led by Techcomp, which fell 8%, while one company improved. For the year, half the companies have gains and the other half are down. Precision System Science has increased the most, climbing 7%, while Shimadzu has fallen 18%.
On October 25, Hitachi High-Technologies reported better-than-expected fiscal second-quarter EPS of ¥35.86 ($0.46), and raised its EPS estimate by 7% to ¥146.87 ($1.86) for the year. Shares climbed 2.0%.
For the month, six European companies improved, six declined and one was unchanged. Analytik Jena recorded the largest decline, falling 9%. Sartorius had the highest return for both the month and year, rising 14% and 109%, respectively. Year to date, prices for 10 European companies are trading higher and three are lower. Alpha MOS has declined the most, having surrendered 55%.
Sartorius reported on October 29 third-quarter EPS growth of 19% to €1.02 ($1.28), and raised its EBITA growth to 18% from 15%. On October 26, Biotage reported a third-quarter EPS decline of 66% to SEK 0.05 ($0.01) due to increased expenses. Exiqon reported on October 30 a quarterly EPS loss of DKK 0.02 ($0.00), compared with a loss of DKK 0.23 ($0.04) a year ago. Full-year EBIT loss is expected to narrow by roughly 65% to DKK 10 million ($1.8 million).
Line Graph: IBO Instrument Industry Stock Index
Lab Instrument Stock Index S&P 500
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
Oct-12 635.37 338.57
2012 2011
Cos. Date Rept. FQ Adj.EPS Consensus Vs.Est. Grw. Adj.EPS
Laboratory Instrumentation
ACCL 31-Oct 3Q $0.11 $0.10 $0.01 10% $0.10
CPHD 18-Oct 3Q ($0.08) ($0.05) -$0.03 NA $0.03
ILMN 23-Oct 3Q $0.41 $0.39 $0.02 86% $0.22
LMNX 29-Oct 3Q $0.04 $0.07 -$0.03 -20% $0.05
PACB 25-Oct 3Q ($0.41) ($0.43) $0.02 9% ($0.45)
PKI 25-Oct 3Q $0.45 $0.44 $0.01 10% $0.41
TMO 24-Oct 3Q $1.19 $1.16 $0.03 11% $1.07
WAT 23-Oct 3Q $1.18 $1.18 $0.00 4% $1.14
Process/Metrology/Motion Instrumentation
FEIC 30-Oct 3Q $0.71 $0.66 $0.05 13% $0.63
MKSI 24-Oct 3Q $0.16 $0.20 -$0.04 -72% $0.58
NANO 30-Oct 3Q $0.10 ($0.02) $0.12 -69% $0.32
VECO 22-Oct 3Q $0.34 $0.31 $0.03 -74% $1.33
Lab Consumables/Equipment
ENZ 15-Oct 4Q ($0.11) ($0.07) -$0.04 0% ($0.11)
SIAL 23-Oct 1Q $0.94 $0.94 $0.00 -2% $0.96
TECH 23-Oct 3Q $0.75 $0.80 -$0.05 -7% $0.81
Diversified Instrumentation
AME 23-Oct 3Q $0.47 $0.46 $0.01 18% $0.40
DHR 18-Oct 3Q $0.77 $0.79 -$0.02 5% $0.73
ITW 23-Oct 3Q $1.09 $1.06 $0.03 9% $1.00
ROP 25-Oct 3Q $1.24 $1.23 $0.01 11% $1.12
TDY 25-Oct 3Q $1.14 $0.95 $0.19 24% $0.92
. Market Value 52 Week Price Change Change EPS EPS LTD/ FY R&D/
Company: Exchange (US $000s) Low High 10/31/12 1Month YTD P/E 12Month FY Equity ROE Sales
Laboratory Instrumentation
Accelrys: o $504,744 6.21 9.59 $8.95 3% 33% NM -0.26 -0.44 4% 1% 24%
Affymetrix: o $227,980 3.16 5.79 $3.17 -27% -22% NM -0.46 -0.40 5% NM 24%
Becton, Dickinson and Company: n $15,536,347 70.05 80.56 $75.68 -4% 1% 14 5.50 5.59 116% 26% 6%
Bio-Rad Laboratories: n $2,899,624 88.86 118.00 $101.35 -5% 6% 16 6.47 6.26 49% 10% 9%
Bruker: o $2,020,239 9.91 17.10 $12.09 -8% -3% 24 0.50 0.55 56% 15% 11%
Cepheid: o $2,004,855 29.90 46.00 $30.31 -12% -12% NM -0.41 0.04 3% 1% 21%
Fluidigm: o $310,009 12.05 17.23 $15.09 -11% 15% NM -0.78 -1.81 3% NM 33%
Harvard Bioscience: o $118,972 3.45 4.76 $4.02 -5% 4% 57 0.07 0.13 10% 4% 5%
Illumina: o $6,294,083 25.65 55.39 $47.50 -1% 56% 68 0.70 0.62 74% 8% 19%
Luminex: o $673,543 15.58 25.79 $16.08 -17% -24% 60 0.27 0.34 4% 6% 18%
MOCON: o $83,205 14.04 20.40 $15.20 3% -5% 24 0.64 0.98 25% 16% 6%
Pacific Biosciences: o $72,640 1.15 5.27 $1.30 -29% -54% NM -1.72 -2.03 5% NM 225%
PerkinElmer: n $3,556,888 17.45 31.72 $30.93 5% 55% 1547 0.02 0.07 70% 0% 6%
Pressure BioSciences: o $2,549 0.19 0.97 $0.25 -17% -58% NM -0.23 -0.77 -1% NM 98%
Sequenom: o $356,247 2.65 5.83 $3.11 -12% -30% NM -0.89 -0.75 18% NM 96%
Thermo Fisher Scientific: n $22,311,324 43.06 61.99 $61.06 4% 36% 21 2.96 3.46 64% 9% 3%
Transgenomic: o $64,481 0.70 1.44 $0.90 -5% -30% 9 0.10 -0.04 18% NM 7%
Waters: n $7,236,176 70.88 94.47 $81.81 -2% 10% 17 4.70 4.69 68% 35% 5%
Process/Metrology/Motion Instrumentation
FEI Company: o $2,299,494 36.30 56.48 $55.05 3% 35% 20 2.79 2.51 7% 15% 9%
MKS Instruments: o $1,258,177 22.45 34.99 $23.61 -7% -15% 19 1.24 2.45 4% 13% 7%
MTS Systems: o $816,491 34.75 55.00 $50.41 -6% 24% 16 3.21 3.24 12% 24% 3%
Nanometrics: o $326,938 12.39 20.99 $13.76 0% -25% 43 0.32 1.22 6% 14% 10%
SDIX: o $23,377 0.95 2.13 $1.14 -9% -38% NM -0.08 -0.01 1% NM 15%
Veeco Instruments: o $1,202,488 20.35 38.39 $30.70 2% 48% 19 1.61 3.11 1% 17% 10%
Zygo: o $353,259 13.76 20.44 $18.62 2% 5% 8 2.30 2.30 3% 25% 10%
Lab Consumables/Equipment
Enzo Biochem: n $78,324 1.33 3.12 $2.00 -2% -11% NM -1.01 -1.01 0% NM 6%
Kewaunee Scientific: o $29,070 7.90 13.45 $11.25 -1% 38% 18 0.64 0.40 42% 3% 1%
Life Technologies: o $8,867,725 36.07 50.99 $48.91 0% 26% 21 2.37 1.99 59% 8% 10%
Pall: n $7,398,996 49.79 65.82 $62.96 -1% 10% 20 3.19 3.19 65% 21% 3%
QIAGEN: o $4,192,031 12.96 19.41 $17.45 -6% 26% 43 0.41 0.40 27% 4% 11%
Sigma-Aldrich: o $8,561,960 58.60 74.94 $70.18 -2% 12% 19 3.70 3.72 24% 21% 3%
Techne: o $2,485,247 62.04 76.02 $67.36 -6% -1% 22 3.00 3.04 1% 17% 9%
Diversified Instrumentation
Agilent Technologies: n $12,704,470 32.51 46.28 $35.99 -6% 3% 13 2.87 2.85 57% 23% 10%
AMETEK: n $8,608,006 25.23 36.56 $35.55 0% 27% 14 2.60 2.37 70% 19% 3%
Danaher: n $36,932,478 44.39 57.15 $51.73 -6% 10% 16 3.28 3.11 46% 11% 6%
Illinois Tool Works: n $28,708,573 42.41 62.09 $61.33 3% 31% 13 4.89 4.19 57% 21% 1%
Mettler-Toledo Int'l: n $5,426,433 142.82 190.02 $169.37 -1% 15% 20 8.52 8.21 98% 35% 5%
Roper Industries: n $10,890,472 78.95 111.66 $109.17 -1% 26% 24 4.64 4.34 66% 13% 4%
Teledyne Technologies: n $2,394,722 49.80 66.29 $64.03 1% 17% 15 4.15 6.84 71% 15% 5%
Laboratory Instrumentation Stock Index 635.37 -1.6% 12.4% 20 68% 11% 7%
Process/Metrology/Motion Instrumentation 555.01 -1.9% 13.4% 17 5% 16% 8%
Lab Consumables/Equipment Stock Index 648.74 -2.2% 13.8% 21 42% 11% 7%
Diversified Instrumentation Stock Index 149.28 -2.3% 13.8% 17 55% 16% 5%
Dow Jones Industrial Average 13,096.46 -2.5% 7.2%
S&P 500 1,412.16 -2.0% 12.3%
NASDAQ Composite 2,977.23 -4.5% 14.3%
. Price
Region Market Value Market Value 10/31/12 Change Change EPS EPS LTD/ FY R&D/
Company (US $000s) (Local 000s) (Local) 1Month YTD P/E 12Month FY Equity ROE Sales
Pacific Shares
Hitachi High-Technologies: t $3,012,886 ¥240,629,561 ¥1,747 -7% 5% 14 ¥127.10 ¥103.71 11% 6% 4%
HORIBA: t $1,158,288 ¥92,508,736 ¥2,175 -5% -6% 12 ¥175.40 ¥204.41 16% 9% 9%
JEOL: t $164,958 ¥13,174,690 ¥166 -5% -14% 1 ¥115.60 ¥115.60 102% 63% 5%
Precision System Science: os $35,308 ¥2,819,934 ¥30,900 5% 7% NM -¥2,072 -¥2,072 43% NM 12%
Shimadzu: t $1,983,355 ¥158,404,260 ¥537 -2% -18% 16 ¥33.51 ¥30.79 19% 5% 3%
Techcomp: hk $78,827 HKD 610,916.25 HKD 2.59 -8% 5% 69 $0.04 $0.04 7% 13% 1%
European Shares
Abcam: I $1,139,108 £706,116 £3.85 -4% 5% 29 £0.13 £0.13 9% 17% 4%
Halma: l $2,511,271 £1,556,699 £4.12 -3% 25% 18 £0.23 £0.23 35% 22% 5%
Oxford Instruments: l $1,194,647 £740,544 £13.44 -2% 41% 30 £0.45 £0.45 35% 20% 8%
Renishaw: l $2,071,336 £1,283,990 £17.64 7% 76% 18 £0.96 £0.96 29% 28% 14%
Scientific Digital Imaging: l $3,223 £1,998 £0.11 0% 2% 105 £0.00 £0.00 0% 1% 10%
Spectris: l $32,977 £2,044,224 £17.28 0% 34% 16 £1.11 £1.07 64% 21% 7%
Alpha MOS: c $5,114 € 3,944 € 1.01 -4% -55% NM -€ 0.05 -€ 0.14 16% NM 13%
Analytik Jena: g $70,112 € 54,078 € 9.92 -9% -7% 37 € 0.27 -€ 0.03 19% NM 15%
Sartorius: g $1,566,403 € 1,208,189 € 64.54 14% 109% 23 € 2.77 € 2.44 102% 11% 6%
Tecan: s $853,911 CHF 795,398 CHF 69.5 2% 9% 18 CHF 3.83 CHF 4.36 5% 18% 12%
Datacolor: s $67,171 CHF 62,568 CHF 410.0 4% 4% 20 CHF 20.07 CHF 21.48 7% 0% 12%
Biotage: st $883 SEK 5,860 SEK 8.0 -6% 54% 14 SEK 0.56 SEK 0.42 5% 6% 8%
Exiqon: no $60,240 DKK 346,616 DKK 9.4 7% -2% NM -DKK 0.35 -DKK 0.71 1% NM 21%
