Strong Start to 2018 for IBO Stock Index

The US economy started off 2018 in strong fashion as US equity markets continued their surge into January. The Dow Jones Industrial Average (DJIA) climbed 5.8% to 26,150.63, while the S&P 500 similarly rose 5.6% to 2,824.12 for the month. The NASDAQ composite increased 7.4%, the most of the three, to finish at 7,411.48.

US GDP increased at an annual rate of 2.6% in the fourth quarter of 2017, falling behind third quarter GDP growth of 3.2%. However, the Bureau of Economic Analysis (BEA) announced that a more complete estimate will be reported next month. US GDP growth in fourth quarter 2017 was primarily driven by increased residential and non-residential fixed investments, exports, government spending and personal consumption. Relatedly, disposable personal income rose 3.9% to $139.0 billion, contributing to the economic expansion.


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Laboratory Instruments and Products Stocks

In January, IBO’s Laboratory Instruments and Products Stock Index leaped 12.2% to 378.60. A majority of the Index finished the month in positive territory, with Harvard Bioscience delivering the fastest monthly growth, up 42.4%. Harvard Bioscience closed the month at $4.70, delivering significant year-over-year growth as well, rising 56.7%. On January 23, Benchmark Capital raised the stock’s target price from $6.00 to $10.00. Conversely, Enzo Biochem’s share price fell the most in January, down 9.7% to close at $7.36. For Enzo Biochem, this represents a five-month consecutive decline, starting from September of last year.

Also gaining double digits were Becton, Dickinson, Thermo Fisher Scientific and Waters. Agilent Technologies’ share price closed at $73.44, nearly reaching double-digit growth at 9.7%. Agilent shares received a “buy” rating, along with a target price of $76.00 from Robert W. Baird on January 18.

Becton, Dickinson shares rose 13.5%, closing at $242.98. On January 19, Bank of America reiterated its “buy” rating for the company’s stock, with a target price of $260.00.

On January 16, Fluidigm registered one million shares of common stock, with a proposed price of $6.46 per share, amounting to an aggregate offering price of $6.5 million. For the month, Fluidigm’s share price advanced 4.1%, closing at $6.13. Relatedly, Nanostring Technologies entered into a sales agreement with Cowen and Co., selling the company’s shares of common stock. The aggregate sales proceeds amount to $40 million.

Illumina shares grew moderately, up 6.5%, to close the month at $232.64. On January 16, Deutsche Bank set a “buy” rating, along with a target price of $275.00 for the stock. On January 30, the company reported adjusted fourth quarter 2017 net income of $212 million, a 68.2% increase. Adjusted EPS for the quarter amounted to $1.44, a significant leap of 69.4%. As for full year 2017, adjusted EPS grew 20.1% to $4.00. The company expects 2018 adjusted EPS to be between $4.50 and $4.60

Thermo Fisher Scientific reported its fourth quarter 2017 earnings on January 31. Adjusted fourth quarter 2017 EPS grew double digits, up 15.8% to $2.79. For the full year 2017, adjusted EPS rose 15.0% to $9.49, driven by higher operating margins. Additionally, the company announced an increase in quarterly dividends. Thermo Fisher reported a quarterly cash dividend payout of $0.17 per share, payable on April 16, representing a 13.0% increase. For the month, Thermo Fisher’s share price jumped 18.0% to $224.13.

Waters delivered adjusted fourth quarter 2017 EPS growth of 13.6%, announced on January 23. Fourth quarter 2017 adjusted EPS amounted to $2.51, as compared to $2.21 in 2016. For the full year, adjusted EPS increased 13.0% to $7.49. Share price for the month climbed 11.6%, finishing at $215.68. On January 24, Citigroup boosted the stock’s target price from $190.00 to $223.00.


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Diversified Laboratory Stocks

IBO’s Diversified Laboratory Stocks Index advanced 4.5% to close the month at 284.24. The Index grew steadily in January, increasing at an average rate of mid-high single digit growth. Danaher grew the fastest of all the stocks in the Index, rising 9.1% to close at $101.29. On January 30, Danaher reported its fiscal 2017 earnings, for which the company delivered an adjusted EPS of $4.03, up 11.5%. Adjusted EPS for the fourth quarter of 2017 grew similarly, up 13.5% to $1.19, beating analysts’ expectations of $1.15. The company expects its first quarter 2018 adjusted EPS to be between $0.90 and $0.93. As for the full year, Danaher projects adjusted EPS of $4.25–$4.35.

Similarly, Roper Technologies was up, growing 8.1% to end the month at $279.89. On January 18, Wells Fargo set a “buy” rating for the stock, along with a boosted price target of $310.00. The new price target signifies a price increase of $15, or 5.1%.

Honeywell reported its full-year 2017 earnings on January 26, delivering strong profitability. Fourth quarter 2017 adjusted EPS grew 6.3% to $1.85, exceeding analysts’ expectations. For the full year 2017, adjusted EPS advanced 10.0% to $7.11, driven by stronger margins. Throughout 2017, Honeywell increased dividends by 12%. The company also spent $2.9 billion in share repurchases in 2017, $1.6 billion alone in the fourth quarter. For 2018, the company expects its adjusted EPS to be $7.75–$8.00, an increase over the previously projected $7.55–$7.80. With the new guidance, adjusted EPS is expected to show a 9%–13% increase. On January 26, Bank of America set a “buy” rating and boosted the stock’s target price from $117.12 to $168.00 for the stock. For the month, Honeywell shares climbed 4.2% to close at $159.74.

Illinois Tool Works (ITW) shares also grew at a similar pace, advancing 4.1% to $173.73 for the month. The company reported its fourth quarter and full-year 2017 earnings on January 24, delivering strong growth results. Fourth quarter 2017 adjusted EPS increased 22.3% to $1.70, while full-year adjusted EPS grew 16.0% to $6.59. For the first quarter of 2018, ITW expects its EPS to be between $1.80 and $1.90. For the full year, the company projects EPS to be $7.45–$7.65. Additionally, ITW plans to increase its dividend pay-out ratio from 43% to around 50% of free cash flow starting in August. The following day, on January 25, Wells Fargo raised the stock’s target price by $10 to $200.

Corning was the only company in the Index to have experienced a decrease in share price for the month. Corning shares fell 2.3% to $31.25, despite Citigroup’s price target boost from $33.0 to $35.0. The company reported its full-year 2017 earnings on January 23, delivering an adjusted EPS of $0.49, down 2.0%. However, adjusted EPS rose sequentially, increasing 13.9% from the third quarter. For the entire year of 2017, Corning reported adjusted EPS of $1.72, an 11% increase.


International Stocks

Asia Pacific market indexes remained solid as most ended January in positive territory. Hong Kong’s Hang Seng advanced nearly double digits, up 9.9% to finish at 32,887.27. China’s Shanghai Composite, along with India’s Sensex 30 both delivered mid-single digit growth, up 5.3% and 5.6%, respectively. However, Australia’s All Ordinaries fell slightly, sliding 0.4% to 6,146.60.

For IBO’s Stock Index, shares in the Asia Pacific ended the month in green, with the exception of Precision System Science, for which its share price fell 5.4% to ¥625.0 ($5.71 at ¥109 = $1). Techcomp increased the fastest among the Asia Pacific shares, soaring 27.9% to close at HKD 2.29 ($0.29 at HKD 7.8 = $1). The remainder of the Asia Pacific shares expanded on average in the mid-high single digits.

In the European region, market indexes that IBO tracks showed moderate growth, as most increased by low to mid-single digits. Italy’s FTSE MIB advanced the fastest, increasing 7.6% to 23,507.06. Conversely, UK’s FTSE 100 slipped the most, down 2.0%. Similarly, Switzerland’s SMI fell slightly, declining 0.5%.

European shares in the IBO Stock Table grew at notable rates, with Scientific Digital Imaging vaulting 29.9% to £0.32 ($0.46 at £0.70 = $1). Similarly, Sartorius’ share price also increased significantly, up 18.0% to €89.0 ($111.2 at €0.80 = $1). The company reported its preliminary 2017 earnings on January 31, delivering 9.3% revenue growth. Furthermore, Sartorius reported an increase of 8.5% in earnings, amounting to €353.2 million ($441.6 million).  The company expects profitability to increase even further in 2018.

Abcam also reported its preliminary earnings this month, on January 5. Abcam announced its half-year results, for which sales were estimated to have grown at around 11%. For the month, Abcam’s share price advanced 16.6% to £12.30 ($17.55). The remaining European shares performed modestly, with just Horizon Discovery and Merck KGaA experiencing a decline in share price, down 3.8% and 1.9%, respectively.

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