November was another unpredictable month with extreme swings in the equity markets as unrelenting concerns about rising oil prices, consumer spending, credit markets and corporate earnings continued to agonize investors. Over the four days ending November 12 the Dow, S&P 500 and NASDAQ fell 4.9%, 5.3% and 8.5%, respectively.

However, on November 26, Federal Reserve Chairman Ben Bernanke once again gave life to a declining market, hinting toward another possible rate cut. At the same time, the US Treasury announced plans to support institutions facing subprime loan predicaments. As a result, the markets ended the month with a strong rally, giving many worried investors something to be thankful for. Despite this turnaround, the Dow, S&P 500 and NASDAQ finished the month in negative territory, down 4.0%, 4.4% and 6.9%, respectively. Fortunately, year to date, the Dow is up 7.3%, the S&P 500 has gained 4.4% and NASDAQ has improved 10.2%.

Two of the four IBO Stock Indexes managed to avoid the downward spiral as the Lab Consumables/Equipment and Diversified Instrumentation Stock Indexes edged 0.5% and 1.0% higher, respectively, benefiting from positive earnings reports and future earnings forecasts. The Laboratory Instrumentation and Process/Metrology/Motion Instrumentation Stock Indexes declined 3.5% and 15.4%, respectively.

Laboratory Instrumentation Stock Index

For the month, the Laboratory Instrumentation Index declined 3.5% to close at 654.48. Seventeen companies declined, while only six companies improved. Combimatrix led the Index, improving 10%, while Transgenomic declined 24%. For the year, the Index has gained 21.3%, with Cepheid still leading the way, up 154%, while Symyx Technologies continues to weigh on the Index, having dropped 65%.

Bio-Rad Laboratories was one of the few companies in the Index to stay afloat, as they were rewarded for posting robust earnings. After the close on November 6, the company reported EPS of $1.03, $0.30 above analysts’ expectations, sending shares up 13.8% to a new historical high. Similarly, after the close on November 1, Cepheid announced revenue growth of more than 50% and an adjusted loss of $0.03 per share, $0.05 ahead of analysts’ expectations, leading shares up 1.6%. On November 13, Starlims reported adjusted EPS of $0.18 on revenue growth of 46%, helping shares climb 3.3%. Conversely, on November 1, Harvard Biosciences reported adjusted EPS of $0.07, in line with analysts’ expectations; however, shares traded down 1.2%. The markets were less forgiving of those companies that fell short of their projected earnings. On November 6, X-Rite announced adjusted EPS of less than $0.01 (see page 12) compared to analysts’ expectations of $0.12 a share, sending shares down 10.2%. On November 7, Caliper Life Sciences announced a loss of $0.05 per share, $0.01 below analysts’ expectations, leading shares down 5.8%.

Given the recent market correction coupled with positive earnings forecasts for some of the companies in the Index, analysts may have perceived bargains as several upgrades were reported. On November 15, JP Morgan upgraded Applied Biosystems to “Overweight” from “Neutral.” On November 28, Piper Jaffray upgraded Cepheid to “Buy” from “Neutral.” On November 30, Susquehanna Financial upgraded Caliper to “Positive” from “Neutral.” Dionex was the only company to receive a downgrade, as Robert W. Baird changed its rating to “Underperform” from “Neutral” on November 1. On November 7, UBS initiated coverage on Illumina with a “Neutral” rating. In other significant news, on November 13, Affymetrix announced a $250 million offering of unsecured senior convertible notes due in 2038, sending shares down 9.6%. With such a substantial amount in cash and short-term investments speculation remains high that the company may seek possible acquisitions.

Process/Metrology/Motion Instrumentation Stock Index

The Process/Metrology/Motion Instrumentation Stock Index declined for the second consecutive month, plummeting 15.4% to 387.58, with all eight companies trading lower. ICx Technologies, a new addition to the Index, traded down 24% from its listed IPO price of $16 on November 8 (see IBO 11/15/07) and closed the month down 42% to lead all decliners. Year to date, the Index has fallen into negative territory, down 9.3%, with five companies in negative territory and only Strategic Diagnostics and Nanometrics up in double digits, climbing 42% and 26%, respectively.

After the market’s close on November 1, RAE Systems reported EPS of $0.01 from continuing operations, $0.02 better than expected, helping shares close 8.9% higher the following day. On the same day, Strategic Diagnostics reported flat adjusted earnings; however, analysts were expecting EPS of $0.03 and shares dropped 12.6% the next day. After the market’s close on November 15, MTS Systems reported EPS of $0.64 (see page 12), $0.05 ahead of analysts’ expectations, leading shares up 4.4% the following day. The only analyst coverage of the Index came on November 1, as AmTech Research initiated a “Buy” rating on FEI.

Lab Consumables/Equipment Stock Index

For November, the Laboratory Consumables/Equipment Stock Index edged 0.5% higher to 507.23, with four companies improving and three companies trading lower. Kewaunee Scientific led the Index, climbing 25%, while QIAGEN fell 10%. For the year, the Lab Consumables/Equipment Stock Index remains well ahead of all IBO Indexes, up 32.9%, with all seven companies up in double digits.

After the market’s close on November 1, Millipore reported EPS of $0.83, $0.07 ahead of analysts’ expectations, sending shares up 3.0% the following day. On November 5, QIAGEN announced adjusted EPS of $0.17, slightly above expectations, leading shares 3.6% higher. On November 20, Kewaunee reported EPS of $0.47 on revenue growth of more than 100%, sending shares up 32.3%.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index grew 1.0% for the month to 119.85, with four companies improving, while Roper Industries and AMETEK declined 10% and 6%, respectively. Mettler-Toledo led the Index for both the month and year, climbing 9% and 48%, respectively. Year to date, the Index is up 19.9%, with all companies trading higher.

After the market’s close on November 1, Mettler-Toledo announced adjusted EPS of $1.15, $0.09 better than analysts’ expectations, sending shares up 7.1%. After the market’s close on November 15, Agilent Technologies reported adjusted EPS of $0.53, beating the average analyst forecast by $0.01, and announced a $2 billion share repurchase program, sending shares up 9.0% the following day. On November 7, Bear Stearns upgraded Danaher to “Outperform” from “Peer Perform.”

On November 12, Roper Industries raised its dividend 11.5% to 7.25 cents a share, sending shares down 2.7%.

International

In November, four Pacific Region companies declined, while JEOL improved 1%. Horiba and Techcomp led all decliners, falling 12% and 11%, respectively. However, for the year, Techcomp continues to be the best performing company, up 93%, while JEOL and Hitachi High-Technologies have each fallen 30%.

The European companies continued to show declines, with 11 companies trading down and only four companies improving. Biohit Oyj declined 23%, while Analytik Jena AG gained 8%. For the year, all 15 European companies are trading lower, with Millbrook leading all decliners, down 52%. On November 1, Sartorius AG reported EPS of €0.17 on revenue growth of 22% and was upgraded to “Buy” from “Hold” by Berenberg Bank, helping shares rebound 8.7%. On November 20, Oxford Industries announced adjusted EPS of £0.02 and revenue growth of 8.6% (see page 12). However, orders declined 2.6%, sending shares 5.2% lower.