Two IBO Stock Indexes Show Impressive Gains

May started with upbeat earnings announcements and mergers and acquisitions news that helped sustain the strong April rally. On May 3, better than expected first quarter productivity data and lower than expected labor costs helped push the Dow Jones Index to another record close and the S&P 500 Index to cross the 1,500 mark for the first time since 2000. On May 9, the Federal Reserve announced that the target for the federal funds rate would remain at 5.25%. This reassurance helped push the Dow to a new record close of 13,362.87 and to boost the S&P, NASDAQ, and European and Asian markets as well. However, the next day, reports of weak April retail sales and guidance and a higher trade deficit led to a market pullback. The Dow, S&P and NASDAQ declined 1.1%, 1.4% and 1.65%, respectively. On May 15, the Dow regained some of its previous losses on news of soft inflationary and lower than expected Consumer Price Index data, but the rest of the market declined. Despite favorable data on new home sales and durable goods orders, the market finished in the red on May 24. Ironically, on May 31, with news that US growth slowed to 0.6% in the first quarter, the slowest in five years, the markets edged slightly higher. Mergers and acquisitions and hope that sluggish economic growth would mitigate inflation concerns led the indexes to finish May at or near new highs. For the month, the Dow and S&P 500 climbed to record highs, up 4.3% and 3.3% to 13,627.64 and 1,530.62, respectively. The NASDAQ grew 3.1% to $2,604.52. Year to date, the Dow is up 9.3%, the S&P 500 has risen 7.9% and NASDAQ has gained 7.8%. Three of the four IBO Stock Indexes ended May in positive territory, while the Process/Metrology/Motion Instrumentation Stock Index slipped 0.1%. The Diversified Instrumentation Stock Index led the Indexes, gaining 5.5%. The Lab Consumables/Equipment Stock Index was up 4.0% and the Process/Metrology/Motion Instrumentation Stock Index gained 1.3%. Laboratory Instrumentation Stock Index In May, the Laboratory Instrumentation Stock Index climbed 1.3% to close at 576.11. Following its IPO, STARLIMS (see page 2) was added to the Index. Excluding STARLIMS, 11 companies climbed higher, 10 declined and one remained unchanged. CombiMatrix and X-Rite led the Index, gaining 28% and 20%, respectively, while Bruker BioSciences and Caliper Life Sciences lost the most ground, falling 26% and 19%, respectively. For the year, the Index is up 6.8%, with Transgenomic leading the way, climbing 58%, while Symyx Technologies continues to show weakness, down 51%. In acquisition news, on May 2, Beckman Coulter increased its offer for Biosite by $5 per share to $90 for a deal valued at $1.67 billion, matching the offer by Inverness Medical. Beckman’s stock declined 1.8%. The following day, Beckman announced a dividend payout of $0.16 per share and was upgraded from “Sector Perform” to “Outperform” by RBC Capital Markets, sending shares up 2.3%. However, on May 21, Biosite agreed to be acquired by Inverness after Beckman refused to increase its offer, leading Beckman shares 1.1% higher. On May 16, Bio-Rad Laboratories agreed to buy a 77.7% stake in DiaMed Holding AG for $390 million, with the remaining 12.7% to be purchased through a tender offer. Bio-Rad slipped 0.37%. For some smaller companies, annoucements had a noticable impact. On May 7, CombiMatrix received commitments to purchase $5 million of its Acacia Research-CombiMatrix common stock and warrants in a registered direct offering, sending shares up 12.3%. After the market’s close on May 7, SEQUENOM reported a 43% increase in quarterly sales (see page 12), but shares fell 3.9%. However, on May 11, SEQUENOM rebounded 8.1% after Rodman & Renshaw initiated coverage with a “Market Outperform.” And, on May 31, the company climbed 3.8% on news that it would provide quantitative gene expression services to the Immune Tolerance Network. Bruker BioSciences declined 28.8% over the first four trading days of the month, after releasing first quarter earnings on April 30 (see page 10). In other news, MOCON increased its quarterly dividend on May 18 by 7% to $0.08 per share, sending shares up 0.8%. On May 16, UBS reiterated its “Buy” rating on Thermo Fisher Scientific and raised the target price, sending shares up 0.8%. Process/Metrology/Motion Instrumentation Stock Index The Process/Metrology/Motion Instrumentation Stock Index slipped 0.1% to 486.87 in May. Four companies declined and one traded flat, while two ended the month higher. MTS Systems recorded the only significant gain, up 3%, while RAE Systems led all decliners, dropping 8%. Year to date, the Index is up 16.2%, led by FEI and Strategic Diagnostics, up 41% and 29%, respectively. Nanometrics has led all decliners, falling 22%. On May 24, AmTech/JSA Research initiated coverage on Veeco Instruments with a “Buy” recommendation, sending shares 0.9% higher. Near the end of the month, Strategic Diagnostics recorded a significant jump in trading volume with no news or announcements, leading investors to speculate on possible acquisition deals. The largest trading volume was recorded on May 25 when shares increased 4.7%. Lab Consumables/Equipment Stock Index The Laboratory Consumables/Equipment Stock Index grew 4.0% in May to 450.53. Seven companies ended up in positive territory while two companies decreased in price. Invitrogen gained the most, up 11%, while New Brunswick Scientific led decliners for the second straight month, down 7%. For the year, the Index has risen 18.1%, with seven companies up in double-digit figures and only New Brunswick in negative territory, down 3%. Stratagene and Pall lead the Index, up 46% and 30%, respectively. After the market’s close on May 1, Invitrogen reported strong first quarter earnings, sending shares up 4.8% to close the next trading day at a 52-week high of $69. The same day, analysts from Bear Stearns, Lehman Brothers and Bank of America increased their 2007 earnings per share estimates to $3.51 from $3.40 and raised their price targets. ThinkEquity Partners increased its price target and maintained its “Accumulate” rating. To enhance its SAFC Pharm business, Sigma-Aldrich announced the purchase of Molecular BioServices for an undisclosed amount on May 9. Shares reacted favorably, climbing 1.4% . Diversified Instrumentation Stock Index The Diversified Instrumentation Stock Index increased 5.5% for the month to 107.65, with all six companies improving and Agilent leading the Index, gaining 11%. For the year, the Index is up 7.7%, with all companies in positive territory. On May 1, Goldman Sachs upgraded Danaher from “Neutral” to “Buy,” citing accelerated organic revenue growth. Goldman raised its 12-month price target on the stock to $81 from $76, leading shares to climb 2.3% over the following two days. On May 24, Danaher agreed to acquire ChemTreat for $435 million in cash and, after the market’s close, increased its dividend by 50% to $0.03 a share. The following day, shares climbed 3.2%. Standard & Poor’s Rating Services raised its rating on Roper Industries to an investment-grade designation from a noninvestment-grade designation on May 18, sending shares up 1.2%. After the market’s close on May 14, Agilent reported second quarter revenues of $1.32 billion (see page 9), in line with analysts’ expectations, but earnings per share fell $0.01 short of expectations of $0.44. Both Goldman and Credit Suisse increased their price target, leading shares 5.2% higher. International This month, all Pacific Region companies were in positive territory. Techcomp, Shimadzu and Horiba rose 19%, 18%, and 12%, respectively. For the year, four of the five Pacific Region companies have improved in double digits, with only Hitachi declining, down 11%. In May, 10 European companies in the stock table lost ground and four improved. Leading the growth, Millbrook rebounded 24% after a poor April. Genetix and Alpha MOS lost the most ground, falling 19% and 12%, respectively. For the year, eight European companies have positive returns and six show negative returns. Biohit and Spectris lead the way, up 36% and 19%, respectively, while Millbrook has continued to show the largest loss, down 25%.

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