US Markets Show Modest Change

Major US indexes were mixed in August as the Dow Jones Industrial Average and S&P 500 declined 0.2% and 0.1%, respectively, while the NASDAQ advanced 1.0%. The markets continued to face global economic growth uncertainty and were further imperiled by the Federal Reserve’s hawkish tone on increasing interest rates. However, in the US, sturdy employment and consumer spending data, along with an uptick in capital and durable goods orders suggesting potentially stronger manufacturing growth in the second half of the year. Year to date, the Dow, S&P 500 and NASDAQ are up 5.6%, 6.2% and 4.1%, respectively.

Laboratory Instruments and Products

The Index declined 2.1% to 261.87 in August but is up 6.9% for the year. Most companies in the Index traded lower for the month, due to mixed quarterly financial results or, for several companies, cautious outlooks.

Aside from Enzo Biochem, which slumped 20.2% for the month without any new press releases, Fluidigm recorded the sharpest decline, falling 13.6%. Shares dropped 15.6% on August 5 after the company reported second quarter sales below its forecast because of lower demand and pricing for the C1 sample preparation system. However, the company maintained its full-year sales outlook of $132–$137 million due to anticipated budget flushes and contribution from its new Imaging Mass Cytometer system.

Similarly, Bruker and PerkinElmer declined 10.3% and 6.4% for the month, respectively, as both companies reported organic sales growth below expectations due to slowing demand in academic and industrial markets. On August 2, Bruker lowered its 2016 organic sales growth outlook to -2% but maintained its adjusted EPS guidance of $0.97–$1.02 due to a lower tax rate. On August 3, the company was upgraded by Janney Montgomery Scott from “Neutral” to “Buy,” but downgraded by Wells Fargo from “Outperform” to “Market Perform.” PerkinElmer also maintained its 2016 adjusted EPS outlook of $2.75–$2.85 on August 4 as a result of strength in the diagnostic and food testing businesses.

Agilent Technologies fell 2.3% for the month as it offered a cautious fiscal fourth quarter growth outlook due to slower research spending in Europe. However, the company reported fiscal third quarter adjusted EPS above expectations on August 17 due to robust demand in China and improved margins. Agilent narrowed its fiscal 2016 adjusted EPS range by $0.01 to $1.88–$1.91, which, at the midpoint, was unchanged from its previous guidance.

Bio-Techne, which contracted 6.3% for the month, missed fiscal fourth quarter adjusted EPS estimates on August 3 because of higher R&D investments. Pacific Biosciences reported a smaller-than-expected second quarter adjusted EPS loss, led by continued demand for the Sequel system. However, the company did not raise its full-year revenue outlook of $93 million. Shares declined 2.6% for the month.

VWR dropped 10.9% in August, as the company initiated its public offering of eight million shares by one of its shareholders (see IBO 3/31/16). However, the company met second quarter adjusted EPS consensus on August 4 and maintained its full-year adjusted EPS forecast of $1.68–$1.74.

In contrast, several smaller companies in the Index were rewarded for strong earnings results and favorable outlooks. NanoString Technologies recorded the largest gain for the month, climbing 18.9%. The firm beat second quarter adjusted EPS expectations on August 3, and narrowed its 2016 EPS loss outlook by $0.15 to $2.15–$2.30. Kewaunee Scientific, which rose 16.8% for the month, reported on August 30 that fiscal first quarter GAAP EPS jumped 37% to $0.48. MTS Systems advanced 4.9% for the month as the company beat fiscal third quarter adjusted EPS expectations on August 8.

Becton, Dickinson improved 0.7%. On August 4, the company easily surpassed fiscal third quarter adjusted EPS expectations due to strong operational performance and cost synergies. The firm raised its fiscal 2016 currency-neutral adjusted EPS range by $0.07 to $9.08–$9.15.

HSBC upgraded QIAGEN on August 1 from “Hold” to “Buy.” On August 18, JPMorgan Chase upgraded Luminex from “Underweight” to “Neutral.” On August 27, CL King downgraded Illumina from “Buy” to “Neutral.”

Diversified Laboratory

In August, the Index improved 1.6% to 204.14, with all but one company, Danaher, trading higher. Xylem had the strongest gain, climbing 6.4%. The company beat second adjusted EPS expectations on August 2. The company also raised its 2016 adjusted EPS range by $0.02 to $2.00–$2.06.

Challenges in the energy and industrial markets caused both Teledyne Technologies and AMETEK to miss second quarter sales expectations on August 4. However, Teledyne reported adjusted stronger-than-projected EPS as a result of cost saving measures. As such, the company raised its 2016 GAAP EPS range by $0.05 to $5.10–$5.20. Third quarter GAAP EPS is expected to be $1.28–$1.33. Shares improved 2.0% for the month. AMETEK posted adjusted EPS in line with consensus but lowered its 2016 adjusted EPS by 7% to $2.28–$2.32. Shares advanced 3.7% for the month.


Asia-Pacific equity markets traded mostly higher in August, led by Hong Kong’s Hang Seng and China’s Shanghai Composite, which advanced 5.0% and 3.6%, respectively. Japan’s Nikkei 225 grew 1.9%.

Prices for the Pacific Region companies in the IBO Stock Table were mixed in August. Techcomp recorded the largest decline, falling 15.8%. Despite reporting positive sales growth on August 17 (see page 12), EPS for the six months fell 84% to $0.06 because of increased operating expenses and currency fluctuation. Precision System Science contracted 14.8% this month. On August 12, it reported that its fiscal fourth quarter EPS loss widened more than sixfold to ¥56.43 ($0.53) due to lower sales volume and a decline in non-operating income. The shift in currency valuations similarly impacted earnings for HORIBA and JEOL. On August 3, HORIBA reported that second quarter EPS fell 62% to ¥22.37 ($0.21). Despite lowering its fiscal 2016 sales forecast by 3%, the company maintained its full-year net income outlook. Shares slipped 0.9% for the month. On August 12, JEOL reported that fiscal first quarter EPS widened from a marginal loss to ¥23.03 ($0.22). Shares fell 8.0% for the month. GL Sciences and Shimadzu rose 1.2% and 7.3% for the month, respectively. On August 3, GL Sciences reported that fiscal first quarter EPS fell 8% to ¥10.60 ($0.10), but sales grew 3.0%. Shimadzu reported on August 5 that fiscal first quarter net earnings improved 1% to ¥3.1 billion ($28.6 million).

All European equity markets expanded in August, except for France’s CAC, which was roughly flat. Germany’s DAX improved the most, climbing 2.5%. However, European companies in the IBO Stock Table were mixed.

On August 11, Biotage announced that second quarter EPS jumped 58% to SEK 0.38 ($0.05) due to strong organic sales growth and efficiency improvements. Shares climbed 5.7% for the month. On August 16, Tecan reported that six month EPS fell 10% to CHF 2.00 ($2.04) due to acquisition costs and a lower tax rate in the previous year. Shares slipped 0.5% for the month. Merck KGaA, which fell 4.5% for the month, reported on August 4 that second quarter adjusted EPS grew 19% to €1.55 ($1.74). The firm raised its adjusted 2016 EPS outlook by 3% to €5.85–€6.10 ($6.57–$6.85).

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