Life Sciences Tools & Diagnostics Industry Update Q3 2024

The YTD-24 performance of the life sciences tools and diagnostics (LSTDX) large-cap group of stocks has been in line with the S&P 500 Healthcare Index (up 11.0% versus 11.5%). However, compared with the broader S&P 500 Index, the large-cap LSTDX group of stocks is substantially underperforming (up 11.0% versus 21.5%).

The LSTDX mid and small/emerging-cap stock groups, however, have not fared as well as their large cap LSTDX brethren as these groups are down 14.3% and 16.5%, respectively, on a YTD-24 basis.

The good news is that inflation figures are once again trending towards the Fed’s target range and, on a near term basis, the September interest rate cut should provide support for continued performance of the stock market as well as M&A activity. Additionally, biotech financing activity in the public markets, especially with respect to IPOs, has shown significant year-over-year improvement. This uptick in biotech-related public market financings provides support for a significant segment of the LSTDX customer base. Finally, the vast majority of LSTDX businesses have substantially normalized after the C-19 pandemic, which should facilitate more productive conversations between buyers and sellers.