EQUITY RESEARCH
CANADIAN RESEARCH AT A GLANCE
April 9, 2015
Price Target Revisions
! Torex Gold Resources Inc.
Summary
Execution key to keeping development of El Limon-Guajes fully funded
Summary
Q2/15 Results in Line with Strength Abroad offsetting Revenue Softness in Canada
Summary
Q1/15 Preview: Expect a small loss
Summary
Lower production expected to mask cost tailwinds
Summary
Strong Q1 GAP YoY bodes well for 2015
Summary
Q2/15 preview - Looking through a mixed quarter at a better H2/15 and F2016
First Glance Notes
! Cogeco Cable Inc.
Earnings Preview
! Capstone Mining Corp.
! NA Precious Metal Equities: Q1/15
Preview
Company Comments
! Ritchie Bros. Auctioneers
! Shaw Communications Inc.
Industry Comments
! Intermediate Oil Sands and E&P
!
Summary
Weekly Valuation Tables
Mobile & Cloud Networking: Small/ Summary
mid-cap selectivity; growth over
recomposition
RBC Flight Deck
Summary
!
! RBC International E&P Daily
! Turnin' to the Right - Canadian
Cdn Airline Q1/15 preview: Prefer Air Canada
Summary
PMO; FOGL; ENQ; MVN; AMER
Summary
Slowdown deepens in March
Oilfield Services Insights
Technical Research
! It's All Relative
Summary
Priced as of prior day's market close, EST (unless otherwise noted).
For Required Non-U.S. Analyst and Conflicts Disclosures, see Page 10.
EQUITY RESEARCH
U.S. RESEARCH AT A GLANCE
April 9, 2015
Price Target Revisions
! CA Inc.
! Family Dollar Stores, Inc.
! Sensata Technologies N.V.
Summary
Reducing estimates and price target on lower new product sales and FX
Summary
2Q hurt by tough Feb weather; March sales improved, deal close approaching
Summary
Expect Upside to 2015 EPS Guide
Summary
Thoughts from Management Meetings
Summary
Idebenone Fast Track Designation for DMD Sets Stage for Mid-2015 NDA Submission
Summary
Lower production expected to mask cost tailwinds
Summary
1Q15 Earnings Preview; Strong Operational Growth Ahead
Summary
In-line quarter; outlook unchanged
Summary
Sells Australian Assets for $2.1B; Valuation Reflects Current Commodity Prices
Summary
Thoughts on Recent Stock Move and Investor Sentiment.
Summary
Thoughts on the Initial Hearing on U.S. Federal Appeals Circuit (MRVL vs. CMU)
Summary
Strong Q1 GAP YoY bodes well for 2015
Summary
Management dinner takeaways - recent changes could lead to opportunity
Summary
1Q15 Earnings Preview: CRM Faces Increased Competitive Headwinds
! HIMSS15 Preview
! Mobile & Cloud Networking: Small/
Summary
Interoperability, Consumerism and Demand Gap to Dominate the Discussion
!
! Specialty Pharmaceuticals
Summary
PMO; FOGL; ENQ; MVN; AMER
Summary
MYL for PRGO makes strategic sense but so does TEVA for MYL - our analysis
First Glance Notes
! Devon Energy Corporation
! Santhera Pharmaceuticals Holding
AG
Earnings Preview
! NA Precious Metal Equities: Q1/15
Preview
Company Comments
! Abbott Laboratories
! Alcoa Inc.
! Apache Corporation
! EMC Corporation
! Marvell Technology Group Ltd.
! Ritchie Bros. Auctioneers
! Sagent Pharmaceuticals Inc
! St. Jude Medical, Inc.
Industry Comments
mid-cap selectivity; growth over
recomposition
RBC International E&P Daily
Summary
Technical Research
! It's All Relative
Summary
In-Depth Reports
! Bank M&A: A Tradition Unlike Any
Summary
Screening for potential small-cap bank consolidation candidates
Other
2
EQUITY RESEARCH
UK & European Research at a Glance
April 9, 2015
Earnings Preview
! NA Precious Metal Equities: Q1/15
Summary
Lower production expected to mask cost tailwinds
Preview
Industry Comments
! Mobile & Cloud Networking: Small/
Summary
mid-cap selectivity; growth over
recomposition
Technical Research
! It's All Relative
Summary
Find our Research at:
RBC Insight (www.rbcinsight.com): RBC's global research destination on the web. Contact your RBC Capital Markets' sales representative to
access our global research site, or use our iPad App "RBC Research"
Thomson Reuters (www.thomsononeanalytics.com)
Bloomberg (RBCR GO)
SNL Financial (www.snl.com)
FactSet (www.factset.com)
3
Price Target Revisions
Torex Gold Resources Inc.(TSX: TXG; 1.08)
Dan Rollins, CFA (Analyst)
(416) 842-9893; [email protected]
Mark Mihaljevic (Associate)
(416) 842-3804; [email protected]
1.80
52 WEEKS
14MAR14 - 06MAR15
1.60
Rating:
Outperform
Risk Qualifier: Speculative Risk
Price Target: 1.85 ▼ 2.00
Execution key to keeping development of El Limon-Guajes fully funded
We believe Torex should be able to fund the development of El Limon-Guajes
internally. However, there appears to be little room for error based on remaining
upfront capital and projected liquidity. While we acknowledge the elevated risk
associated with Torex at this time, we believe the risk/reward opportunity is skewed
to the upside.
1.40
1.20
1.00
60000
40000
20000
M
A
M
Close
J
J
2014
A
S
O
N
D
J
2015
F
M
Rel. S&P/TSX COMPOSITE INDEXMA 40 weeks
EPS, Adj Diluted Prev.
2014A
(0.04)↓
(0.03)
2015E
(0.04)↓
(0.03)
2016E
(0.06)↑
(0.08)
2017E
0.00
P/E
All market data in CAD; all financial data in USD; dividends paid in
CAD.
• Development of El Limon-Guajes appears fully funded at this time
• We believe Torex should be able to fully fund the development of its El LimonGuajes project assuming no further cost escalation and/or delays occur.
• Little room for cost escalation and/or delays
• With a minimum of $20–25M in unrestricted cash likely needed during the
construction, commissioning and ramp-up phases, we believe Torex has little
room for error. As such, delivering El Limon-Guajes on time and on budget will
be key to mitigating any potential funding deficiencies.
• Additional capital flexibility could be gained should Torex successfully arrange
a $25M equipment financing, gain access to $45M in restricted cash prior
to commercial production and/or receive VAT refunds quicker than currently
assumed. In addition, a smooth start-up could bolster the level of precommercial revenues during the ramp-up phase.
• Securing additional financing would enhance capital flexibility
• Given the potential for unforeseen challenges during the commissioning and
ramp-up phases, we believe it may be prudent for Torex to secure additional
capital.
• Risk/reward opportunity skewed to the upside
• We reiterate our Outperform, Speculative Risk recommendation as we believe
Torex's risk/reward balance is skewed to the upside given an implied 71% return
to our target price and potential re-rating as El Limon-Guajes transitions to full
production over the next 12–18 months.
First Glance Notes
Drew McReynolds, CFA, CA (Analyst)
(416) 842-3805; [email protected]
Jie He (Associate)
416 842 4123; [email protected]
Haran Posner (Analyst)
(416) 842-7832; [email protected]
Cogeco Cable Inc.(TSX: CCA; 71.01)
Rating:
Outperform
Q2/15 Results in Line with Strength Abroad offsetting Revenue Softness in
Canada
• Q2/15 operating results largely in line. Consolidated revenues and EBITDA of
$509MM (+4.8% YoY) and $231MM (+4.4%), respectively, were largely in line
with our estimates of $511MM and $234MM (consensus was $507MM and
$231MM). Consolidated EBITDA margins were 45.4%, versus our estimate of
45.7% and 45.6% in Q2/14. Adjusted EPS of $1.21 was below our $1.33 estimate
(consensus was $1.30) due to the modest EBITDA variance and slightly higher
taxes and interest costs.
• Modest upward guidance revisions in line with our forecast. Management
made modest upward revisions to F2015 guidance reflecting updated FX
assumptions.
4
52 WEEKS
14MAR14 - 06MAR15
75.00
70.00
65.00
• What to look for on the 11:00am ET conference call (#800-524-8950; code:
3132273#). (i) more granularity on the deceleration in revenue growth in
Canadian Cable including TiVo traction and pricing dynamics; and (ii) the
sustainability of the sequential up-tick in Enterprise margins.
60.00
55.00
900
600
300
M
A
M
J
Close
J
2014
A
S
O
N
D
J
2015
F
M
Rel. S&P/TSX COMPOSITE INDEXMA 40 weeks
All values in CAD unless otherwise noted.
Earnings Preview
Capstone Mining Corp.(TSX: CS; 1.31)
Fraser Phillips, P.Eng. (Analyst)
(416) 842-7859; [email protected]
Wen Tian, CFA (Associate)
(416) 842-4126; [email protected]
Thomas Klein (Associate)
(416) 842-5339; [email protected]
Steve Bristo, CFA (Associate)
(416) 842-7826; [email protected]
Rating:
Price Target:
Q1/15 Preview: Expect a small loss
52 WEEKS
14MAR14 - 06MAR15
2.80
2.40
2.00
1.60
1.20
20000
15000
10000
5000
M
A
M
J
Close
J
2014
A
S
O
Sector Perform
1.75
N
D
J
2015
F
Rel. S&P/TSX COMPOSITE INDEXMA 40 weeks
EPS, Adj Diluted
2014A
0.13
2015E
(0.05)
2016E
0.12
2017E
0.21
All market data in CAD; all financial data in USD.
Dan Rollins, CFA (Analyst)
(416) 842-9893; [email protected]
Stephen D. Walker (Analyst)
(416) 842-4120; [email protected]
Sam Crittenden, P.Eng., CFA (Analyst)
(416) 842-7886; [email protected]
Jonathan Guy (Analyst)
+44 20 7653 4603; [email protected]
M
Capstone will release its Q1/15 production results on April 13th before market
open and financial results on April 28th after market close. We forecast a
quarterly loss of $0.03 for Q1/15 and expect unit costs to increase slightly. We
look for an update on progress with Minto's permitting delays, Pinto Valley's PV3
PFS and Santo Domingo's EIA.
• Earnings expected to decrease QoQ: We forecast Q1/15 EPS of ($0.03), generally
in-line with consensus of ($0.02) and down from $0.04 in Q4/14. We expect
sequential weakness in Capstone's quarterly earnings given declining commodity
prices and increasing operating costs.
• Q1/15 negatively affected by lower commodity prices; production mixed
among different commodities: During the quarter, copper, zinc, lead and moly
prices decreased by 12%, 7%, 10% and 9% QoQ. We expect the company to
produce 48.4Mlbs of copper in Q1, down 3% QoQ and 19% YoY. We expect zinc,
moly, gold and silver production to increase QoQ, partially offsetting the small
decrease in copper production.
• Q1/15 cost expected to increase QoQ: Our estimated average cost increased to
US$2.14/t for Q1/15 from US$1.88/t for Q4/14. We also expect capex to increase
slightly to US$33M in Q1/15 compared with US$31M in Q4/14.
• Catalysts for 2015: Capstone is expected to receive the Environmental Impact
Assessment for Santo Domingo during Q2/15. The company is also expected
to complete the Pinto Valley Phase 3 pre-feasibility study in Q3/15. For Minto,
we believe the permitting delays and the current cost structure could threaten
closure of the mine. Receipt of required permits and the start of pre-stripping at
Minto North could be a positive catalyst for the shares.
• Estimate revisions: We have updated our model to incorporate actual metal
prices and foreign exchange rates for Q1/15. Our Q1/15 EPS estimate increases
from ($0.04) to ($0.03).
NA Precious Metal Equities: Q1/15 Preview
NA Precious Metal Equities: Q1/15 Preview
Financial results expected to be mixed quarter-over-quarter
We expect financial results to be mixed quarter-over-quarter, with some
companies reporting stronger results and others weaker results. From an industrywide perspective, seasonal weakness is expected to impact operational results.
Although we anticipate that precious metal producers will begin to benefit from
the initial impact of lower oil prices and weaker currencies, we expect these
5
tailwinds could be masked by the natural lag effect through supply chains and lower
anticipated grades from a majority of the companies in our coverage universe.
After two years in "survival mode", we expect investors will begin to look for
companies which can generate improving fundamentals within the current price
environment. Be it through "smart" M&A, exploration and/or growth projects,
companies that can deliver improving fundamentals while keeping balance sheets
in good stead are likely to benefit from increased investor interest.
Q1/15 themes and drivers
•
•
•
•
•
Aggregate production expected to decline ~8%
Pressure on grades expected to continue
Impact of lower fuel prices/currencies likely to be masked
Costs expected to increase over 4%
Aggregate net debt expected to decline 3.5%
Positive and negative surprise potential for Q1/15
• Positive: Agnico-Eagle, B2Gold, and Klondex
• Negative: Detour, IAMGOLD, and Kinross
• Potential dividend cuts: Alamos and Pan American
Company Comments
Ritchie Bros. Auctioneers(NYSE: RBA; 25.68; TSX: RBA)
Sara O'Brien, CFA, CA (Analyst)
(514) 878-7256; [email protected]
Juliane Szeto (Associate)
(416) 842-3806; [email protected]
Rating:
Price Target:
52 WEEKS
14MAR14 - 06MAR15
27.00
Outperform
31.00
Strong Q1 GAP YoY bodes well for 2015
We believe new management's strategy to expand geographically and across
channels will be successful. We expect RBA will see top-line growth in the 10% range
driving operating leverage and double-digit earnings growth from 2016. RBA’s FCF
exceeds earnings, and with its under-levered balance sheet (net cash position) we
view these as supportive to the company’s premium valuation multiple.
26.00
25.00
24.00
23.00
22.00
4000
3000
2000
1000
M
A
M
Close
2013A
2014A
2015E
2016E
J
J
2014
A
S
O
N
Rel. S&P 500
EBITDA Prev.
EV/EBITDA
164.4
16.0x
188.6
14.1x
204.2↑
199.8
13.0x
237.4↑
232.4
11.2x
All values in USD unless otherwise noted.
Drew McReynolds, CFA, CA (Analyst)
(416) 842-3805; [email protected]
Jie He (Associate)
416 842 4123; [email protected]
Haran Posner (Analyst)
D
J
2015
F
MA 40 weeks
M
• Strong Q1/15 GAP up 12% YoY despite FX headwinds from Canada. RBA
reported Q1/15 gross auction proceeds (GAP) at a strong $955M up 12% YoY
while Q1/15 LTM GAP was a historical record at $4.3B. Given ~30% of GAP is
CAD facing FX headwinds, we view Q1 GAP results as very strong. While Q1 is
seasonally a weaker quarter for RBA (as well as Q3), we view initial Q1 pricing
and volume trends as positive for 2015.
• Continue to expect EBITDA margin expansion from operating leverage. Recall,
with RBA's majority fixed cost base and management focus on expense control,
we expect EBITDA margin to expand as top line grows over time. We expect
Q1 EBITDA will see solid gains YoY as the underwritten contract at Casper crane
auction was a success to RBA.
• RBC Q1 EPS estimate of $0.15 is above Street of $0.14, up 15% YoY. We see Q1
growth driven by positive Q1/15 GAP of $955M up 12% and margin expansion.
We expect EBITDA margin of 32.2% up 350bps YoY.
• Next auction watch list - Houston and Edmonton. RBA's next big auctions are its
two day Houston auction April 15-16th and four day Edmonton auction in late
April. We expect these will be a good indication of pricing trends from larger
supply of oil service related equipment.
• RBA reports Q1/15 on Thursday May 7, after market close with conference call
May 8.
Shaw Communications Inc.(TSX: SJR.B; 28.74; NYSE: SJR)
Rating:
Price Target:
Sector Perform
30.00
6
Q2/15 preview - Looking through a mixed quarter at a better H2/15 and F2016
(416) 842-7832; [email protected]
52 WEEKS
14MAR14 - 06MAR15
30.00
28.00
26.00
7500
6000
4500
3000
1500
M
A
M
Close
2013A
2014A
2015E
2016E
J
J
2014
A
S
O
N
D
J
2015
F
Rel. S&P/TSX COMPOSITE INDEXMA 40 weeks
Revenue Prev.
5,142.0
5,239.0
5,580.6↑
5,572.0
5,773.6↑
5,758.0
All values in CAD unless otherwise noted.
M
Shaw will report Q2/15 results on Tuesday, April 14th and will host a conference
call at 3:30pm ET (dial-in #1-800-319-4610).
• A relative safe haven for investors concerned with increased wireless
competition. We see an improving near-term outlook for Shaw reflecting an
easing in the rate of IPTV-driven basic cable subscriber losses, the positive impact
of price increases, a potential uptick in business market growth and a bumpup in FCF in F2016E with the completion of the accelerated capital fund. This
outlook combined with a more reasonable valuation (7.9x FTM EV/EBITDA versus
the group average of 6.8x) and an attractive 4.1% dividend yield should provide a
relative safe haven for investors concerned with increased wireless competition.
Longer-term, we remain concerned with the growth prospects for media and
satellite (~35% of revenue) given rising structural headwinds.
• Expecting a mixed Q2/15 but a better H2/15. For Q2/15, we expect revenue and
EBITDA of $1,364MM (+7.0% YoY) and $571MM (+8.1%), respectively, slightly
above consensus of $1,352MM and $561MM. We expect Q2/15 to be mixed
reflecting the timing of price increases (delayed to January 1, 2015), additional
cost savings (H2/15 weighted) and improvements in business network services
under new leadership. Our Q2/15 forecast factors in: (i) total RGU net additions
(consumer and business) of zero (versus -1k in Q2/14) comprising Internet +13k,
telephony +4k, satellite -4k and basic cable -13k (these estimates exclude the
one-time negative RGU impact of eliminating the 30-day cancellation period
January 15th); and (ii) revenue and EBITDA from business infrastructure services
(ViaWest) of $68MM and $27MM, respectively.
Industry Comments
Mark J. Friesen, CFA (Analyst)
(403) 299-2389; [email protected]
Intermediate Oil Sands and E&P Weekly Valuation Tables
Pablo Orozco (Associate)
(403) 299-7434; [email protected]
• Commentary will resume at the end of the week.
• We have made minor adjustments to our BTE and MEG models. Please refer to
our changes table on page 11 for details.
Mark Sue (Analyst)
(212) 428-6491; [email protected]
Mobile & Cloud Networking: Small/mid-cap selectivity; growth
over recomposition
Ameet Prabhu (Associate)
(212) 618-3330; [email protected]
Spencer Green (Associate)
(212) 858-7153; [email protected]
All values in USD unless otherwise noted.
• Our investment priorities are growth segments of cloud networking and mobile
and our favorite small/mid-cap growth stocks heading into 2Q are: Arista,
MobileIron and Ruckus Wireless. We’re opportunistic on recompositions:
Brocade, Ciena and Finisar as they drive increasing revenues from data-center
build-outs. Massive data-center growth is being supplemented by smaller,
regionally focused cloud repositories and we’re starting to see data-centers of all
sizes emerging globally; a long-tail growth opportunity for select vendors.
• Growth themes. Mobile device management (MDM) and voice-over Wi-Fi are
two growth themes best played via MobileIron (target $13) and Ruckus (target
$16). Smartphone ubiquity and MDM stability is giving way to ASP increases
in the emerging EMM market. Aruba's acquisition by HP may open up new
partnership opportunities for Ruckus, while a focus on voice over Wi-Fi quality
differentiates Ruckus at carriers.
• Stocks we like on pull-backs. In small/mid-cap, we like Brocade (12x CY16E
EPS) with new IP storage switching opportunities on top of steady SAN trends
and shareholder returns; with the stock close to our $13 target. There’s
carrier consolidation delay, telco spending pause and cord cutting/shaving
impact-related overhang on Arris (9x CY16E EPS), yet we see spending ramps
post deal-close with upgrade cycles and potential shareholder returns on
deck. Ciena’s diversifying beyond telco projects with hyper-scale data-center
customers contributing ~10% of revenues and its fastest growth. For Finisar,
datacom contributes 77% of its top-line with +16% YoY growth expected in FY16,
consistent with broader data-center spend growth rates.
7
Walter Spracklin, CFA (Analyst)
(416) 842-7877; [email protected]
RBC Flight Deck
Derek Spronck (Analyst)
(416) 842-7833; [email protected]
• Air Canada - strong March caps off to a better than expected Q1...looking for
a strong Q1 beat. March traffic came in very strong for AC. This led to Q1 traffic
up 10.9% (well ahead of our 8%), on capacity of 9.3%. With fares (according to
our RBC Fare Tracker) starting to pick up late in the quarter, we are increasing
our Q1/15 EBITDAR of $361MM (up from our previous $328MM), well above
consensus of $319MM.
• WestJet not as strong, lowering estimates. WJA traffic came in below
expectations and did not keep up with capacity, resulting in declining load
factors. Q1/15 traffic was up 2.8% vs. our 3.5%, on capacity growth of 4.7%.
Nevertheless, the stock is cheap and consensus estimates appear reasonable.
Our Q1/15 EBITDAR for WestJet goes to $313MM (down from $317MM) vs.
consensus $311MM.
• Implication is simple - Rouge is working. When we look deeper into the
numbers, the implication in our view is clear: Rouge is allowing AC to offer a more
competitive product that is gaining market share on lower cost capacity.
Adjusting long-range estimates and targets. We are adjusting our estimates mainly
to account for the move higher in the CAD adjusted price of fuel:
Steve Arthur, CFA (Analyst)
(416) 842-7844; [email protected]
Anthony Jin, CFA, P.Eng. (Analyst)
(416) 842-5338; [email protected]
All values in EUR unless otherwise noted.
Cdn Airline Q1/15 preview: Prefer Air Canada
• AC - target to $17 (from $18); maintain Outperform, Speculative Risk
• WJA target to $35 (from $38); maintain Outperform
• CHR - maintain $7 target and Outperform
Nathan Piper (Analyst)
+44 131 222 3649; [email protected]
RBC International E&P Daily
Al Stanton (Analyst)
+44 131 222 3638; [email protected]
PMO.L/FOGL.L: Start drilling Isobel Deep; ENQ.L: EnQuest Producer departs for
Alma/Galia field; MVN.V: Loma Montosa Play De-risked; AMER.L: Director Buying
PMO; FOGL; ENQ; MVN; AMER
Haydn Rodgers, CA (Associate)
+44 131 222 4911; [email protected]
Victoria McCulloch, CA (Analyst)
+44 131 222 4909; [email protected]
Adam Naughton (Associate)
+441312223695; [email protected]
All values in USD unless otherwise noted.
Dan MacDonald, CFA (Analyst)
(403) 299-2394; [email protected]
Turnin' to the Right - Canadian Oilfield Services Insights
Matthew McKellar (Associate)
403 299 5045; [email protected]
The full impact of throttled back E&P spending was felt in March, with drilling
and completions activity down 63% and 53% y/y, respectively. Operationally, it
is unlikely to get any better until 1Q16, but we see some stocks discounting this
outlook fairly well at current levels. A notable positive is service intensity per well,
with average days to drill and metres/well both up y/y, due to continuing secular
trends in addition to changes in well type mix as drilling programs continue to
evolve with commodity prices.
All values in CAD unless otherwise noted.
Slowdown deepens in March
We note several important trends:
• Increased service intensity per well: Average days to drill in Western Canada
YTD is ~13.6, up 19.5% y/y, with the largest increase in Alberta at 33.8%. As
well, average meters/well is up 12% YTD at 2,523m, with both AB and SK seeing
increases while BC is down 3.1%.
• Drilling activity continues to decline: Total wells drilled were down 46% in 1Q15
and 63% in March y/y on a rig released basis. This quarter was the lowest level
of drilling activity since 2009.
• Oil well completions activity tracking drilling lower: Well completions of 538
in March 2015 were down 53% y/y. However, fracturing-intensive gas well
8
completion activity in March was flat versus last year, while oil well completions
were down 65%. Total 1Q15 completions of 1,799 were down 36% y/y.
Technical Research
Robert Sluymer, CFA (Analyst)
(212) 858-7066; [email protected]
Anna Drotman (Associate)
(212) 858-7065; [email protected]
It's All Relative
OVERVIEW
• Equity indexes remain range bound above key support near the March lows for
the SPX and the 2014 break-out for small-caps
• Group Highlights: (+) Internet, Software, IT Services, select Retail, Aerospace (-)
REITS, Machinery
• Growth/Momentum ideas: (+) UA, M, AMZN, PCLN, GPN, BA
• Bottoming/Emerging ideas: GT, SWI, ADSK, SWI, CDNS
FEATURED CHARTS
• DISCRETIONARY (+) Select Retail: UA leadership intact, M reaccelerating. (+)
Internet continues to improve with AMZN and PCLN beginning to rally from its
50-dma. (+) Discretionary laggards showing early signs of bottoming/improving:
GT, HOG.
• TECHNOLOGY (+) Software & IT Services continue to outperform/accelerate:
ADSK, CRM, SWI, CNDS, GPN, EQIX
• INDUSTRIALS (+) Aerospace: BA beginning to rally from trading support at its 50dma (-) Machinery continues to lag: CMI, LECO, VMI
• FINANCIALS (-) REITs pullback/correction broadening to more names making
new relative lows as illustrated by DRE, GGP and VNO.
9
Required disclosures
Non-U.S. analyst disclosure
Nathan Piper;Al Stanton;Haydn Rodgers;Victoria McCulloch;Adam Naughton;Dan Rollins;Stephen D. Walker;Sam
Crittenden;Jonathan Guy;Drew McReynolds;Jie He;Haran Posner;Mark J. Friesen;Pablo Orozco ;Dan MacDonald;Matthew
McKellar;Fraser Phillips;Wen Tian;Thomas Klein;Steve Bristo;Sara O'Brien;Juliane Szeto;Mark Mihaljevic;Walter Spracklin;Derek
Spronck;Steve Arthur;Anthony Jin (i) are not registered/qualified as research analysts with the NYSE and/or FINRA and (ii) may
not be associated persons of the RBC Capital Markets, LLC and therefore may not be subject to FINRA Rule 2711 and NYSE Rule
472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst
account.
Conflicts disclosures
This product constitutes a compendium report (covers six or more subject companies). As such, RBC Capital Markets chooses
to provide specific disclosures for the subject companies by reference. To access current disclosures for the subject companies,
clients should refer to https://www.rbccm.com/GLDisclosure/PublicWeb/DisclosureLookup.aspx?entityId=1 or send a request to
RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7.
Please note that current conflicts disclosures may differ from those as of the publication date on, and as set forth in, this report.
The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including
total revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated
by investment banking activities of the member companies of RBC Capital Markets and its affiliates.
Distribution of ratings
For the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories
- Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Top Pick(TP)/
Outperform (O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively,
the meanings are not the same because our ratings are determined on a relative basis (as described below).
Distribution of ratings
RBC Capital Markets, Equity Research
As of 31-Mar-2015
Rating
BUY [Top Pick & Outperform]
HOLD [Sector Perform]
SELL [Underperform]
Count
909
713
115
Percent
52.33
41.05
6.62
Investment Banking
Serv./Past 12 Mos.
Count
Percent
280
30.80
125
17.53
5
4.35
Conflicts policy
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To access our current policy, clients should refer to
https://www.rbccm.com/global/file-414164.pdf
or send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South
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subject companies on which the Firm currently provides equity research coverage. Research Analysts may, from time to time,
include short-term trade ideas in research reports and / or in SPARC. A short-term trade idea offers a short-term view on
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how a security may trade, based on market and trading events, and the resulting trading opportunity that may be available. A
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research analyst's views of the longer-term (one year) prospects of the subject company, as a result of the differing time horizons,
methodologies and/or other factors. Thus, it is possible that a subject company's common equity that is considered a long-term
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indirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.
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