best ideas to start the new year

Transcription

January 4, 2016
BEST IDEAS
TO START THE NEW YEAR
January 4, 2016
Dear Valued Clients,
2016 marks the eleventh year for our Best Ideas list. As for our performance last year, it was the
third time in ten years we underperformed the Russell 2000. For 2016, we hope our Best Ideas list
once again outperforms the Russell 2000 and as the case every year, our goal is to drive Alpha—
each of our 31 industry teams identifies the one stock they expect to outpace the performance of
their industry, the Russell 2000 and the markets in general.
Even though we did not recommend creating an investment portfolio based on the 2015 Best Ideas
list, we have calculated a total return based on an initial $1,000 investment in each idea. For
comparison’s sake, the 2015 Best Ideas list generated a return of -9.9% (as of 12/28/2015) vs.
-3.44% for the Russell 2000. See page 3 for the Stephens 2016 Best Ideas list and page 4 for
detailed 2015 Best Ideas list performance. In retrospect, since we began our Best Ideas list in
2006, our compounded annual return of 11.1% compares well to 6.91% for the Russell 2000. Over
the last 10 years, our Best Ideas list has outperformed the Russell 2000 by an average of 420 bps.
This performance does not take into account commissions or fees that an investor would incur with
an investment portfolio following our Best Ideas in a brokerage or managed advisory account.
The Stephens 2016 Best Ideas list is a compilation of the stocks with the best fundamental
investment characteristics as selected by individual analysts from their covered companies. These
selections are made without regard to the underlying characteristics of each industry.
We look forward to adding value to your investment process in 2016.
Please see the glossary of terms and detailed risk section for Plains All American Pipeline beginning on page
48 of this report. Investors should also review the risk factors identified by Plains All American Pipeline as
disclosed in the documents filed by Plains All American Pipeline with the SEC beginning on page 50 of this
report.
*Past performance is not indicative of future performance.
See important disclosures and analyst certification on page 50 of this report. This report constitutes a compendium report (covers six
or more subject companies). As such, Stephens Inc. chooses to provide specific disclosures for the companies mentioned by
reference. T o access cu
rrent d isclosures f or t he al l co mpanies in t his r eport, cl ients sh ould refer t o
https://stephens.bluematrix.com/sellside/Disclosures.action or contact your Stephens Inc. representative for additional information.
© 2016 Stephens Inc.
111 Center Street
Little Rock, AR 72201
501-377-2000
800-643-9691
www.stephens.com
Member NYSE, SIPC
January 4, 2016
2016 Best Ideas Table.............................................................................................................................. 3
2015 Best Ideas Performance ................................................................................................................. 4
Consumer – Food & Agribusiness: TreeHouse Foods, Inc. (THS) ...................................................... 6
Consumer – Healthy Living: ClubCorp Holdings, Inc. (MYCC) ............................................................. 7
Consumer – Restaurants: Buffalo Wild Wings, Inc. (BWLD) ................................................................. 8
Consumer – Retail/Broadlines: LKQ Corp. (LKQ) ................................................................................. 9
Consumer – Retail/Hardlines: Penske Automotive Group, Inc. (PAG) ............................................... 10
Consumer – Retail/Softlines: G-III Apparel Group, Ltd. (GIII) ............................................................. 11
Energy – Exploration & Production: Pioneer Natural Resources Co. (PXD)………………………… . 12
Energy – Exploration & Production: Rice Energy Inc. (RICE)………………………….….. ................ 13
Energy – Master Limited Partnerships: Plains All American Pipeline, L.P. (PAA)………………..….. 14
Energy – Oilfield Services: Flotek Industries, Inc. (FTK) ..................................................................... 15
Financial Services – Banks/Midwest: First Busey Corp. (BUSE). ...................................................... 16
Financial Services – Banks/Southeast & West Coast: Ameris Bancorp (ABCB). ............................ 17
Financial Services – Banks/Southwest: Bank of the Ozarks, Inc. (OZRK). ....................................... 18
Financial Services – Banks/Super-Regional & Midwest: First Midwest Bancorp, Inc. (FMBI) ......... 19
Financial Services – Real Estate Services: Bankrate, Inc. (RATE)……………………………….. ...... 20
Financial Services – Specialty Finance: Aaron’s, Inc. (AAN)…………………………………………….21
Healthcare – Diagnostics & Life Science Tools: Trinity Biotech Plc (TRIB)……………..……… ...... 22
Healthcare – Healthcare Services: AmSurg Corp. (AMSG) ................................................................ 23
Healthcare – Medical Devices: Endologix, Inc. (ELGX)…................................................................. . 24
Industrials – Building Materials: U.S. Concrete, Inc. (USCR) ............................................................ 25
Industrials – Industrial Products & Services: MasTec, Inc. (MTZ)....................................................26
Industrials – Transportation/Airfreight & Logistics/Maritime: Echo Global Logistics (ECHO)…... . 27
Industrials – Transportation/Less-Than-Truckload & Truckload: Knight Transportation (KNX) ..... 28
Industrials – Transportation/Railroad & Transportation Suppliers: Union Pacific Corp. (UNP)…. 29
Technology – Business Services: Fidelity National Information Services, Inc. (FIS) ........................ 30
Technology – Infrastructure Software & Security: Palo Alto Networks, Inc. (PANW)…………….. .. 31
Technology – Media: Gray Television, Inc. (GTN) ............................................................................... 32
Technology – Power & Industrial Technology: 3D Systems Corp. (DDD) ........................................ 33
Technology – Semiconductors: M/A-COM Technology Solutions Holdings, Inc. (MTSI) .................. 34
Technology – Software as a Service: HubSpot, Inc. (HUBS)…………………………………………… 35
Technology – Telecommunications Services: Frontier Communications Corp. (FTR)………………36
Prices in this report are as of 12/31/15 unless otherwise noted
Stephens Inc.
2
January 4, 2016
STEPHENS INC. RESEARCH 2016 BEST IDEAS
Analyst
Ticker
Company Name
Aslam
Atkins
Bienvenu
Bizzell
Campbell
Cooley
Delco
Duncan
Edelstein
Evans
Green
Grooms
Hambly
Hearnsberger
Huff
Jones
Kumar
Long
Marietta
McCarver
McEvoy
Nelson
Olney
Patel
Ruykhaver
Schmid
Slabaugh
Stafford
Wyatt
Zukin
Zwick
THS
ECHO
LKQ
AAN
RATE
ELGX
KNX
MTZ
MYCC
GTN
PXD
USCR
AMSG
DDD
FIS
TRIB
MTSI
UNP
FTK
FTR
FMBI
PAG
OZRK
GIII
PANW
PAA
BWLD
ABCB
RICE
HUBS
BUSE
TreeHouse Foods, Inc.
Echo Global Logistics, Inc
LKQ Corporation
Aaron's, Inc.
Bankrate, Inc.
Endologix, Inc.
Knight Transportation, Inc.
MasTec, Inc.
ClubCorp Holdings, Inc.
Gray Television, Inc.
Pioneer Natural Resources Company
U.S. Concrete, Inc.
AmSurg Corp.
3D Systems Corporation
Fidelity National Information Services, Inc.
Trinity Biotech Plc Sponsored ADR Class A
M/A-COM Technology Solutions Holdings, Inc.
Union Pacific Corporation
Flotek Industries, Inc.
Frontier Communications Corporation Class B
First Midwest Bancorp, Inc.
Penske Automotive Group, Inc.
Bank of the Ozarks, Inc.
G-III Apparel Group, Ltd.
Palo Alto Networks, Inc.
Plains All American Pipeline, L.P.
Buffalo Wild Wings, Inc.
Ameris Bancorp
Rice Energy Inc.
HubSpot, Inc.
First Busey Corporation
Price
12/31/2015
$78.46
$20.39
$29.63
$22.39
$13.30
$9.90
$24.23
$17.38
$18.27
$16.30
$125.38
$52.66
$76.00
$8.69
$60.60
$11.76
$40.89
$78.20
$11.44
$4.67
$18.43
$42.34
$49.46
$44.26
$176.14
$23.10
$159.65
$33.99
$10.90
$56.31
$20.63
Price
Target
$105.00
$29.00
$37.00
$30.00
$17.00
$17.00
$30.00
$24.00
$27.00
$22.00
$170.00
$70.00
$97.00
$12.00
$80.00
$22.00
$50.00
$112.00
$20.00
$6.50
$21.00
$60.00
$57.00
$70.00
$225.00
$37.00
$190.00
$38.00
$20.00
$70.00
$25.00
Percentage
Difference
34%
42%
25%
34%
28%
72%
24%
38%
48%
35%
36%
33%
28%
38%
32%
87%
22%
43%
75%
39%
14%
42%
15%
58%
28%
60%
19%
12%
83%
24%
21%
Market Cap.
($ Mil)
$3,416.1
$646.4
$9,091.3
$1,637.0
$1,311.8
$1,311.8
$1,961.5
$1,412.4
$1,177.8
$1,039.8
$18,593.1
$764.1
$4,202.0
$976.2
$19,760.4
$19,760.4
$2,216.3
$67,057.0
$606.5
$5,443.9
$1,456.9
$3,827.9
$4,545.6
$2,056.0
$15,187.9
$9,151.7
$3,064.3
$3,064.3
$1,389.8
$1,968.4
$603.1
Source: Stephens Inc. and FactSet Research Systems
*”Percentage Difference” is the percentage return that would occur if the security listed increased in price from its current price (as
of 12/31/2015) to its target price.
Stephens Inc.
3
January 4, 2016
STEPHENS INC. RESEARCH 2015 BEST IDEAS PERFORMANCE
Analyst
Ticker
Aslam
Atkins
PPC
Bizzell
Campbell
Cooley
Delco
Duncan
MATX
SC
FNF
STE
CVTI
2015 Best Ideas
Pilgrim's Pride Corporation
Matson, Inc.
Santander Consumer USA Holdings, Inc.
Fidelity National Financial, Inc - FNF Group
STERIS Plc
Covenant Transportation Group, Inc. Class A
Cash
Edelstein
UNFI
United Natural Foods, Inc.
GTN
RRC
Range Resources Corporation
BKD
Cash
Brookdale Senior Living Inc.
Evans
Green
Grooms
Hambly
Hearnsberger
POWR
PowerSecure International, Inc.
Huff
ADS
Alliance Data Systems Corporation
Jones
Kumar
Bienvenu
Long
Marietta
TRIB
QRVO
SUN
WBC
FTK
Trinity Biotech Plc Sponsored ADR Class A
Qorvo, Inc.
Sunoco LP
WABCO Holdings Inc.
McCarver
CSAL
Communications Sales & Leasing Inc
MNRO
Cash
Monro Muffler Brake, Inc.
Naidu
Nelson
Olney
Cash
Cash
Patel
Quillin
Ruykhaver
Schmid
FTNT
Cash
Fortinet, Inc.
Cash
Slabaugh
Wyatt
Zukin
KKD
MRD
MKTO
Krispy Kreme Doughnuts, Inc.
Memorial Resource Development Corp
Marketo, Inc.
Companies That
Have Been
Removed From
Best Ideas List
INT
Cash
Cash
WCC
PWR
TFM
AWAY
VMC
Beginning
Price
Current Price
(as of 12/28/15)
Amount
Invested
31.88
47.32
22.53
37.47
20.02
35.26
65.69
27.71
76.86
25.07
43.52
15.86
34.53
76.39
18.22
1000.00
1000.00
765.85
765.85
1000.00
1000.00
1000.00
1000.00
1000.00
882.12
761.41
1000.00
509.58
1000.00
1137.38
1000.00
1000.00
1235.23
1000.00
1000.00
1059.21
1000.00
1332.26
1000.00
803.71
1000.00
1000.00
1000.00
1000.00
932.37
1000.00
837.62
1000.00
912.78
1000.00
1000.00
1082.41
1000.00
1000.00
730.54
1000.00
1000.00
662.86
1000.00
1644.44
1644.44
1000.00
1000.00
1112.16
41.76
48.05
31.30
15.26
53.41
67.21
HMSY
36.67
36.14
16.15
34.28
258.17
6.47
17.83
68.33
49.05
107.12
20.11
17.09
30.73
25.65
21.67
LTXB
57.56
25.24
CALX
10.02
MWE
30.77
68.28
ESE
TSS
CERS
Cash
SPN
ZAYO
CHUY
Cash
NOW
S&P 500
Russell 2000
Russell 3000
*Returns above include dividends and stock splits
15.81
24.30
18.65
15.23
278.14
11.86
52.89
37.70
101.79
11.72
19.92
65.98
31.79
19.80
18.14
18.75
67.85
29.03
Total Value of Stephens Portfolio
Benchmark
Indices
40.88
15.15
15.90
28.91
Value When
Taken Off YTD Performance
Best Idea
765.85
765.85
882.12
761.41
509.58
1137.38
1235.23
1059.21
1332.26
803.71
932.37
837.62
912.78
1082.41
730.54
662.86
1644.44
1644.44
1112.16
-
-11.23%
-9.62%
-20.78%
0.20%
17.75%
-34.25%
-23.86%
-56.65%
17.84%
-54.20%
23.52%
-49.14%
-0.11%
43.53%
-45.55%
-22.60%
-23.14%
-4.98%
-36.06%
-34.95%
-8.72%
15.64%
8.24%
0.00%
-26.95%
3.31%
-33.71%
37.34%
-15.20%
10.76%
$30,000
-9.89%
30,000
30,000
30,000
1.98%
-3.44%
1.09%
**YTD performance priced as of 12/28/2015
Stephens Inc.
4
January 4, 2016
Note: The following changes to the Best Ideas list took place in 2015:
Analyst
Hearnsberger
Lawrence
Delco
Naidu
Grooms
Duncan
McCarver
Evans
Hearnsberger
Marrietta
Atkins
Jones
Slabaugh
Zukin
Slabaugh
Edelstein
Huff
Duncan
Atkins
Duncan
Quillin
Marrietta
Olney
Evans
Company Removed
Cash
Cash
Cash
HMSY
VMC
WCC
ZAYO
ESE
SPN
INT
CERS
CHUY
NOW
Cash
TFM
TSS
Cash
Cash
PWR
CALX
MWE
LTXB
AWAY
Date
1/13/2015
1/16/2015
1/23/2015
2/17/2015
4/13/2015
4/23/2015
6/6/2015
6/11/2015
7/21/2015
7/23/2015
7/31/2015
8/3/2015
8/7/2015
8/7/2015
8/12/2015
8/21/2015
9/3/2015
9/9/2015
9/29/2015
10/16/2015
11/24/2015
12/2/2015
12/9/2015
12/14/2015
Price
$19.78
$82.72
$67.80
$25.74
$38.20
$18.59
$36.12
$5.20
$32.56
$75.46
$21.28
$45.47
$21.64
$7.32
$45.26
$27.32
$35.60
Replaced With
ESE
SUN
CVTI
Cash
Cash
Cash
CSAL
AWAY
POWR
FTK
Cash
TRIB
Cash
MKTO
KKD
UNFI
ADS
PWR
MATX
Cash
Cash
Cash
Cash
GTN
Date
1/13/2015
1/16/2015
1/23/2015
2/17/2015
4/13/2015
4/23/2015
6/8/2015
6/11/2015
7/21/2015
7/23/2015
7/31/2015
8/3/2015
8/7/2015
8/7/2015
8/12/2015
8/21/2015
9/3/2015
9/9/2015
9/29/2015
10/16/2015
11/24/2015
12/2/2015
12/9/2015
12/14/2015
Price
$36.14
$49.05
$27.71
$25.65
$31.30
$16.15
$17.09
$17.83
$29.03
$18.14
$48.05
$258.17
$25.07
$37.47
$15.26
Other public companies mentioned in this report (prices as of 12/31/15):
Name
Adobe Systems Incorporated
C1 Financial, Inc.
ConAgra Foods, Inc.
Furmanite Corporation
Jacksonville Bancorp, Inc.
Keurig Green Mountain, Inc.
LendingTree, Inc.
Macy's Inc
Marketo, Inc.
Oracle Corporation
Pulaski Financial Corp.
Rice Midstream Partners LP
salesforce.com, inc.
Trivascular Technologies, Inc.
Verizon Communications Inc.
Wal-Mart Stores, Inc.
Ticker
ADBE
BNK
CAG
FRM
JAXB
GMCR
TREE
M
MKTO
ORCL
PULB
RMP
CRM
TRIV
VZ
WMT
Price
$93.94
$24.21
$42.16
$6.66
$18.73
$89.98
$89.28
$34.98
$28.71
$36.53
$15.96
$13.49
$78.40
$6.65
$46.22
$61.30
Other private and foreign companies mentioned:
Act-On
Community & Southern Holdings
Credit Karma
Daimler AG
InfusionSoft
MailChimp
Schurz
Stephens Inc.
5
COMPANY SUMMARY
January 4, 2016
Farha Aslam, Analyst
212-891-1778, [email protected]
Changes
Previous
Rating
Target Price
TreeHouse Foods, Inc.
Current
---
Overweight
$105.00
Price:
Fully Diluted Shares Out (mil.):
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$78.46
43.10
$92.92
$69.01
$3,381.6
Dec
Average Daily Volume:
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
436,941
41.9
45.4
$1.43
NA/NA
$42.21
7.9%
EPS
2014A
$0.38A
$0.57A
$0.47A
$0.78A
$2.23A
35.2x
2015E
$0.41A
$0.72A
$0.65A
$1.33
$3.10
25.3x
2016E
$0.70
$0.67
$0.82
$1.05
$3.25
24.1x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.80A
$0.84A
$0.89A
$0.99A
$3.53A
22.2x
2015E
$0.59A
$0.66A
$0.86A
$0.98
$3.10
25.3x
2016E
$0.70
$0.67
$0.82
$1.05
$3.25
24.1x
Rev.
$2.95B
$3.24B
$6.46B
Mar
Jun
Sep
Dec
FY
P/E
Oper. EPS
TreeHouse Foods , headquartered in Oak Brook, IL,
is a leading manufacturer of private label products in
the United States and Canada focused on
center-of-the-store, shelf stable food categories. Key
categories include pickles, non-dairy powder
creamer, salad dressing and soup.
THS – NYSE
2016 Best Idea
INVESTMENT CONCLUSION:
TreeHouse is our Best Idea for 2016 given our view that the CAG Private
Brands transaction provides very compelling cost synergies, growth
opportunities, and cash flow. The core business is well positioned given the
growing healthy snacks platform, recovering K-cup business, and margin
expansion opportunities. Our rating on the stock is Overweight and the price
target of $105 is based on a base TreeHouse value of $75 per share and a
deal value of $30 per share based on 20x year 3 accretion of $1.50.
CATALYSTS:
• The ConAgra Private Brands acquisition creates significant value.
TreeHouse is solidifying the Company's leadership in the growing private
label food industry via the acquisition of ConAgra's PB business. The
acquisition is expected to close in the C1Q16 and was struck at an
attractive valuation of 9.2x LTM EBITDA. The deal positions TreeHouse to
deliver a 3-year double-digit EPS CAGR given the deal is anticipated to
have year 1 EPS dilution of $0.25-$0.30, EPS accretion of $0.55-$0.70 in
year 2, and an EPS contribution of $1.50-$1.65 in year 3.
• The deal accretion numbers are likely conservative given only 100 bps
of gross margin improvement over three years is factored into the
guidance, whereas CAG PB business has experienced 600 bps of margin
degradation since the business was acquired from Ralcorp.
• Growing Healthy Snacks Business. The Flagstone Foods business is
posting high-single-digit growth reflecting new customer wins. Note,
Wal-Mart is rolling out a private label nut display in the produce aisle in
3,800 stores. Margins are anticipated to expand as a result of higher
sales, as well as the successful execution of automation, hedging, and
productivity improvement initiatives.
• Recovering Coffee Business. TreeHouse's private label K-cup business
was impacted by Green Mountain's grab for market share. THS is winning
back lost customers and should benefit from increased household
penetration of K-cup compatible brewers, given the increasing number of
low-priced single cup brewers being marketed.
• Margin Improvement Opportunities in Core Business. Gross margins
in the core business are targeted to expand 100 bps annually, benefiting
from benign commodity costs and the Company's simplification efforts.
RISKS:
• Increases in input costs, such as raw materials, packaging materials and
fuel costs, could adversely affect TreeHouse Foods’ profitability.
• The Company’s private label and regionally branded products may not be
able to compete successfully with nationally branded products.
1 Year Price History for THS
Q3
Q1
2015
Q2
96
88
80
72
64
56
Q3
2016
Created by BlueMatrix
Source: Bloomberg
Stephens Inc.
6
COMPANY SUMMARY
January 4, 2016
Joe Edelstein, CFA, Analyst
Changes
Previous
Rating
Target Price
Current
---
Overweight
$27.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$18.27
64.75
$24.95
$16.84
$1,183.0
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
ClubCorp Holdings, Inc.
569,514
62.9
81.7
$1.16
$0.52/2.9%
$2.78
5.0%
2014A
($0.06)A
($0.28)A
$0.05A
$0.49A
$0.21A
87.0x
2015E
($0.07)A
$0.00A
$0.02A
$0.12
$0.07
NM
2016E
($0.04)
$0.08
$0.05
$0.20
$0.29
63.0x
2014A
2015E
2016E
FY
EV/EBITDA
$196.4M
11.0x
$232.7M
9.3x
$250.4M
8.7x
Rev.
$884.2M
$1.05B
$1.13B
Mar
Jun
Sep
Dec
FY
P/E
Non-GAAP
EBITDA
ClubCorp
Holdings
Inc.
is
the
largest
owner-operator of private golf clubs in the U.S. with
clubs in 26 states, Washington D.C., Mexico and
China.
MYCC – NYSE
2016 Best Idea
We like ClubCorp's 3-pronged growth strategy of organic growth,
reinventions, and acquisitions. We are attracted to the highly recurring
membership revenue model, and we believe the Company benefits from
significant scale advantages. We expect 3%-5% annual organic top-line
growth and 5%-7% annual organic EBITDA growth. The recent acquisitions
of the Sequoia Golf portfolio and other clubs are expected to contribute
meaningfully in 2016. We are attracted to the Company's $300 mil. EBITDA
target and believe the Company is well on track to accomplish this goal by
2018. The stock is trading at 11.3x LTM EBITDA. Our target price is $27,
based on 11x our NTM estimate. Total return opportunity is attractive with the
2.8% dividend yield.
CATALYSTS:
• Spring membership drives face easier comparisons against 2015's
challenging weather. We note 100-year rain events in Texas and wet
weather in other geographies kept prospective members from seeing,
visiting, and joining a club last year.
• The acquisition pipeline is very robust with our estimate of 40-50 clubs in
MYCC's sights. The golf & country club industry remains highly
fragmented. We view the recent debt raise as a supportive funding for
potential transactions.
• The Company spent $60 mil. on reinventions in 2015 across 30 clubs. The
reinventions of the former Sequoia Golf clubs are on track and we
anticipate benefits such as membership growth, dues increases, and
greater club usage to drive food & beverage operations.
• O.N.E. memberships penetration continue to increase. Approximately 49%
of members have upgraded, but we note that new members sign on with a
75% take-rate.
RISKS:
• Club memberships and golf activities are discretionary items and subject
to the consumer discretionary environment.
• Acquisition growth is dependent upon identifying new clubs and operating
them profitably.
• The illiquid nature of real estate holdings may limit the Company's ability to
monetize assets.
• Unusual weather patterns and extreme weather events could adversely
affect the value of golf courses or negatively impact business and results
of operations.
1 Year Price History for MYCC
Q3
Q1
2015
Q2
27
24
21
18
15
12
Q3
2016
Source: Bloomberg
Stephens Inc.
7
COMPANY SUMMARY
January 4, 2016
Will Slabaugh, Analyst
Buffalo Wild Wings, Inc.
Billy Sherrill, Associate
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$190.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$159.65
19.05
$205.83
$147.69
$3,041.3
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
566,974
18.8
0.0
$5.96
NA/NA
$34.39
15.1%
EPS
2014A
$1.49A
$1.25A
$1.14A
$1.07A
$4.95A
32.3x
2015E
$1.52A
$1.12A
$1.00A
$1.60
$5.25
30.4x
2016E
$1.82
$1.39
$1.35
$1.93
$6.50
24.6x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$1.54A
$1.31A
$1.22A
$1.09A
$5.15A
31.0x
2015E
$1.55A
$1.12A
$1.00A
$1.63
$5.31
30.1x
2016E
$1.85
$1.42
$1.38
$1.95
$6.60
24.2x
Rev.
$1.52B
$1.85B
$2.22B
Mar
Jun
Sep
Dec
FY
P/E
Adj. EPS
BWLD – NASDAQ
2016 Best Idea
We are making BWLD our Best Idea in restaurants for 2016 given our
conviction that fundamental trends remain intact and belief that both numbers
and sentiment should improve throughout the year. Our core bull thesis
includes 1) a continuation of positive traffic growth (which we think was
hidden by a bad World Series lap in the QTD period), 2) lower wing/boneless
prices, 3) improving labor and G&A controls and 4) accretion from the recent
franchisee acquisition. We believe the combination of such events will
ultimately culminate into upside to current consensus expectations and
expanding valuation. We maintain our OW/Vol. rating and $190 price target.
CATALYSTS:
We believe, despite 3Q's quarter-to-date commentary regarding current
trends, that traffic remains on a positive trajectory at Company-owned stores,
leaving upside to the Street's current +3.4% SSS estimate. Furthermore, we
look for steadily improving operating margins as wing inflation subsides,
mgmt. locks in lower boneless wings (breast meat) YOY, and the Company
realizes more meaningful cost synergies from the recent franchisee store
acquisition than most expect. We would also point out that the Company has
historically been very effective in offsetting unforeseen cost pressures
through G&A controls.
RISKS:
Broadly speaking, the casual dining industry has seen weakening traffic
trends amid a softening of discretionary spending, which we credit to rising
monthly payments (autos, homes, etc.). This has resulted in a fairly dramatic
push toward value promotions in the industry, which is somewhat concerning.
While we maintain our belief that these trends are not exerting as much of a
meaningful impact on the lower-price point destinations, should this macro
headwind impact BWLD, our optimism around upside to estimates and
sentiment would be misguided. Furthermore, while we are not modeling
outright deflation in the price of traditional wings in 2016 (though we believe it
is entirely possible), should prices continue to dramatically inflate, we would
have to reassess our current margin assumptions.
Based in Minneapolis, MN, Buffalo Wild Wings, Inc.
offers guests a flexible dining experience featuring
Buffalo, NY-style chicken wings complemented by 14
signature sauces and a unique menu of sandwiches,
entrées, and desserts. Each restaurant offers a
family-friendly, multimedia-rich dining experience and
features numerous large screen televisions and
interactive trivia games to complement its sports bar
atmosphere.
1 Year Price History for BWLD
Q3
Q1
2015
Q2
220
200
180
160
140
120
Q3
2016
Source: Bloomberg
Stephens Inc.
8
COMPANY SUMMARY
January 4, 2016
Ben Bienvenu, Analyst
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$37.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$29.63
305.49
$32.25
$22.90
$9,051.7
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
1,473,228
279.0
40.7
$0.38
NA/NA
$9.94
1.5%
2014A
$0.34A
$0.34A
$0.30A
$0.26A
$1.24A
23.9x
2015E
$0.35A
$0.39A
$0.33A
$0.31
$1.37
21.6x
2016E
$0.42
$0.44
$0.38
$0.36
$1.60
18.5x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.35A
$0.35A
$0.31A
$0.27A
$1.27A
23.3x
2015E
$0.36A
$0.39A
$0.34A
$0.31
$1.40
21.2x
2016E
$0.42
$0.44
$0.38
$0.36
$1.60
18.5x
Rev.
$6.74B
$7.26B
$7.93B
Mar
Jun
Sep
Dec
FY
P/E
Oper. EPS
LKQ Corp., headquartered in Chicago, IL, is the
largest nationwide source for recycled auto parts.
The
company
provides
reconditioned,
remanufactured, aftermarket, and self-service auto
parts. LKQ has recently added a heavy truck division
and continues to grow its remanufacturing
capabilities.
LKQ Corp.
LKQ – NASDAQ
2016 Best Idea
We think LKQ is a compelling investment given its dominant position in an
industry that is experiencing solid secular tailwinds related to improving
employment rates, lower gasoline prices, increased miles driven, and
accelerated growth in vehicles in the 3 year to 8 year age range. Additionally,
given the lapping of headwinds experienced last year related to FX and
declining scrap steel prices, we think LKQ has an opportunity to return to
mid-teen revenue and EPS growth in FY16, which has led to valuation
expansion in the past. We currently have an OW/V rating and a $37 price
target, which is based on 23x our FY16 EPS estimate of $1.60.
CATALYSTS: Quarterly Earnings Beats. Better-than-expected execution in
the base business could lead to better-than-expected earnings. We think that
expectations seem realistic currently.
Greater Synergy Capture. As integration work makes progress with recently
completed acquisitions, any synergies beyond management's expectations
could improve profitability.
Alix Partners Study. Findings to improve operating efficiencies in the N.A.
business could enhance profitability. This initiative is currently in a pilot stage,
but initial findings have been encouraging.
First Analyst Day. LKQ will host its first ever analyst day on March 15. We
think this will provide management an opportunity to articulate the Company's
strategy.
Accretive acquisitions. LKQ has a history of being very acquisitive, with
both bolt-on and transformative acquisitions. Given the fragmentation of the
market and LKQ's ability to find accretive acquisitions like Rhiag, we think
this could provide upside to earnings.
RISKS: Integration Missteps. Given the complexity of expanding operations
overseas, a lack of execution could lead to slower synergies capture.
Intensified FX Pressure. Given LKQ's exposure to Europe and the UK,
continued strength in the dollar could compress revenue and pressure
expense leverage.
Declining Scrap Prices. A continued decline in scrap steel prices would
pressure revenue, gross margins and dampen the Company's ability to
achieve expense leverage.
Softening Macro Demand Fundamentals. If we see a meaningful economic
downturn with an increase in unemployment rates and reduction in miles
driven, organic growth would likely slow in North America.
1 Year Price History for LKQ
Q3
Q1
2015
Q2
33
30
27
24
21
18
Q3
2016
Source: Bloomberg
Stephens Inc.
9
COMPANY SUMMARY
January 4, 2016
Rick Nelson, CFA, CPA, Analyst
Penske Automotive Group
Nicholas Zangler, CFA, Associate
Changes
Previous
Rating
Target Price
Current
---
Overweight
$60.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$42.34
90.07
$54.39
$41.30
$3,813.6
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
309,794
42.6
70.9
$0.40
$1.00/2.4%
$19.72
2.8%
2014A
$0.75A
$0.81A
$0.83A
$0.89A
$3.38A
12.5x
2015E
$0.84A
$1.04A
$0.96A
$0.87
$3.72
11.4x
2016E
NE
NE
NE
NE
$4.02
10.5x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.73A
$0.89A
$0.85A
$0.79A
$3.27A
12.9x
2015E
$0.85A
$1.05A
$0.96A
$0.87
$3.72
11.4x
2016E
NE
NE
NE
NE
$4.02
10.5x
Rev.
$17.18B
$19.04B
$19.78B
Mar
Jun
Sep
Dec
FY
P/E
Oper. EPS
Penske Automotive Group, Inc ., headquartered in
Bloomfield Hills, Michigan, is the second-largest
public automotive retailer in the U.S. as measured by
total revenue of $17.2 billion in 2014. It owns and
operates 173 franchises in major metro areas in the
continental U.S. and Puerto Rico, as well as 171
franchises internationally, primarily in the U.K.
PAG – NYSE
2016 Best Idea
Penske Automotive Group (PAG) is poised to outperform in 2016, benefiting
from market share gains in the premium/luxury brands, tailwinds in the
service/parts, and industry consolidation. New products and growing off-lease
returns should feed new and used car sales. We note PAG is over-indexed to
premium luxury brands where leasing is more prevalent. UK auto dealerships
have grown from $900 mil. to $6.5 bil. since its initial acquisition 12 years
ago, and we see a similar opportunity in heavy trucks. The Company is in the
early stages of consolidating the commercial truck segment with a goal to
double revenues from the current level of ~$900 mil. in the near term. Penske
has partnered with Freightliner, which commands ~38% market share. PAG's
strong relationship with Daimler, Freightliner's parent, should be an
advantage as it looks to consolidate its dealer network. The commercial
vehicle segment offers attractive acquisition multiples (25%-30% discount to
auto retail), low capex requirements, a higher proportion of service/parts
(~70% of gross profit vs. 40% in auto dealerships), and estimated operating
margins at 4.0% to 4.5% vs. 2.5% to 3.0% in auto retail. Relative to other
dealers, PAG has significant capacity to participate in M&A. TTM net
debt/EBITDA currently sits at 1.9x; the Company has historically operated at
2.5x and we would not rule out 3.0x, which could bring up to $3.0 bil. of
acquired revenues. Beginning in 4Q15, the Company will begin to
anniversary underperformance seen in Australia, which has reduced EPS by
($0.14) over the past year. FX headwinds will anniversary in 1Q16 and have
reduced EPS by ($0.14) over the past three quarters. The Company is in the
early stages of rolling out a new digital site "Preferred Purchase" that enables
customers to choose a vehicle, value trade-ins, and arrange financing from a
desktop or mobile device.
CATALYSTS:
• Capacity for acquisitions in the auto retail/commercial vehicle segments.
• Anniversary of headwinds from foreign exchange and Australia.
• High number of off-lease returns in premium/luxury segment driving
new/used vehicle sales.
• Service/parts segment benefiting from growth in the pool of serviceable
vehicles (0-5 year) and elevated recall activity.
RISKS:
• Acquisitions bring integration and operational risks.
• The ability to source acquisitions at attractive prices.
• Further deterioration in Australia and continued foreign exchange
headwinds.
• Significant reduction in annual new vehicle sales.
1 Year Price History for PAG
Q3
Q1
2015
Q2
56
52
48
44
40
36
Q3
2016
Source: Bloomberg
Stephens Inc.
10
COMPANY SUMMARY
January 4, 2016
Rick Patel, CFA, Analyst
G-III Apparel Group
Shreya Jawalkar, Associate
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$70.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$44.26
45.54
$73.93
$40.41
$2,015.6
Jan
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
524,098
39.7
0.0
$2.86
NA/NA
$19.44
7.8%
Adj. EPS
2014A
$0.03A
$0.14A
$1.39A
$0.50A
$2.12A
20.9x
2015E
$0.15A
$0.27A
$1.85A
$0.48
$2.75
16.1x
2016E
NE
NE
NE
NE
$3.17
14.0x
Apr
Jul
Oct
Jan
FY
P/E
2014A
$0.03A
$0.14A
$1.61A
$0.48A
$2.33A
19.0x
2015E
$0.15A
$0.27A
$1.87A
$0.48
$2.77
16.0x
2016E
NE
NE
NE
NE
$3.17
14.0x
Rev.
$2.12B
$2.39B
$2.56B
Apr
Jul
Oct
Jan
FY
P/E
EPS
G-III Apparel Group, headquartered in New York
City, is a retailer and wholesaler of men's and
women's outerwear, dresses, sportswear, swimwear,
and accessories. Its largest business is licensed
wholesale, in which Calvin Klein is its biggest brand
with products across several categories. Its
wholesale non-licensed segment includes multiple
brands as well as Vilebrequin, GIII's newest
acquisition.
GIII – NASDAQ
2016 Best Idea
With the stock down in 2015 due to unfavorable weather and concerns about
its customers, we see GIII rebounding in 2016 as sales and sentiment
improve. We believe GIII is a best in class retailer with a diverse business
model, strong management team, and multiple pathways to continue driving
double-digit EPS growth annually over the next few years. In wholesale, we
see sales being driven organically and through expansion into new
categories/licenses. At retail, we see margin expansion at G.H. Bass and
Wilson's. We also see potential upside from future acquisitions, as GIII has
historically been an attractive roll-up story. Overall, we believe GIII has EPS
power of >$5 (vs. estimated $2.75 in ’15) excluding future acquisitions. We
reiterate our Overweight (Vol) rating on GIII and $70 price target.
CATALYSTS:
• The wholesale channel should be driven by organic growth and expansion
through new brands and categories. Organic growth will be driven by shelf
space in existing categories like dresses, athleisure wear, handbags, etc.
that have had strong momentum. New initiatives include Tommy Hilfiger
dresses and Karl Lagerfeld products (both starting spring ’16), G.H. Bass
women’s wear, and licensed opportunities (G.H. Bass footwear and
menswear).
• The retail channel should benefit from productivity and margin
improvements at G.H. Bass and Wilson's, which are both turnaround
stories. G.H. Bass in particular has shown significant signs of
improvement over the last year. Bass has flattish margins versus GIII’s
goal of ~10%.
• A potential acquisition is also on the table, and GIII has been vocal about
targeting a lifestyle brand with annual sales of $500 mil. - $1 bil. This could
be yet another lever for future sales and EPS growth.
Overall, we think GIII is on track to meet its long-term goals of HSD%-LDD%
annual sales growth, DD% operating margins (vs. 7.8% in 2014) and DD%
annual earnings growth.
RISKS:
• Macroeconomic headwinds (economic weakness could hurt sales)
• Dependence on favorable weather (35%-40% of GIII's sales come from
outerwear)
• Concentrated customer base (~20% of sales from Macy's)
• Inherent risk from acquisitions (acquisitions are a part of GIII's growth
strategy)
1 Year Price History for GIII
Q3
Q1
2015
Q2
80
70
60
50
40
30
Q3
2016
Source: Bloomberg
Stephens Inc.
11
COMPANY SUMMARY
January 4, 2016
Will Green, Analyst
Pioneer Natural Resources
Ben Wyatt, Analyst
2016 Best Idea
Matt Beeby, Associate
Josh Stevens, Associate
John Durham, Associate
Changes
Previous
Rating
Target Price
Current
---
Overweight
$170.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$125.38
149.38
$181.97
$105.83
$18,729.3
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
Mar
Jun
Sep
Dec
FY
P/E
Oper. CFPS
Mar
Jun
Sep
Dec
FY
P/CFPS
EBITDAX
FY
EV/EBITDAX
PXD – NYSE
2,397,751
147.9
23.7
$6.88
$0.08/0.1%
$60.08
6.1%
2014A
$0.86A
$0.01A
$2.59A
$2.90A
$6.39A
19.6x
2015E
($0.52)A
($1.46)A
$4.31A
($0.10)
$2.20
57.0x
2016E
NE
NE
NE
NE
$0.00
NM
2014A
$3.91A
$4.37A
$4.65A
$3.59A
$16.44A
7.6x
2015E
$2.42A
$2.62A
$2.44
$2.68
$10.12
12.4x
2016E
NE
NE
NE
NE
$12.31
10.2x
2014A
$2.59BA
7.9x
2015E
$1.92B
10.6x
2016E
$2.03B
10.0x
PXD maintains a multi-decade inventory of low-cost oil assets in the Permian
Basin. While economics will certainly be more challenged in a low price oil
environment in 2016, boasting one of the best balance sheets in our
coverage (YE16 net debt/EBITDA of ~1.1x) coupled with a solid hedge
position (85% of oil and 70% of natural gas in 2016, 20% of oil in 2017)
should allow PXD to withstand a low oil price environment in the intermediate
term. The Company’s recent drilling results in the Wolfcamp and Spraberry
zones have also steadily improved in recent months and are now consistently
producing wells tracking above 1 million Boe, allowing the Company to target
15%-20% multi-year production growth on much less capital needs than
before. The Company adopted an early focus on infrastructure build-out and
recently netted ~$1 bil. from the sale of Eagle Ford midstream assets, which
also should provide capital/cost tailwinds going forward. The combination of
multiple decades of drilling inventory, low cost assets, ample liquidity, a solid
balance sheet and a strong hedge position provide PXD a unique and distinct
advantage over much of the E&P industry entering 2016.
CATALYSTS:
• Continuation of "headline" well results with strong IP rates suggesting
EURs tracking above the 1 million Boe type curve.
• Continued gains in efficiencies given the scale of drilling and completion
activity in the Company's Permian acreage.
• Investment in vertical integration of services with tank batteries, SWD
facilities, sand/logistics, water access and gas processing providing further
improvement in well economics.
RISKS:
• Permian/West Texas Weather Risk.
• Execution Risk.
• Excessive Rig Capacity.
• NGL Markets.
1 Year Price History for PXD
Pioneer Natural Resources is a Texas-based E&P.
Q3
Q1
2015
Q2
200
175
150
125
100
75
Q3
2016
Source: Bloomberg
Stephens Inc.
12
COMPANY SUMMARY
January 4, 2016
Ben Wyatt, Analyst
Rice Energy Inc.
Will Green, Analyst
2016 Best Idea
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$20.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$10.90
136.38
$25.33
$8.01
$1,486.5
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
2,525,073
79.9
31.4
$1.88
NA/NA
$11.49
13.3%
2014A
$1.03A
($0.06)A
($0.05)A
$0.76A
$1.70A
6.4x
2015E
$0.00A
($0.51)A
$0.43A
$0.02
($0.05)
NM
2016E
NE
NE
NE
NE
($0.27)
NM
2014A
$0.47A
$0.18A
$0.26A
$0.53A
$1.44A
7.6x
2015E
$0.52A
$0.57A
$0.70A
$0.64
$2.43
4.5x
2016E
NE
NE
NE
NE
$2.70
4.0x
2014A
FY
$257.6MA
EV/EBITDAX
7.7x
2015E
$431.9M
4.6x
2016E
$503.6M
3.9x
Mar
Jun
Sep
Dec
FY
P/E
Oper. CFPS
Mar
Jun
Sep
Dec
FY
P/CFPS
EBITDAX
RICE – NYSE
With assets primarily in Belmont, Greene and Washington counties, RICE
continues to benefit from drilling efficiencies and completion optimization. Its
wells have produced some of the highest IP rates in the industry, while use of
a managed choke program implies EUR improvement with just modest
pressure declines. RICE remains well positioned for growth given its
high-quality asset base, right sized firm transport and strong hedge portfolio
(~70% hedged in 2016). Recent midstream transactions have provided a
boost to an already robust liquidity position, while debt levels should remain
manageable through 2016 (net debt/EBITDA of <3.0x).
CATALYSTS:
• Enticing valuation vs. gas peers.
• Improved cycle times/lower well costs, leading to better well economics.
• Additional drop downs/asset sales to improve the balance sheet.
• Favorable industry trends in activity to alleviate overhang on gas prices.
RISKS:
The Company has exposure to differential blowouts with natural gas
commodity price swings, while delays/bottlenecks of midstream assets could
also pose a risk to our estimates. Heavy insider ownership could also be a
negative with the potential for sales of secondary shares.
1 Year Price History for RICE
Rice Energy (RICE) is a Canonsburg, PA-based
E&P company with operations in the Marcellus Shale
and Utica Shale.
Q3
Q1
2015
Q2
30
25
20
15
10
5
Q3
2016
Source: Bloomberg
Stephens Inc.
13
COMPANY SUMMARY
January 4, 2016
Matt Schmid, Analyst
Changes
Previous
Rating
Target Price
Current
---
Overweight
$37.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$23.10
397.73
$52.70
$17.83
$9,187.6
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
Mar
Jun
Sep
Dec
FY
P/E
CFPS
Mar
Jun
Sep
Dec
FY
P/CFPS
4,017,918
392.6
55.1
$1.07
$2.80/12.2%
$20.51
1.8%
2014A
$0.74A
$0.45A
$0.53A
$0.67A
$2.39A
9.7x
2015E
$0.36A
($0.06)A
$0.25A
$0.50
$1.05
22.0x
2016E
NE
NE
NE
NE
$1.73
13.4x
2014A
$0.82A
$0.67A
$0.65A
$0.75A
$2.88A
8.0x
2015E
$0.75A
$0.39A
$0.47A
$0.62
$2.23
10.4x
2016E
NE
NE
NE
NE
$2.30
10.0x
Denotes PAA's distributable cash flow per unit (DCF)
Adj. EBITDA
FY
EV/EBITDA
2014A
2015E
2016E
$2,200.0M $2,203.1M $2,324.1M
8.7x
8.7x
8.3x
Plains All American (PAA) is a Houston, TX, based
midstream company that is diversified across the
midstream value chain as well as geographically
across the United States and Canada.
Plains All American
Pipeline
PAA – NYSE
2016 Best Idea
PAA is well-positioned to endure a challenging operating environment as
crude production continues to re-balance through 2016. Ongoing margin
pressure will likely impact the supply and logistics segment, but PAA's strong,
diversified backlog of fee-based projects should drive growth in the
transportation and facilities segments. As new and recently completed
projects ramp up, increased capacity utilization should generate 2016
EBITDA growth and strengthen coverage of PAA's $2.80 annual distribution.
The Company expects to return to 1.0x+ coverage in 2017, and we believe
PAA has the integrated high-quality asset base to support its current
distribution and generate significant long-term growth.
Please see the glossary and detailed risk section starting on p. 48.
Investors should also review the risk factors identified by the Company
as disclosed in the documents filed by the Company with the SEC at the
end of this report.
CATALYSTS:
• Fee-Based Volume Growth. PAA's transportation and facilities segments
are expected to drive 2016 EBITDA growth. Faster-than-expected
ramp-up
of
recently
completed
projects
could
result
in
better-than-expected margins from higher-tariff incremental volumes.
• Increased Regional Differentials. The supply and logistics segment is
expected to be below normal baseline levels of $500 mil.-$550 mil. of
EBITDA, but wider than expected regional oil price differentials could
provide upside.
• 2016 Funding Resolution. PAA is evaluating a number of options to
finance 2016 CapEx. Announcement of non-core asset sales would
remove uncertainty surrounding 2016 and reduce equity needs.
RISKS:
• Access to Capital. An inability to execute on asset sales or access the
debt and equity markets at desirable rates could pose a risk to our price
target.
• Interest Rate Risk. A significant move higher in interest rates could
pressure PAA units.
• Regulatory Risk. Negative regulations could hinder PAA's operations or
tax advantaged status.
1 Year Price History for PAA
Q3
Q1
2015
Q2
60
50
40
30
20
10
Q3
2016
Source: Bloomberg
Stephens Inc.
14
COMPANY SUMMARY
January 4, 2016
Matthew Marietta, Analyst
Christopher Denison, Associate
Previous
Rating
Target Price
Current
---
Overweight
$20.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$11.44
53.63
$21.72
$8.12
$613.5
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
Mar
Jun
Sep
Dec
FY
P/E
Adj. EPS
Mar
Jun
Sep
Dec
FY
P/E
Adj. EBITDA
FY
EV/EBITDA
FTK – NYSE
2016 Best Idea
Brooks Braden, Associate
Changes
1,903,845
51.6
12.6
$0.02
NA/NA
$5.50
26.6%
2014A
$0.22A
$0.20A
$0.26A
$0.29A
$0.97A
11.8x
2015E
($0.03)A
($0.23)A
$0.04A
($0.03)
($0.25)
NM
2016E
($0.02)
($0.02)
$0.01
$0.05
$0.03
NM
2014A
$0.22A
$0.20A
$0.24A
$0.30A
$0.95A
12.0x
2015E
($0.02)A
$0.02A
$0.04A
($0.03)
$0.00
NM
2016E
($0.02)
($0.02)
$0.01
$0.05
$0.03
NM
2014A
98.1M
6.7x
2015E
19.6M
33.4x
2016E
21.9M
29.9x
INVESTMENT CONCLUSION: We are staying the course with FTK as our
Best Idea as we enter the new year. FTK's differentiated complex nano-fluid
(CnF) product offering within OFS boosts productivity of wells ~20%-30%,
and our proprietary data analysis has indicated well performance
improvement of as much as 60%-90% in Permian and Eagle Ford data sets.
Even as U.S. onshore activity has suffered throughout 2015, 3Q15 CnF sales
volumes increased ~35% q/q and ~60% y/y. Cash-strapped E&Ps should
increasingly look to maximize value from each well; we think CnF is at an
inflection point of wholesale industry acceptance and offers rare opportunities
for profitable growth within the worst industry downturn in decades.
CATALYSTS:
• Large Operators in Validations Become Power-Users. FTK is currently
in validations with five large, U.S.- based independent operators.
Wholesale acceptance of CnF chemistries from any one of these E&Ps
could provide an immediate and significant step in CnF revenues, while
also accelerating the paradigm shift of other users to begin their own CnF
validations.
• Third-Party Support. FTK has partnered with industry guru John Ely who
is known for his experience with completions techniques and his doubts in
the efficacy of oilfield chemicals—until CnF, that is. Continued support
from John Ely's independent opinion, as well as third-party consultants
hired by FTK, could help re-instate investor confidence in the product (see
FracMax risk below).
• International Expansion. FTK has an ongoing growth strategy for
International markets, most notably in South America and the Middle East.
RISKS:
• Competitive Product. FTK has been able to keep CnF pricing stable
since the 1Q15 time frame, based on sound patent design. However, a
competitive product (none available at this time) would potentially disrupt
the pricing power the Co. has been able to maintain.
• FracMax Data Errors Are Ongoing/Unresolved. FracMax, the Co.'s
proprietary data analysis and sales validation tool, was found to have data
errors within the software, which resulted in a ~$500 mil. sell-off in market
cap in Nov-15. A lengthy resolution process, or one that downplays the
originally promoted efficacy of CnF, could dampen investor confidence in
the product.
• Other Product Lines. CnF comprised 41% of 3Q15 revs. Other revenue
sources included more commoditized OFS chemicals (27%), Drilling Tech.
segment (12%) and Production Tech. segment (3%), which have declined
in line with overall oilfield activity levels. Non-Energy Chem. Tech.
Segment (16%) sells citrus oils to consumer and commercial industries.
Flotek Industries Inc. is a Houston, Texas-based
oilfield technology company with a portfolio of
products and services led by its high end Chemistry
Technology, CnF.
1 Year Price History for FTK
Q3
Q1
2015
Q2
24
20
16
12
8
4
Q3
2016
Source: Bloomberg
Stephens Inc.
15
COMPANY SUMMARY
January 4, 2016
Erik Zwick, CFA, Analyst
First Busey Corp.
Terry McEvoy, CFA, Analyst
Changes
Previous
Rating
Target Price
Current
---
Overweight
$25.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$20.63
28.69
$22.59
$17.77
$591.9
Dec
Float (mil.):
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.26A
$0.28A
$0.31A
$0.25A
$1.10A
18.8x
79,624
24.3
$0.68/3.2%
$12.95
1.7%
2015E
$0.26A
$0.33A
$0.36A
$0.35
$1.31
15.7x
2016E
$0.37
$0.38
$0.39
$0.41
$1.56
13.2x
First Busey Corp. is a $3.9 bil. bank holding
company with roots tracing back to 1868 and
headquartered in Champaign, Il. The Company
operates 29 branches in Illinois, one in Indianapolis,
and six in southwest Florida. First Busey also owns
Busey Wealth Management with $5.1 bil in AUM and
FirsTech, a retail payment processing subsidiary with
3000 locations in 36 states.
BUSE – NASDAQ
2016 Best Idea
2016 is shaping up to be a big year for First Busey. The Pulaski Financial
(PULB, $15.96, not covered) acquisition is scheduled to close in 1H16,
increasing assets by 40%, and management is planning an organic growth
expansion in Indianapolis. While it will take until the second half of 2016 for
the pro forma earnings power to be fully visible, we estimate First Busey will
improve the ROA from the 1.00% level in 2015 to approximately 1.20% in
2017. Additionally, an above average dividend payout and dividend yield
provide downside support.
CATALYSTS:
M&A Expansion: We estimate the expected 1H16 closing of the Pulaski
Financial acquisition to add $1.5 bil. in assets and 13 branches located in the
St. Louis MSA. The acquisition is expected to be 10%-12% accretive in year
one with a tangible book dilution earnback period of 3 years. Management is
targeting 25% cost savings and while no revenue synergies have been
assumed, we believe there is an opportunity for certain business lines (wealth
management and mortgage) to be additive to fee income.
Organic Expansion: In addition to acquisitions, we believe First Busey has
attractive organic growth opportunities in its legacy central Illinois and
Indianapolis markets. In 2016, First Busey plans to increase its presence in
the Indianapolis MSA, whose economy has been growing at a 2x rate relative
to the rest of the U.S. over the past 2 years. The Company has closed 4
unprofitable branches in 2015 and plans to use the cost savings to fund
expansion in Indianapolis. Management targets a mid to slightly
higher-single-digit annual organic growth rate. We are modeling 6% organic
growth in both 2016 and 2017.
RISKS:
Merger Integration: With Pulaski Financial equal to approximately 40% of
First Busey’s current asset size, the transaction is relatively large. The
integration process will require a substantial amount of preparation and
manpower to ensure a successful execution. Any delay or difficulty in the
process could result in additional costs and downside risk to EPS estimates.
Future Acquisitions: Market reaction to announced acquisitions is
dependent on several metrics including pricing, earnings accretion and
tangible book value dilution. Paying too much for an acquisition in the eyes of
the market could have a negative impact on share price.
1 Year Price History for BUSE
Q3
Q1
2015
Q2
24
22
20
18
16
14
Q3
2016
Source: Bloomberg
Stephens Inc.
16
COMPANY SUMMARY
January 4, 2016
Tyler Stafford, Analyst
Changes
Previous
Rating
Target Price
Current
---
Overweight
$38.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$33.99
32.20
$35.21
$22.71
$1,094.5
Dec
Float (mil.):
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
Mar
Jun
Sep
Dec
FY
Oper. EPS
Mar
Jun
Sep
Dec
FY
Ameris Bancorp
304,287
31.1
$0.20/0.6%
$15.60
8.3%
2014A
$0.32A
$0.32A
$0.43A
$0.39A
$1.46A
--
2015E
$0.32A
$0.04A
$0.48A
$0.52
$1.35
--
2016E
$0.51
$0.61
$0.65
$0.63
$2.41
--
2014A
$0.33A
$0.39A
$0.44A
$0.39A
$1.55A
--
2015E
$0.32A
$0.15A
$0.49A
$0.54
$1.50
--
2016E
$0.51
$0.61
$0.65
$0.63
$2.41
--
Ameris Bancorp (ABCB) is a bank holding company
headquartered in Moultrie, Georgia. Through its
subsidiary, Ameris Bank, ABCB provides a full-range
of banking services to its retail and commercial
customers through 104 locations in select markets in
Georgia, Alabama, Florida and South Carolina.
ABCB – NASDAQ
2016 Best Idea
We are making Ameris Bancorp (ABCB) our Best Idea in 2016 as we think
the Company is set to see solid double-digit loan, EPS, and TBV growth,
supplemented with meaningfully improved profitability and efficiency
enhancements and an active M&A strategy. Specifically, we think the recently
closed / pending acquisitions and clean credit slate will result in an ROA /
ROTCE / efficiency ratio of 1.35%, 17%, and 60% in 2016 and 2016-17 EPS
of $2.41 and $2.78. While this pace of EPS growth is impressive, we think it
could ultimately prove too conservative as it will likely be aided by
incremental cost saving initiatives and additional accretive M&A
announcements. Importantly, management is focused on growing TBV, so
we would expect future acquisitions to be relatively neutral to TBV. While
ABCB has seen strong appreciation in 2015 (+33% vs. peers of +3%), the
stock still trades at a sharp discount to peers at 12.2x our 2017 EPS estimate
vs. peers at 14.0x.
CATALYSTS:
• Future M&A: We think the primary balance sheet and EPS growth driver
over the next several years will be M&A and expect ABCB to remain active
on its M&A strategy in 2016 through EPS accretive and TBV accretive /
neutral acquisitions.
• Successful M&A Integration: Given two recently closed acquisitions and
one pending acquisition, we think a high priority is placed on the
successful integration of these acquisitions.
• Loan Growth: The Company currently expects low-double-digit organic
loan growth in 2016, and we believe estimates could likely be positively
revised if growth comes in better than expected.
RISKS:
• Integration Issues: Should ABCB see a delay in closing of its JAXB
acquisition or issues in integration/conversion, we would expect ABCB’s
earnings and stock price to be pressured.
• Aggressive M&A Pricing: Should M&A pricing become more aggressive
and prevent future acquisitions, we would expect the stock price could be
pressured.
• Organic Loan Growth Slows Down: Should organic loan growth come in
below our forecasted level, our EPS estimates would likely be pressured.
1 Year Price History for ABCB
Q3
Q1
2015
Q2
36
32
28
24
20
16
Q3
2016
Source: Bloomberg
Stephens Inc.
17
COMPANY SUMMARY
January 4, 2016
Matt Olney, CFA, Analyst
Bank of the Ozarks, Inc.
Matthew Sealy, Associate
2016 Best Idea
Aaron Fogle, Associate
Changes
Previous
Rating
Target Price
Current
---
Overweight
$57.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$49.46
90.37
$54.96
$32.35
$4,469.7
Dec
Float (mil.):
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
Mar
Jun
Sep
Dec
FY
Oper. EPS
Mar
Jun
Sep
Dec
FY
OZRK – NASDAQ
784,135
82.7
$0.58/1.2%
$14.89
8.4%
2014A
$0.34A
$0.34A
$0.40A
$0.43A
$1.52A
--
2015E
$0.47A
$0.51A
$0.52A
$0.54
$2.05
--
2016E
$0.55
$0.38
$0.68
$0.71
$2.33
--
2014A
$0.33A
$0.35A
$0.42A
$0.44A
$1.55A
--
2015E
$0.46A
$0.52A
$0.54A
$0.54
$2.08
--
2016E
$0.55
$0.64
$0.68
$0.71
$2.61
--
We are making OZRK our Best Idea in 2016 as the Company’s strong
earnings momentum is likely to continue in the near term. OZRK maintains
peer-leading profitability (2.1% ROA / 17.5% ROTCE in 2015) and we believe
similar levels will continue in 2016 due to strong organic loan growth, pending
acquisitions of Community & Southern Holdings and C1 Financial (BNK) and
expense management. Due to its 3.8x TBV and broad footprint, we believe
OZRK is well positioned for additional M&A announcements in 2016. OZRK
trades at 15.2x our 2017 EPS forecast compared to peers at 13.2x. Our price
target of $57 assumes 17x our 2017 EPS forecast and $2 from incremental
M&A that is not in our forecast.
CATALYSTS:
• M&A Announcement. OZRK has two pending acquisitions, but the
Company remains acquisitive and is well positioned for additional M&A
announcements in 2016.
• Increased Loan Growth. We suspect management’s originated loan
growth guidance (minimum of $2.5 billion) is conservative, which could
increase the Company’s profitability.
RISKS:
Credit Trends. OZRK’s loan portfolio remains outstanding (0.4% of loans are
“classified” vs. U.S. peers at 2.5%), and credit costs remain immaterial, but
should credit trends deteriorate, then OZRK’s credit cost could increase.
• NIM Compression. OZRK’s NIM is 5.1% vs. peers at 3.9%. We expect
NIM compression (5-10 bps per quarter), but this could potentially
accelerate and slow profitability.
• $10 Billion Asset Threshold. Due to its pending acquisitions, OZRK is
likely to cross over the $10 billion threshold in 2016, which would result in
increased regulatory scrutiny, higher compliance costs, and lower
interchange income in 2017.
Bank of the Ozarks, Inc. is a financial holding
company headquartered in Little Rock, Arkansas.
The Company owns a state-chartered subsidiary
bank that conducts banking operations through
offices in Arkansas, Georgia, Texas, North Carolina,
Florida, Alabama, South Carolina, New York and
California. Bank of the Ozarks offers retail and
commercial banking services to its clients along with
a unique specialty real estate platform.
1 Year Price History for OZRK
56
48
40
32
Q3
Q1
2015
Q2
24
Q3
2016
Source: Bloomberg
Stephens Inc.
18
COMPANY SUMMARY
January 4, 2016
First Midwest Bancorp.
Austin Nicholas, Analyst
Changes
Previous
Rating
Target Price
Current
---
Overweight
$21.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$18.43
77.95
$19.81
$15.34
$1,436.6
Dec
Float (mil.):
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.24A
$0.25A
$0.25A
$0.19A
$0.93A
19.8x
557,171
76.1
$0.36/1.9%
$14.73
2.8%
2015E
$0.26A
$0.29A
$0.30A
$0.29
$1.14
16.2x
2016E
$0.27
$0.31
$0.33
$0.35
$1.27
14.5x
First Midwest's principal subsidiary, First Midwest
Bank, and other affiliates provide a full range of
business, middle-market and retail banking as well as
wealth management services through over 100
locations in metropolitan Chicago, northwest Indiana,
central and western Illinois, and eastern Iowa.
FMBI – NASDAQ
2016 Best Idea
First Midwest’s deposit profile is unique and positions the Company well as
rates rise. Not only are these deposits core in nature, but over time,
management has been able to maintain below peer deposit costs.
Additionally, the loan portfolio is diverse and fee income is growing faster
than the industry. As one of the last Chicago-focused banks of any
meaningful size, we view increasing levels of bank consolidations as a
positive for FMBI’s valuation. In summary we feel FMBI has multiple catalysts
to improve shareholder value.
CATALYSTS:
• Almost half of First Midwest’s deposits are to retail customers (peers are
closer to one-third) and 86% of its total deposits are core. On the other
side of the balance sheet, 37% of earnings assets reprice in less than
three months (vs. peers at 29%) and almost 10% of assets are in cash.
Putting this all together, we feel First Midwest’s actual asset sensitivity
could surprise on the upside as rates rise.
• There is only one bank in the Chicago marketplace with assets between
$5 bil. - $15 bil.: First Midwest. With the super-regional banks now posed
to get back into the M&A arena, we feel First Midwest could be squarely in
the crosshairs of many that want to expand in the 3rd-largest banking
market in the U.S.
RISKS:
• Federal Reserve Is Slow to Raise Interest Rates: One component
behind our positive view on First Midwest is the expected improvement in
profitability and earnings growth once the Fed begins raising the fed funds
rate.
• Ongoing Economic Troubles in Illinois: With 90% of First Midwest’s
deposits in the Chicago MSA, the Company could be negatively impacted
should state and city government fiscal problems impact the local
economy and home prices. While their loan portfolio is diverse, 44% is
connected to commercial real estate.
• Crossing $10 Bil. in Assets With Expensive Acquisitions: We believe
First Midwest needs to add $2 bil. - $3 bil. of assets after the Company
itself organically grows above $10 bil. This would be accomplished
through multiple Midwest bank acquisitions. Tangible book dilution could
occur in a M&A deal.
1 Year Price History for FMBI
20
18
16
14
Q3
Q1
2015
Q2
12
Q3
2016
Source: Bloomberg
Stephens Inc.
19
COMPANY SUMMARY
January 4, 2016
John Campbell, Analyst
Hayden Blair, Associate
Changes
Previous
Rating
Target Price
Current
---
Overweight
$17.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$13.30
99.38
$15.80
$8.87
$1,321.8
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
600,318
54.7
26.6
$1.40
NA/NA
$8.32
7.9%
EPS
2014A
$0.04A
($0.02)A
($0.07)A
$0.10A
$0.05A
NM
2015E
$0.05A
$0.00A
($0.23)A
$0.08
($0.10)
NM
2016E
NE
NE
NE
NE
$0.29
45.9x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.18A
$0.15A
$0.18A
$0.18A
$0.68A
19.6x
2015E
$0.19A
$0.16A
$0.19A
$0.19
$0.73
18.2x
2016E
NE
NE
NE
NE
$0.73
18.2x
Rev.
$544.9M
$548.8M
$395.1M
Mar
Jun
Sep
Dec
FY
P/E
Adj. EPS
Bankrate is a leading publisher, aggregator and
distributor of personal finance content on the Internet.
The Company provides consumers with proprietary,
fully researched, comprehensive, independent and
objective personal finance editorial content across
multiple vertical categories including mortgages,
deposits, insurance, credit cards, and other
categories, such as retirement, automobile loans,
and taxes.
Bankrate, Inc.
RATE – NYSE
2016 Best Idea
We are buyers of RATE primarily due to the following three reasons:
1. RATE is a performance marketer that continues to have a few nice
secular drivers supporting its business. The Company benefits from both
increased consumer activity/interaction online and the ongoing shift of ad
dollars from traditional media sources to the online channel. RATE's key
offering, credit cards, is benefiting from a steady credit recovery cycle,
and we believe the primary card issuers in the market will remain
aggressive in customer acquisition efforts over the next few years due to
the ongoing need to find additional income streams, generally improving
consumer credit worthiness and the "card lock" phenomena (i.e.,
consumers utilizing one card for mobile payments and less often cycling
between multiple cards).
2. At ~9x forward EBITDA (vs. TREE at ~19x forward EBITDA & private
player Credit Karma at ~10x forward rev.), the stock is not reflecting its
industry-leading position in its core credit card offering or the bright
outlook/pending growth in the market, the full removal of its prior
one-year-long SEC investigation (related to past management team,
investigation tied to 1Q12 & 2Q12) overhang, its recent exit of the past
troubled Insurance business or its increased cash position from the sale.
3. We see nice optionality from a few different angles. First, under
conservative assumptions, we think RATE's credit card business alone is
worth roughly where the stock trades today, thus, we believe there is
some nice upside optionality present in its other businesses (particularly
Banking). Second, we believe RATE has nice optionality with its ~$310
mil. in cash on hand following the Insurance business sale (3Q close of
$145 mil. + $165 mil. in insurance business sale).
CATALYSTS:
• Credit card-driven 4Q beat + full year EBITDA guidance beat
• Capital deployment (accretive M&A, faster share repurchase, etc.)
• Entry into the fast-growth personal loans market
• Further business unit monetization (less likely)
RISKS:
• Material slowdown in any key vertical (particularly credit cards)
• Margin pressure stemming from heightened competition and rising
customer acquisition costs (particularly credit cards)
• Poor uses of capital including unattractive M&A
1 Year Price History for RATE
Q3
Q1
2015
Q2
16
14
12
10
8
6
Q3
2016
Source: Bloomberg
Stephens Inc.
20
COMPANY SUMMARY
January 4, 2016
J.R. Bizzell, Analyst
Changes
Previous
Rating
Target Price
Current
---
Overweight
$30.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$22.39
72.59
$40.80
$21.32
$1,625.3
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
Aaron's, Inc.
966,391
71.5
33.1
$0.34
$0.10/0.4%
$18.51
5.8%
2014A
$0.53A
($0.02)A
$0.13A
$0.30A
$0.94A
23.8x
2015E
$0.68A
$0.56A
$0.33A
$0.30
$1.86
12.0x
2016E
$0.74
$0.61
$0.51
$0.53
$2.40
9.3x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.53A
$0.23A
$0.39A
$0.39A
$1.55A
14.4x
2015E
$0.73A
$0.61A
$0.39A
$0.35
$2.08
10.8x
2016E
$0.74
$0.61
$0.51
$0.53
$2.40
9.3x
Rev.
$2.72B
$3.14B
$3.29B
Mar
Jun
Sep
Dec
FY
P/E
Oper. EPS
AAN – NYSE
2016 Best Idea
We continue to be constructive on AAN as we believe that recent fears over a
data glitch at Progressive have raised concerns around the underwriting
model for the segment. While the data interruption is concerning, we believe
that these fears are misguided, and we continue to think Progressive’s rapid
growth will continue as current retail relationships mature and the Company
continues to add new retail partners—ultimately driving the majority of AAN
revenue growth in 2016. Additionally, we think the announcement late last
year of three new national retail partners at Progressive was mostly
overlooked, and we continue to believe in the substantial market opportunity
for Progressive’s virtual RTO platform. Though sales improvements in retail
stores likely take time, we see retail store EBITDA margins continuing to
improve as management further leverages price increases, smartphones
offered in store, an expanding e-commerce platform and further cost
cuts/inventory reductions. If Progressive can show the data glitch was truly
one-time in nature, we believe AAN deserves to trade within its historical
11x-13x forward earnings range. If the core retail locations were to show any
signs of positive momentum, we believe investors will then begin to give AAN
a premium multiple to its historical valuation. AAN is currently trading at 9.4x
our FY16E EPS and 5.7x our FY16E EBITDA, respectively. Our $30 PT
equates to 12.7x our FY16E EPS and ~7x FY16E EV/EBITDA multiples.
CATALYSTS:
Catalysts include a quicker than expected improvement in core business,
continuation of Progressive's high growth rates, and better than expected
operating margins at both the core retail locations and Progressive.
RISKS:
Risks include further deterioration of Progressive credit, continued core retail
location sales struggles, any adverse economic changes, and any new
regulatory oversight.
Aaron's Inc., headquartered in Atlanta, Georgia,
operates in two basic businesses. Its Sales & Lease
division operates over 1,100 company-owned lease
ownership stores and has over 600 franchise
locations. The Company has been moderately
expanding its lease ownership store locations. In
addition, AAN operates several RIMCO stores, 13
company and 6 franchised locations.
1 Year Price History for AAN
48
40
32
24
Q3
Q1
2015
Q2
16
Q3
2016
Source: Bloomberg
Stephens Inc.
21
COMPANY SUMMARY
January 4, 2016
Drew Jones, Analyst
Trinity Biotech plc
Garrett Phelps, Associate
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$22.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$11.76
23.06
$20.24
$10.74
$271.2
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
185,243
NA
0.0
$0.40
$0.22/1.8%
$8.89
7.6%
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.18A
$0.18A
$0.18A
$0.18A
$0.72A
16.3x
2015E
$0.17A
$0.10A
$0.10
$0.08
$0.44
26.7x
2016E
NE
NE
NE
NE
$0.48
24.5x
Rev.
$104.9M
$100.3M
$110.6M
Trinity
Biotech
Plc.
develops,
acquires,
manufactures and markets diagnostic products for
the clinical laboratory and point-of-care markets. Its
product portfolio encompasses diagnostics for
autoimmune, infectious disease, diabetes and
sexually transmitted diseases.
TRIB – NYSE
2016 Best Idea
We are naming TRIB our Best Idea for 2016 as we see FDA approval for the
recently submitted Meritas Troponin I test as a game changer for the
Company. Upon approval, TRIB's troponin test will be the only FDA guideline
compliant test and will be positioned to take share in a market that is
estimated to be $350 mil., despite poor performance of currently approved
POC tests. While a smaller opportunity, the Company's rapid syphilis test is
also well positioned to drive sales growth NT, being the only CLIA-waived
point of care syphilis test. Further, we expect the Company to continue a
recent trend of meeting quarterly expectations, which should serve as nice
catalysts for the stock.
CATALYSTS:
• Anticipated FDA Approval for Meritas Troponin I – Following FDA
submission, announced December 17th, the Company is on track to
receive FDA approval for its troponin test in 3Q16. As noted above, this
would position the test well to gain share of an estimated $350 mil. annual
market. Initially, we see this as a replacement opportunity for TRIB.
However, the market could expand when customers are presented with a
guideline compliant option for testing and portions of the $600+ mil.
lab-based troponin testing market shift to the POC.
• Solid Setup for Rapid Syphilis Product – We view the Company's rapid
syphilis test as well positioned to capitalize on the relationships which
TRIB has with virtually all public health systems within the U.S. (largest
customers for this test). As TRIB's product is the only CLIA-waived test we
expect this to be an easy replacement market.
• Meeting/ Exceeding Street Expectations - After multiple years of failing
to hit quarterly estimates, we believe management is well on its way to
establishing credibility on this front. As evidence, TRIB reported 3Q15
revenue in line and EPS a penny above expectations and the stock
reacted favorably (up 20% that day).
RISKS:
• Regulatory – The Company's products are largely subject to a high
degree of regulatory oversight, especially prior to product approval.
• New Product Acceptance – There is a risk that the Company's newly
introduced products have difficulty gaining acceptance or take longer than
anticipated to gain hold in a given geography.
• Foreign Currency Exposure – TRIB receives a significant proportion of
its revenue in foreign currency which could continue to present a
headwind to results.
1 Year Price History for TRIB
Q3
Q1
2015
Q2
21
18
15
12
9
6
Q3
2016
Source: Bloomberg
Stephens Inc.
22
COMPANY SUMMARY
January 4, 2016
Dana Hambly, CFA, Analyst
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$97.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$76.00
53.96
$87.42
$52.42
$4,101.0
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
Mar
Jun
Sep
Dec
FY
P/E
Adj. EPS
Mar
Jun
Sep
Dec
FY
P/E
Adj. EBITDA
FY
EV/EBITDA
Rev.
AMSURG Corporation
1,036,545
52.9
49.7
$4.32
NA/NA
$33.21
6.3%
2014A
$0.55A
$0.59A
($0.23)A
$0.53A
$1.28A
59.4x
2015E
$0.39A
$0.65A
$0.85A
$0.83
$2.72
27.9x
2016E
$0.54
$0.81
$0.89
$0.95
$3.18
23.9x
2014A
$0.55A
$0.63A
$0.69A
$0.77A
$2.75A
27.6x
2015E
$0.62A
$0.97A
$1.03A
$1.00
$3.62
21.0x
2016E
$0.73
$0.98
$1.05
$1.11
$3.85
19.7x
2014A
$304.5M
20.2x
2015E
$489.5M
12.6x
2016E
$553.8M
11.1x
$1.62B
$2.53B
$2.87B
AMSURG Corp. develops, acquires and operates
practice-based ambulatory surgery centers in
partnership with physician practice groups as well as
healthcare systems. The Company also operates a
physician outsourcing company through its Sheridan
subsidiary.
AMSG – NASDAQ
2016 Best Idea
AmSurg is our healthcare services Best Idea for 2016. AMSG's strong
balance sheet and solid free cash flow provide plenty of resources for future
acquisitions in the highly fragmented ASC and physician staffing industries.
Through sustainable mid-single-digit organic growth coupled with healthy
acquired growth, we expect AMSG to generate 15%+ revenue/EBITDA
growth for the next several years, which provides good upside to current
Street estimates. We maintain our Overweight (Vol) rating and $97 PT.
CATALYSTS:
• Further M&A: AMSG has identified a pipeline of ~$500 million it has
under non-binding LOIs expected to close by the end of 1Q16. At multiples
of 8x-10x EBITDA, we estimate an incremental $50 million - $62.5 million
in EBITDA, which is not included in our 2016 numbers. We estimate
AMSG currently has over $900 million in liquidity, and we expect free cash
flow of $350+ million in 2016 providing plenty of dry powder for 2H16
acquisitions in the increasingly consolidating sector.
• Favorable risk/reward: AmSurg recently announced the acquisition of
Premier Emergency Medical Specialists, a 49 physician Phoenix,
AZ-based Emergency Room provider. We estimate this deal adds ~$15
million in revenue and ~$2 million in EBITDA. ED is obviously a large
focus for the Company, and we continue to expect large-scale capital
deployment for anesthesiology practices as well. As AMSG closes these
deals, we see 9%-10% upside to current consensus 2016 estimates. With
trading multiples of 12.5x-13.5x, we see the shares moving to a range of
$92-$102 in the next couple of months. Assuming the acquisition pipeline
remains healthy, we expect that AMSG generates 17%+ growth in 2017
(5% organic, 12% acquired), or over $700 million in EBITDA-NCI.
Assuming multiples in the 11x-14x range implies a share price (at 4x
levered) over the next 12-18 months in the $80-$124 range. We view this
as a favorable risk/reward particularly in the healthcare services sector.
RISKS:
• Sluggish Volume Growth. AMSG's Sheridan segment is tied to overall
hospital volume trends, which have benefited recently from increased
healthcare coverage, but there are some concerns that volumes will slow
in 2016 and beyond.
• Poor Integration/Lack of Synergies. AMSG has been and, we expect,
will continue to be acquisitive. This may cause integration and operational
inefficiencies. Revenue synergies from deals may fail to materialize.
1 Year Price History for AMSG
Q3
Q1
2015
Q2
90
80
70
60
50
40
Q3
2016
Source: Bloomberg
Stephens Inc.
23
COMPANY SUMMARY
January 4, 2016
Chris Cooley, CFA, Analyst
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$17.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$9.90
67.79
$18.07
$8.39
$671.1
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
Endologix, Inc.
1,134,658
64.9
36.2
$1.29
NA/NA
$1.46
14.5%
2014A
$0.08A
($0.14)A
($0.21)A
($0.22)A
($0.50)A
NM
2015E
($0.17)A
($0.19)A
($0.16)A
($0.18)
($0.70)
NM
2016E
($0.14)
($0.13)
($0.12)
($0.12)
($0.53)
NM
Mar
Jun
Sep
Dec
FY
P/E
2014A
($0.08)A
($0.06)A
($0.13)A
($0.11)A
($0.38)A
NM
2015E
($0.14)A
($0.18)A
($0.13)A
($0.13)
($0.58)
NM
2016E
($0.10)
($0.09)
($0.08)
($0.12)
($0.39)
NM
Rev.
$147.6M
$154.5M
$172.6M
Mar
Jun
Sep
Dec
FY
P/E
PF EPS
Endologix, Inc. designs, manufactures, and
distributes innovative products designed for use in
the endovascular treatment of abdominal aortic
aneurysms (AAA). The Company's headquarters are
located in Irvine, CA.
ELGX – NASDAQ
2016 Best Idea
ELGX shares are poised to experience relative out-performance in CY16 as
the planned acquisition of TRIV and expected FDA clearance of Nellix serve
to create the industry's broadest, most comprehensive portfolio, with
application not only within the traditional but also complex AAA markets. As a
result, the Company now expects the corporate top-line growth profile to
accelerate from approximately 5.0% to 20.0% in CY20; gross margins are
forecast to increase 500bps to 74.0%; $150.0 million in synergies are to be
realized and, as a result, corporate operating margins are forecast to improve
from (25.2%) in CY15E to 20.0% in CY20. To wit, we fully expect ELGX's FH
CY16 operating results to remain challenged due to noted merger-related
integration headwinds, but we view the long-term growth potential attributable
to Nellix as outweighting the temporal nearer-term integration risks. As a
result, we are comfortable riding out FH volatility in order to fully realize the
anticipated appreciation in ELGX's shares stemming from the expected 2H
acceleration in core business growth and potential game-changing FDA
clearance of Nellix during the 4Q. Furthermore, at 3.9x core ELGX CY16E
revenue, the shares are attractively valued at a discount to not only
comparable industry peers, but also historical averages.
CATALYSTS:
ELGX's shares stand to benefit from a number of potential catalysts
throughout the course of CY16, including closing the pending acquisition of
TRIV, completing the PMA filing for Nellix, and launching Ovation iX during
the 1Q, the planned launch of the AFX2 and presentation of Nellix's 1-Year
IDE trial data during the 2Q, and FDA PMA clearance of Nellix and
subsequent initial domestic commercialization during the 4Q16 operating
period. Moreover, once integration-related issues abate going into the 2H of
CY16, we see the potential for above consensus growth as well as potential
for further margin enhancement.
RISKS:
The two primary risks to our bullish thesis include, but are not limited to, (1)
timing and regulatory risk associated with the Company's expected FH16
PMA filing for Nellix and the expected subsequent late 2H CY16 FDA PMA
clearance and (2) risks associated with the FH integration of the pending
acquisition of Trivascular, most notably greater disruption in the sales force
and manufacturing and system integration issues.
1 Year Price History for ELGX
Q3
Q1
2015
Q2
21
18
15
12
9
6
Q3
2016
Source: Bloomberg
Stephens Inc.
24
COMPANY SUMMARY
January 4, 2016
Trey Grooms, Analyst
U.S. Concrete, Inc.
Blake Hirschman, Associate
2016 Best Idea
Drew Lipke, Associate
Changes
Previous
Rating
Target Price
Current
---
Overweight
$70.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$52.66
14.66
$62.82
$25.02
$772.0
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
196,468
13.6
68.5
$2.16
NA/NA
$8.39
5.5%
2014A
($0.12)A
$0.59A
$0.96A
$0.13A
$1.56A
33.8x
2015E
($0.77)A
$0.67A
$0.11A
$0.69
$0.80
65.8x
2016E
NE
NE
NE
NE
$3.47
15.2x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.00A
$0.78A
$1.01A
$0.40A
$2.21A
23.8x
2015E
$0.22A
$1.31A
$1.97A
$0.77
$4.39
12.0x
2016E
NE
NE
NE
NE
$3.79
13.9x
Rev.
$703.7M
$985.5M
$1.13B
Mar
Jun
Sep
Dec
FY
P/E
Oper. EPS
USCR – NASDAQ
U.S. Concrete, Inc., headquartered in Euless, TX, is
a leading producer of concrete in the United States,
selling to the Commercial & Industrial, Residential
and Street, Highway, & Other Public Works end
markets. USCR groups its products into two main
categories: 1) Ready-Mixed Concrete and 2)
Aggregates.
USCR is well positioned as a non-residential (59% volume) play in strong
geographic markets with leading market share in each market. Ready-mix is
often viewed as a lower barrier to entry business; however, through its
geographical footprint, scale, and higher mix of commercial volumes, USCR
has carved out a moat in the ready-mix world that continues to be
under-appreciated by investors, for now. USCR's key markets continue to
see improving construction activity. Due to its scale purchasing power and
materials price increases, USCR is able to pass on ready-mix price
increases, driving strong incremental margins. We believe USCR is
well-positioned to deliver upside to current investor expectations in 2016 and
is one of the few names on our list where we believe numbers are too low
and valuation is too low. We are naming USCR as our top idea entering 2016
and reiterate our Overweight rating and $70 price target.
CATALYSTS:
• Potential for estimate revisions higher. Our currently published $160.8
million for FY16 EBITDA bakes in 3% ready-mix price, 7% organic
ready-mix volumes and just 15% incremental EBITDA margins. Mgmt.’s
target is for incremental EBITDA margin in the 25%-30% range.
• Accelerating cement/aggregates pricing trends. Aggregates and
cement are major input costs for USCR. Similar to a distribution business,
when its costs are going up, it’s easier to push pricing. With its scale
advantage, USCR is able to buy better than smaller players.
• Acquisitions. USCR has completed 8 acquisitions in 2015, further
consolidating its market share. Along with tuck-in acquisitions, USCR is
currently looking to expand into a fifth geographic platform.
RISKS:
• Slowdown in construction trends in key markets. USCR ready-mix
volume by end market consists of 59% commercial, 26% residential, and
15% infrastructure. By region, USCR's exposure consists of 45% Texas,
32% California, 19% New York/New Jersey, and 4% other. Any slowdown
in construction activity would be negative for USCR.
• Deflation in cement or aggregate pricing. If USCR were to see negative
cement or aggregate pricing in 2016, its ability to pass on price increases
to customers would be limited.
• Increased competitive environment. Competition ranges from smaller
private companies to large, vertically integrated manufacturers of cement
and aggregates. Price can be a competitive factor.
1 Year Price History for USCR
75
60
45
30
Q3
Q1
2015
Q2
15
Q3
2016
Source: Bloomberg
Stephens Inc.
25
COMPANY SUMMARY
January 4, 2016
Matt Duncan, CFA, Analyst
MasTec, Inc.
Will Steinwart, Associate
2016 Best Idea
Blake Anderson, Associate
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$24.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$17.38
80.50
$23.09
$14.48
$1,399.1
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
1,345,544
63.8
49.7
$0.28
NA/NA
$12.78
10.4%
2014A
$0.19A
$0.39A
$0.57A
$0.25A
$1.40A
12.4x
2015E
($0.08)A
($0.05)A
$0.09A
$0.04
$0.01
NM
2016E
$0.19
$0.33
$0.45
$0.40
$1.37
12.7x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.16A
$0.42A
$0.61A
$0.38A
$1.57A
11.1x
2015E
$0.07A
$0.10A
$0.26A
$0.12
$0.55
31.6x
2016E
$0.21
$0.36
$0.48
$0.43
$1.48
11.7x
Rev.
$4.61B
$4.12B
$4.72B
Mar
Jun
Sep
Dec
FY
P/E
Adj. EPS
MTZ – NYSE
MasTec is a leading energy and communications
infrastructure provider with a leading position in the
wireless market and growing presence in electrical
transmission and O&G pipeline.
We are making MasTec our Best Idea for 2016. While 2015 was a
challenging year for the Company (largely due to external factors), we believe
there are multiple catalysts over the next year that should drive
outperformance relative to current Street expectations including 1) natural
gas pipeline expansion, 2) potential for increased spending from large
communication customers, and 3) improved electrical segment performance.
Management has backed up its bullish outlook for 2016 by buying a
significant amount of stock in the open market during 2H15. While lower oil
prices and MLP funding concerns can't be dismissed entirely, we note that
MTZ's Oil & Gas backlog grew substantially in 2015, and the outlook for its
Oil & Gas segment remains strong. In conclusion, we believe MTZ is set up
well to meaningfully improve on 2015 results and see the stock as a "beat
and raise" story throughout 2016. Shares currently trade at 2016 EV/EBITDA
and P/adj. EPS multiples of 5.9x and 11.7x vs. peers at 5.9x and 14.9x,
respectively. Our $24 price target implies a 2017 EV/EBITDA multiple of 6.4x.
CATALYSTS:
• Project announcements. We expect MTZ to continue to announce large
project wins, especially in its Oil & Gas segment. Backlog in 4Q15 is
expected to more than double for that segment vs. 3Q15.
• Entry to emerging markets. MTZ should be able to continue to win
projects tied to Mexico in both its Oil & Gas and Communications
segments.
• Hitting or exceeding quarterly consensus projections. MTZ had a
rough year in 2015, due largely to external factors. Following a string of
quarterly earnings disappointments, we believe simply hitting consensus
projections in 2016 (which appear conservative to us) should move the
stock higher.
RISKS:
• Regulation. Permitting, regulation, and/or customer-caused delays could
cause volatility in the timing of project start-ups and completion.
• Execution. MTZ generates a large percentage of revenues from fixed
price contracts and is likely to grow as larger projects are awarded. Actual
revenues and project costs could vary substantially from original
projections due to changes in a variety of factors.
• Competition. MTZ operates in a highly competitive industry with relatively
low barriers to entry.
1 Year Price History for MTZ
24
21
18
15
Q3
Q1
2015
Q2
12
Q3
2016
Source: Bloomberg
Stephens Inc.
26
COMPANY SUMMARY
January 4, 2016
Jack Atkins, Analyst
Echo Global Logistics
Andrew Hall, Associate
Changes
Previous
Rating
Target Price
Current
---
Overweight
$29.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$20.39
30.94
$34.35
$16.56
$630.9
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
Oper. EPS
376,172
26.3
0.0
$1.40
NA/NA
$13.10
9.1%
2014A
$0.19A
$0.27A
$0.30A
$0.25A
$1.02A
20.0x
2015E
$0.23A
$0.30A
$0.37A
$0.24
$1.15
17.7x
2016E
NE
NE
NE
NE
$1.30
15.7x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.10A
$0.18A
$0.23A
$0.20A
$0.71A
28.7x
2015E
$0.14A
($0.03)A
$0.11A
$0.24
$0.48
42.5x
2016E
NE
NE
NE
NE
$1.30
15.7x
Rev.
$1.17B
$1.52B
$1.87B
Mar
Jun
Sep
Dec
FY
P/E
EPS
Based in Chicago, IL, Echo Global Logistics is a
leading provider of technology-enabled transportation
and supply chain management services. Echo
procures transportation and provides logistics
services for clients across a wide range of industries,
such as manufacturing, construction, consumer
products and retail.
ECHO – NASDAQ
2016 Best Idea
We believe ECHO is positioned to outperform in 4Q15 and throughout 2016
as the Company captures market share from smaller brokerage operators
due to its scale and superior IT platform. In addition, once the IT integration
from the Command acquisition is complete in mid-2016, we believe ECHO
will begin realizing the significant revenue synergies inherent in the
transaction, including cross-selling ECHO's LTL and Intermodal offerings to
Command's customers. Finally, we believe the passing of the ELD mandate
could be a major disruption in the transportation industry, potentially creating
opportunities for additional market share gains as shippers narrow the
number of brokers they work with and smaller industry operators find it
increasingly difficult to secure capacity.
CATALYSTS:
Market Share Gains. ECHO has been rapidly taking market share in the $55
bil. domestic truckload brokerage market and currently has 3%-4% market
share. We expect this trend to continue in 2016 due to its growing scale and
the investment the Company has made in its customer and carrier sales
force. ECHO has an advantage over smaller brokers due to its scale,
sourcing abilities, and technology platform, all of which are key differentiators
for shippers.
Revenue Synergy Potential. ECHO expects to realize $200 mil.-$300 mil. in
revenue synergies by 2018 from its acquisition of Command in June 2015.
We believe the completion of the IT integration in mid-2016 will allow ECHO
to begin cross-selling its LTL and Intermodal offerings to Command's
truckload customers.
Regulatory Actions. ECHO expects the passing of the ELD mandate to be a
major disruption in the domestic surface-based transportation market. We
believe this regulatory mandate could lead to additional organic growth
opportunities for ECHO as smaller industry operators struggle to secure
capacity and potentially exit the market.
RISKS:
Macro Economic Recession. A macro economic slowdown could result in a
reduction in consumer spending and further weigh on spot market demand.
Integration Risk. ECHO has successfully completed and integrated 18
acquisitions prior to Command. However, Command is the largest acquisition
ECHO has completed, and there are inherent risks associated with
integrating a company of Command's size.
1 Year Price History for ECHO
Q3
Q1
2015
Q2
35
30
25
20
15
10
Q3
2016
Source: Bloomberg
Stephens Inc.
27
COMPANY SUMMARY
January 4, 2016
Brad Delco, Analyst
Knight Transportation, Inc.
Scott Schoenhaus, Associate
Changes
Previous
Rating
Target Price
Current
---
Overweight
$30.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$24.23
80.92
$34.73
$21.72
$1,960.7
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
1,254,690
62.3
16.5
$0.21
$0.24/1.0%
$8.81
11.1%
2014A
$0.23A
$0.31A
$0.31A
$0.40A
$1.25A
19.4x
2015E
$0.36A
$0.33A
$0.37A
$0.31
$1.36
17.8x
2016E
$0.28
$0.32
$0.37
$0.37
$1.35
17.9x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.23A
$0.31A
$0.31A
$0.40A
$1.25A
19.4x
2015E
$0.36A
$0.39A
$0.37A
$0.31
$1.42
17.1x
2016E
$0.28
$0.32
$0.37
$0.37
$1.35
17.9x
Rev.
$1.10B
$1.19B
$1.23B
Mar
Jun
Sep
Dec
FY
P/E
Oper. EPS
Knight Transportation, headquartered in Phoenix,
AZ, is a short-to-medium haul truckload carrier
offering dry van, refrig., intermodal and brokerage
services to customers through its network of service
centers and branches located throughout the United
States serving North America. The principal types of
freight transported include consumer staples, retail,
paper products, packaging/plastics, manuf., and
import & export commodities.
KNX – NYSE
2016 Best Idea
We are naming KNX our Best Idea for 2016 as we believe the Company
offers the most attractive risk/reward profile looking out the next 12 months.
In short, we believe KNX is best positioned in either an improving or more
muted macro environment as the Company is one of the most efficient
operators in the industry. Additionally, we believe there are several catalysts
looking ahead from which KNX should best benefit. With shares currently
trading at 16.3x vs. the 10-yr. historic average of ~21x, we see valuation as
being attractive with meaningful upside to current levels and reiterate our OW
rating and $30 price target.
CATALYSTS:
• Best-In-Breed Carrier With Excellent Management Team. KNX
maintains one of the best operating and return profiles among its TL
peers. The management team has consistently proven to be strong
operators through both choppy and strong freight environments, and we
therefore see KNX's premium valuation vs. the group as warranted.
• Encouraging Setup for 2016 TL Fundamentals. Several of the large
public TL carriers have announced Capex reductions for 2016 (as seen in
recent Class 8 orders), which we believe should bode well for the industry.
Additionally, with the publication of the ELD Final Rule on Dec. 11, 2015,
we believe that additional capacity will be removed from the industry,
which should positively impact rates, particularly for quality,
well-capitalized carriers such as KNX.
• Attractive Valuation. Shares of KNX are currently trading at 16.3x NTM
Street EPS estimates, which compares to the ten-year average of 20.6x.
We view the risk/reward profile as attractive, and our $30 target assumes
shares trade at ~19x our 2017 EPS estimate of $1.55.
RISKS:
• Economic Downturn. A downturn in economic activity could have an
adverse impact on freight volumes for trucking companies. However, we
note that in the previous downturn, KNX's annual operating revenue
decreased 15% from 2008 to 2009, while earnings only declined 8%,
demonstrating the Company's operating strength.
• Rising Class 8 Truck Orders. If Class-8 truck and trailer orders return to
inflated levels, investors may conclude that capacity is reentering the
industry, which could compress valuations.
• Sharply Rising Fuel Prices. Historically, rising fuel prices have had a
negative impact on trucking stocks. If prices were to rapidly spike, then the
Company's costs and earnings could suffer as fuel surcharges typically lag
sharp diesel fuel price increases.
1 Year Price History for KNX
Q3
Q1
2015
Q2
36
32
28
24
20
16
Q3
2016
Source: Bloomberg
Stephens Inc.
28
COMPANY SUMMARY
January 4, 2016
Justin Long, Analyst
Union Pacific Corp.
Brian Colley, Associate
Changes
Previous
Rating
Target Price
Current
---
Overweight
$112.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$78.20
854.12
$124.52
$74.78
$66,792.2
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
5,725,078
849.8
35.1
$1.80
$2.20/2.8%
$24.07
1.1%
2014A
$1.19A
$1.43A
$1.53A
$1.61A
$5.75A
13.6x
2015E
$1.30A
$1.38A
$1.50A
$1.40
$5.58
14.0x
2016E
$1.30
$1.50
$1.65
$1.54
$6.00
13.0x
Mar
Jun
Sep
Dec
FY
P/E
2014A
$1.19A
$1.43A
$1.53A
$1.59A
$5.73A
13.6x
2015E
$1.30A
$1.30A
$1.50A
$1.40
$5.50
14.2x
2016E
$1.30
$1.50
$1.65
$1.54
$6.00
13.0x
Rev.
$23.99B
$22.08B
$22.86B
Mar
Jun
Sep
Dec
FY
P/E
Oper. EPS
Union Pacific Corp., based in Omaha, NE, links 23
states in the western two-thirds of the country
through a 32,000 route mile network. Its business mix
includes ag products, auto, chemicals, energy,
industrial products and intermodal. It offers long-haul
routes from all major West Coast and Gulf Coast
ports to eastern gateways. Union Pacific Railroad
connects with Canada's rail systems and is the only
railroad serving all six major gateways to Mexico.
UNP – NYSE
2016 Best Idea
The rail industry uncharacteristically underperformed the market in 2015
primarily from a combination of 1) weaker-than-expected volumes and 2)
resource levels that were mismatched in a volatile demand environment. And
while we won't argue the outlook for the broader economy remains uncertain,
the y/y volume comps for UNP start to ease in 2016 and we continue to see
EPS tailwinds from strong pricing, productivity gains and meaningful share
buybacks. Bottom-line, we're in a challenging market, but this is a
best-in-class company with the highest margin / return profile among the
domestic rails and its valuation relative to the market (S&P 500) is at a
10-year low. As a result, we find the risk / reward favorable and are naming
the stock our 2016 Best Idea.
CATALYSTS:
• A Stabilization in Rail Volumes. We admit there is volume uncertainty
given a tough macro backdrop, but UNP will be facing the easiest y/y
comps in the sector as we get into 2016. This is a function of 2015
headwinds from 1) West Coast port disruptions, 2) out-sized weakness in
coal / energy, and 3) BNSF recapturing market share lost in 2014 (due to
temporary service-related issues).
• Strong Pricing Trends. The rail industry is structurally advantaged given
it is a cheaper source of transportation capacity vs. truckload. With
regulation expected to tighten truckload capacity, improving rail service
and UNP's efficient long-haul network, we believe rail pricing can keep
moving higher even in times of volume uncertainty. We view this as a key
point of differentiation for the rails vs. other cyclical sectors.
• Improvements in Rail Service / Cost Structure. After facing
service-related challenges in 2014 and 1H15, UNP started to benefit from
improved service metrics and cost cuts in 3Q15. We expect the
annualized benefits from these items to be a tailwind in 2016.
RISKS:
We believe risks could include a further deterioration in the broader economy,
worse-than-expected trends in the energy market (coal, frac sand, crude,
etc.), the potential for increased regulation in the rail industry, more
aggressive pricing trends and the potential for recent M&A discussions to
create a more challenging operating environment.
1 Year Price History for UNP
Q3
Q1
2015
Q2
135
120
105
90
75
60
Q3
2016
Source: Bloomberg
Stephens Inc.
29
COMPANY SUMMARY
January 4, 2016
Brett Huff, CFA, Analyst
Fidelity National
Information Services
James Rutherford, Associate
Changes
Previous
Rating
Target Price
Current
---
Overweight
$80.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$60.60
282.15
$73.60
$58.49
$17,098.3
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
2,006,720
275.3
43.1
$1.73
$1.04/1.7%
$23.14
0.7%
2014A
$0.52A
$0.62A
$0.52A
$0.68A
$2.34A
25.9x
2015E
$0.39A
$0.84A
$0.62A
$0.77
$2.61
23.2x
2016E
$0.48
$0.58
$0.75
$0.96
$2.77
21.9x
Oper.
CashEPS
2014A
2015E
2016E
Mar
Jun
Sep
Dec
FY
P/CashEPS
$0.68A
$0.75A
$0.80A
$0.87A
$3.10A
19.5x
$0.64A
$0.74A
$0.90A
$0.94
$3.22
18.8x
$0.77
$0.86
$1.04
$1.24
$3.91
15.5x
Rev.
$6.42B
$6.69B
$9.48B
Mar
Jun
Sep
Dec
FY
P/E
FIS – NYSE
2016 Best Idea
We are making FIS our Best Idea for 2016 because we think its multiple has
been compressed too much on soft services organic growth. We think the
issue is temporary and that services and overall organic growth will
re-accelerate in '16 and multiple expansion should follow. FIS is too cheap in
our view at 10.5x EV/16E operating EBITDA (peers at 13x) and 16x P/16E
FCF (peers at 23x). Our $80 target is based on 13x EV/forward EBITDA and
21x P/FCF.
CATALYSTS:
• Re-acceleration of professional services growth in the CapCo business.
• Organic growth acceleration as temporary items (gross-to-net-rev
accounting change in loyalty business, low-term fees) lap.
• Growth acceleration from potential large deal closings in the GFS
segment.
• Potential SunGard upside. FIS could achieve higher-than-expected cost
synergies and/or organic SunGard growth.
RISKS:
• Further CapCo professional services weakens. Services growth went from
mid-teens in 2014 to LSD in 2H15 driven by belt tightening at banks and
some sales leadership issues.
• SunGard integration issues. While a risk in all M&A, we are confident in
integration execution given FIS' successful track record on large-deal
integration (eFunds, Certegy, Metavante).
• Weakness in the global economy. Including SunGard, FIS' international
exposure is ~25% of rev (including ~3% in Brazil). International economic
weakness could negatively impact growth in these businesses.
Fidelity National Information Services is a leading
global provider of bank technology/core processing,
payment processing, and related services.
1 Year Price History for FIS
Q3
Q1
2015
Q2
75
70
65
60
55
50
Q3
2016
Source: Bloomberg
Stephens Inc.
30
COMPANY SUMMARY
January 4, 2016
Jonathan Ruykhaver, CFA, Analyst
Nathan Leiphardt, Associate
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$225.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$176.14
85.91
$200.55
$117.60
$15,132.2
Jul
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
1,573,162
81.4
45.8
$9.31
NA/NA
$7.29
5.2%
EPS
2015A
($0.38)A
($0.53)A
($0.56)A
($0.55)A
($2.02)A
NM
2016E
($0.45)A
($0.44)
($0.43)
($0.34)
($1.66)
NM
2017E
NE
NE
NE
NE
($1.34)
NM
Oct
Jan
Apr
Jul
FY
P/E
2015A
$0.15A
$0.19A
$0.23A
$0.28A
$0.86A
NM
2016E
$0.35A
$0.38
$0.43
$0.56
$1.73
NM
2017E
NE
NE
NE
NE
$2.64
66.7x
Rev.
$928.1M
$1.31B
$1.71B
Oct
Jan
Apr
Jul
FY
P/E
PF EPS
Palo Alto Networks is a leading provider of network
security and Next Generation Firewall (NGFW)
solutions that offer broad, integrated and high
performance protection against a wide range of
security threats while simplifying management and
operation of the security infrastructure. The
Company’s family of PA Series appliances provide a
variety of network security functions including
firewall, URL Filtering, Malware Protection, and
Application Control.
Palo Alto Networks, Inc.
PANW – NYSE
2016 Best Idea
We continue to believe that Palo Alto is the most forward thinking vendor in
the firewall market and that its positioning around a complete end-to-end
enterprise security platform that encompasses the network, cloud, APTs
(advanced persistent threats), virtualized environments, and the endpoint will
resonate with customers and lead to sustained share gains. Driven by new
product initiatives, strong market trends, and a growing distribution footprint,
we believe that the Company is well positioned for solid organic growth. We
reiterate our Overweight/Vol. rating and $225 price target.
CATALYSTS:
• Recognition of the Need for Advance Endpoint Technology. We view
Traps' ability to preemptively prevent malware infections on endpoints as
being a strong differentiator within the nascent, next-generation endpoint
security market. We think strong uptake for this product represents a
significant possible catalyst over the next 1-2 years.
• Increasing Focus on High Throughput Use Cases. We think Palo Alto's
relatively new product releases and continued push towards better
servicing the highest throughput use cases (service provider, data center)
represent an important expansion of the Company's product portfolio, that
this has been a material driver of the Company's strong product revenue
growth, and that the Company is only in the very early stages of these
opportunities.
• Continued Adoption of WildFire. We believe that WildFire is one of the
top APT solutions on the market, offered at a very competitive price, and
that this, in conjunction with its integration with PANW's Next-Gen firewalls
will enable Palo Alto to take more than its fair share of the budget being
allocated to these types of solutions.
RISKS:
• End Market Demand. We believe major breaches have materially
increased awareness of security risks present within organizations and
that this has led to an increased level of spend on network security. A
moderation in what has been strong end market demand could make it
difficult for Palo Alto to maintain its growth and profitability momentum.
• Execution. Palo Alto has continued to grow revenues at a 50+% clip,
despite its current $1.3+ billion annual revenue run rate, thus commanding
a premium valuation multiple. This high level of execution and growth
could be difficult for the Company to sustain, especially given the size of
the Company, and any challenges the Company encounters could lead to
a material devaluation of the stock.
1 Year Price History for PANW
Q3
Q1
2015
Q2
200
180
160
140
120
100
Q3
2016
Source: Bloomberg
Stephens Inc.
31
COMPANY SUMMARY
January 4, 2016
Kyle Evans, Analyst
Tommy Moll, Associate
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$22.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$16.30
66.11
$18.07
$9.17
$1,077.6
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
748,270
61.9
85.1
$0.53
NA/NA
$5.77
3.1%
EPS
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.02A
$0.03A
$0.24A
$0.53A
$0.82A
19.9x
2015E
$0.10A
$0.17A
$0.09A
$0.17
$0.54
30.2x
2016E
$0.08
$0.26
$0.40
$0.69
$1.42
11.5x
Rev.
$508.1M
$590.7M
$749.1M
Gray Television is a television broadcast company
that owns and operates television stations and digital
assets.
GTN – NYSE
2016 Best Idea
We believe GTN represents one of the best growth stories in the U.S. media
sector, and we are making it our Best Idea because of its solid core growth
(5%+ YTD.), impressive margin profile (36.1% adj. EBITDA margin ‘15/’16
avg.), best-in-class station footprint (top stations in small markets), LT growth
potential (potential to grow 3X+ via station M&A under FCC cap), likelihood of
solid results in 2016 (political, retrans and Schurz synergies) and an
attractive valuation of 9.3x EV/adj. EBITDA (‘15/’16 avg., pro forma for
Schurz). Our $22 price target assumes the stock trades at 10.6x a year from
today PF for the acquisition of Schurz.
CATALYSTS:
• M&A. Expect Schurz synergies in 2016 and more station M&A as a strong
2016 delevers the balance sheet.
• Retransmission Revenue. Retrans, which accounts for roughly 25% of
revenue and ~30% of EBITDA, adds stability and growth to the model.
• Selling National Direct. GTN terminated its national agency and expects
to save between $8 mil.-$9 mil. annually as a result.
• 2016 Political Spending. GTN’s strong stations in key markets should
drive strong results in 2H16.
• Better-Than-Expected Non-Political Core. We believe GTN can
continue to outperform public peers on organic growth of core ad sales.
RISKS:
• Consumer and Auto Dependence. GTN depends on a strong U.S.
consumer, decent advertising backdrop and stable auto industry.
• Pressure From Networks. The network/affiliate relationship is healthy
and mutually beneficial, but current 50/50 split on retrans could favor
networks longer term.
• Over-the-Top and Skinny Bundles. Cord cutting and declining sub
metrics at the cable nets could drive overall concern about the health of
the industry.
• Digital Fragmentation. U.S. consumers can only watch so much TV, and
digital/mobile trends are changing consumption patterns.
• High Expectations. Expectations are high for 2H16, and there is a
chance investors get ahead of the Company.
• FCC Risks: Any regulation or precursor to it that restricts affiliate
broadcasters from effectively negotiating retrans rates is a risk.
1 Year Price History for GTN
Q3
Q1
2015
Q2
21
18
15
12
9
6
Q3
2016
Source: Bloomberg
Stephens Inc.
32
COMPANY SUMMARY
January 4, 2016
Ben Hearnsberger, Analyst
Brandon Wright, Associate
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$12.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$8.69
112.08
$33.97
$8.44
$974.0
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
3,079,445
104.3
0.7
$2.54
NA/NA
$11.15
31.5%
2014A
$0.05A
$0.02A
$0.03A
$0.01A
$0.11A
79.0x
2015E
($0.12)A
($0.12)A
($0.29)A
($0.23)
($0.76)
NM
2016E
($0.23)
($0.21)
($0.16)
($0.13)
($0.72)
NM
Non-GAAP
EPS
2014A
2015E
2016E
Mar
Jun
Sep
Dec
FY
P/E
$0.15A
$0.16A
$0.18A
$0.21A
$0.70A
12.4x
$0.05A
$0.03A
$0.01A
($0.03)
$0.05
173.8x
($0.06)
($0.02)
$0.06
$0.12
$0.10
86.9x
Rev.
$653.7M
$637.3M
$621.0M
Mar
Jun
Sep
Dec
FY
P/E
3D Systems Corp.
DDD – NYSE
2016 Best Idea
We believe the demand environment remains subdued, but see
company-specific restructuring actions driving profitability improvement by
FY'17. Additionally, the valuation is low on an absolute basis, trading for 2.8x
LTM tangible book value vs. 2.5x in the great recession, and relative to the
applied technology group trading for 4.4x on average. We see the recent
announcement that DDD is discontinuing the low-end consumer printer as a
step in the right direction and believe stronger focus on profitable offerings in
auto, aero and healthcare will drive a more profitable organization and a
return to historical profitability.
CATALYSTS:
• Restructuring announcement expected in early FY'16
• Hiring announcement of a new CEO expected FY'16
• Potential sell-side upgrades (3 buys, 15 holds, 3 sells)
RISKS:
• Revenue decline could outpace restructurings
• Potential quarterly misses
• Increased competition
3D Systems Corp., headquartered in Rock HIll, SC,
is the largest (market cap) global provider of 3D
printing solutions including 3D printers and ancillary
components,
print
materials,
software,
and
on-demand
parts
services
(Quickparts)
for
professionals and consumers.
1 Year Price History for DDD
Q3
Q1
2015
Q2
40
32
24
16
8
0
Q3
2016
Source: Bloomberg
Stephens Inc.
33
COMPANY SUMMARY
January 4, 2016
Harsh Kumar, Analyst
M/A-COM Technology
Solutions
Richard Sewell, Associate
Changes
Previous
Rating
Target Price
---
Current
Overweight(Vol)
$50.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$40.89
53.07
$43.19
$25.82
$2,170.0
Sep
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
401,178
23.5
44.8
$3.06
NA/NA
$8.02
18.6%
EPS
2015A
($0.21)A
($0.22)A
$0.03A
$0.08A
($0.32)A
NM
2016E
$0.11
$0.15
$0.19
$0.22
$0.66
62.0x
2017E
$0.29
$0.33
$0.38
$0.42
$1.42
28.8x
Dec
Mar
Jun
Sep
FY
P/E
2015A
$0.29A
$0.31A
$0.33A
$0.34A
$1.29A
31.7x
2016E
$0.41
$0.45
$0.49
$0.52
$1.86
22.0x
2017E
$0.53
$0.57
$0.62
$0.66
$2.38
17.2x
Rev.
$420.6M
$485.9M
$571.0M
Dec
Mar
Jun
Sep
FY
P/E
Adj. EPS
MTSI – NASDAQ
M/A-COM Technology Solutions Holdings, Inc.
(MTSI) designs and manufactures high-performance
analog semiconductors for products across the radio,
microwave, and millimeter spectrum. MTSI utilizes a
fab-lite
manufacturing
model
with
internal
manufacturing facilities in Lowell, MA, and Cork,
Ireland.
2016 Best Idea
INVESTMENT CONCLUSION: We are making MTSI our Best Idea for 2016
as we believe it has several growth opportunities that could potentially double
the size of revenues over the next 3-5 years. Additionally, MTSI is well
positioned to continue to see margin expansion and achieve its targets of
60%/30% by the end of the year.
CATALYSTS:
Growth Drivers Included in Our Estimates:
• Lasers for Optical: We believe MTSI is the best positioned to benefit
from the fiber-to-the-home initiative in China through its laser business.
This product is currently supply constrained, but we think as MTSI's Lowell
facility comes on-line for production in the beginning of 2016, this
headwind should begin to abate. We believe the PON market is growing at
roughly 20% per annum.
• Aerospace/Defense Refresh: MTSI is on the cusp of significant growth in
its defense market beginning with its F-16 upgrades. These upgrades
should be a nice driver of growth for the next 3-5 years. We think that the
defense orders could be between $10 mil.-$20 mil. per year.
Growth Drivers Not Reflected in Our Estimates:
• GaN-on-Silicon: We view this opportunity as a free option as MTSI hopes
to disrupt a greater than $1 bil. LDMOS market for base stations. We
believe revenue contribution from this market could begin in CY16.
• Optical for Data Centers: We believe MTSI is well positioned for the
optical market within data centers. We see this market as orders of
magnitude bigger than the PON market with a better margin profile.
• MPAR: The upgrade opportunity of civil and aerospace radar systems
using MTSI's MPAR technology could be a nice growth opportunity. We
believe meaningful revenues could begin in 2H16/early 2017. This
opportunity could be upwards of $40 mil.-$50 mil. annually.
RISKS:
• Revenues From New Products Take Longer to Realize Than
Expected: Several keys areas of growth could be transformative for the
company. If these revenues take longer than expected to materialize, this
could diminish some of the long-term growth opportunities for the
company.
• Inventory Correction in Laser Market: If an inventory correction occurs
from too much supply, this could adversely affect revenues and earnings.
1 Year Price History for MTSI
Q3
Q1
2015
Q2
45
40
35
30
25
20
Q3
2016
Source: Bloomberg
Stephens Inc.
34
COMPANY SUMMARY
January 4, 2016
Alex Zukin, Analyst
Changes
Previous
Rating
Target Price
---
HubSpot, Inc.
Current
Overweight(Vol)
$70.00
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$56.31
34.10
$60.11
$31.77
$1,920.2
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
272,579
24.7
0.2
$3.94
NA/NA
$3.64
5.8%
EPS
2014A
($1.73)A
($1.43)A
($1.84)A
($0.69)A
($4.20)A
NM
2015E
($0.34)A
($0.34)A
($0.40)A
($0.30)
($1.39)
NM
2016E
NE
NE
NE
NE
($1.26)
NM
Mar
Jun
Sep
Dec
FY
P/E
2014A
($1.52)A
($1.22)A
($1.62)A
($0.24)A
($2.76)A
NM
2015E
($0.18)A
($0.17)A
($0.27)A
($0.17)
($0.79)
NM
2016E
NE
NE
NE
NE
($0.61)
NM
Rev.
$115.9M
$179.2M
$231.9M
Mar
Jun
Sep
Dec
FY
P/E
PF EPS
HubSpot sells a single marketing & sales automation
platform tailored for small and medium sized
businesses (SMB). HubSpot went public in October
2014. The company is headquartered in Cambridge,
MA.
HUBS – NYSE
2016 Best Idea
We are making HUBS our Best Idea entering 2016. With marketing platforms
in place at ~2% of businesses and only a nascent move into international
markets, we see a large greenfield opportunity in front of the Company. We
see the Company's Agency Partner channel and new product offerings
driving near-term growth that results in successive beat and raise quarters
through 2016. While HubSpot is our Best Idea for 2016, we believe the
Company has the potential to be a dominant platform vendor to the SMB and
a multi-year success story.
CATALYSTS:
• Agency Partner Channel. Total Agency partners now total 2,700, and we
estimate revenues from this channel grew +82% Y/Y in the most recent
quarter. The rapid and sustained growth of this revenue continues to be a
differentiating component of the business model and a key tenet of our
investment thesis. At present, this accounts for ~40% of the Company's
business, but this number is steadily increasing. Given the scale benefits
inherent in this distribution model, we wouldn't be surprised to see this
channel ultimately drive a significant portion of business given the
extensive and fragmented nature of the SMB.
• New Products Driving ARPU Expansion. New products and a greater
focus on monetization of the current portfolio have the potential to drive
increased revenue from the installed base. At the Company's user
conference in September, it released a number of new products that
include Websites ($300/month), Reporting ($200/month) and Ads
($100/month). This will be the first time the Company has additional SKUs
to sell back into the base.
• Valuation. Our price target of $70 represents 10x, in line with the highest
premium growth stories in our coverage universe. We see considerable
outperformance over the next two years that may render even our
aggressive price target conservative.
RISKS:
• Churn. HubSpot's focus on the SMB market leaves it exposed to an
investor base that is more prone to churn than its Enterprise counterparts.
At present, HUBS is experiencing a low 80% customer retention rate but a
high 90% revenue retention rate, driven by an ability to upsell.
• Competition. HubSpot faces competition from all directions. If it chooses
to move up market, HubSpot will need to prove that it can scale at that
level against MKTO, CRM, ORCL and ADBE while in its current market,
competition comes from a number of vendors including Act-On,
InfusionSoft and MailChimp to name a few.
1 Year Price History for HUBS
Q3
Q1
2015
Q2
64
56
48
40
32
24
Q3
2016
Source: Bloomberg
Stephens Inc.
35
COMPANY SUMMARY
January 4, 2016
Barry McCarver, Analyst
Frontier Communications
Brian Hawthorne, Associate
Changes
Previous
Rating
Target Price
Current
---
Overweight
$6.50
Price:
52-Week High:
52-Week Low:
Market Cap (mil.):
Fiscal Year End:
$4.67
1,168.21
$8.46
$4.19
$5,455.5
Dec
Float (mil.):
Debt/Cap:
Cash/Shr:
Dividend/Yield:
Book Value/Shr:
Short Interest:
EPS
14,446,806
1,160.2
72.8
$0.68
$0.42/9.0%
$5.01
14.7%
2014A
$0.04A
$0.04A
$0.04A
$0.01A
$0.13A
35.9x
2015E
($0.05)A
($0.03)A
($0.07)A
($0.14)
($0.29)
NM
2016E
($0.20)
$0.01
$0.01
$0.01
($0.17)
NM
Mar
Jun
Sep
Dec
FY
P/E
2014A
$0.05A
$0.05A
$0.05A
$0.04A
$0.19A
24.6x
2015E
$0.02A
$0.03A
$0.03A
($0.07)
$0.01
NM
2016E
($0.12)
$0.04
$0.04
$0.04
$0.00
NM
Rev.
$4.77B
$5.58B
$9.56B
Mar
Jun
Sep
Dec
FY
P/E
PF EPS
Frontier Communications offers voice, broadband,
video, wireless Internet data access, data security
solutions, bundled offerings, specialized bundles for
small businesses and home offices, and advanced
business communications for medium and large
businesses in 28 states and with approximately
18,200 employees based entirely in the United
States.
FTR – NASDAQ
2016 Best Idea
Shares of FTR were off +25% in 2015 as the Company raised capital to close
the $10.5 bil. VZ asset acquisition. Although FTR’s two previous large deals
came with challenges, both proved accretive. This time around, FTR is
already operating its own FiOS platform and the targeted assets are 54%
fiber-enabled, making it a much healthier network. We look for FTR to
rebound strongly in 2016 as the Company closes the deal and starts to work
on the cost synergies. We forecast this deal to be +30% accretive to free
cash flow for FTR after the first year, enabling the Company to lower
leverage, buy back stock, or raise the dividend. We reiterate our Overweight
rating and $6.50 price target.
CATALYSTS:
Deal Closing. FTR expects to close the VZ deal on 3/31/16. Given that all
the needed capital has been raised and regulatory hurdles are crossed, we
see no reason that the deal shouldn’t close as scheduled. As a result of the
"flash-cut" transition, the first few days after the close could foreshadow
long-term performance.
Revised Guidance. When first announced, FTR guided for the first 12
months of acquired asset revenue to be $5.4 bil. Recent results have shown
revenue and FiOS subscribers have actually increased. Annualizing the first
9 months of FY15 revenue for the VZ assets would get ~$5.8 bil.
Exceeding Synergies. FTR guided for $700 mil. in synergy savings (13.5% of
Opex) over the next three years following the deal close. Integration
preparation is well underway, and FTR suggested that cost synergies could
materialize sooner than expected. We estimate that if FTR was to save
15.5% of VZ Opex, then this could add 2.5% to FY18 Adj. EBITDA.
Cash Returns. Pro forma net debt-to-Adj. EBITDA with the acquisition will be
4.0x, well above the Company’s target range of 3.0x-3.5x. Over the course of
the next 1-3 years we expect to see FTR use the cash flow accretion from the
deal to pay down debt, buy back stock, or increase the dividend.
RISKS:
Integration. Sloppy integration could cause a disruption in service, impacting
churn in those markets. Given the fiber sophistication of the target network,
the overall integration is smaller than the 2010 VZ deal.
Capital Requirements. Cash flow could be negatively impacted from
higher-than-expected capital requirements for upgrading/integrating the
remaining 46% of VZ assets that are not fiber-enabled.
Content Costs. As FTR expands its exposure to residential services,
increasing content costs could continue to put pressure on margins.
1 Year Price History for FTR
Q3
Q1
2015
Q2
9
8
7
6
5
4
3
Q3
2016
Source: Bloomberg
Stephens Inc.
36
January 4, 2016
Stephens Research Recommendations 2015
Symbol
Company
Rating/
Volatility
Rating
Date
Price
Previous
Rating
12/31/15
Price
FNF
Fidelity National Financial
O
01/02/15
$34.45
E
$34.67
FRC
First Republic Bank
E
01/05/15
$52.12
NR
$66.06
SIVB
SVB Financial Group
O
01/05/15
$111.93
NR
$118.90
CUDA
Barracuda Networks
O/V
01/06/15
$36.51
NR
$18.68
VRNS
Varonis Systems
O/V
01/06/15
$31.74
NR
$18.80
CHRW
C.H. Robinson Worldwide
O
01/08/15
$69.71
E
$62.02
ESE
ESCO Technologies
O
01/12/15
$34.87
NR
$36.14
THS
Treehouse Foods
E
01/12/15
$91.21
O
$78.46
PF
Pinnacle Foods
E
01/12/15
$35.66
O
$42.46
AREX
Approach Resources
U
01/12/15
$5.54
E/V
$1.84
EPE
EP Energy
E
01/12/15
$9.18
O
$4.38
XCO
EXCO Resources
U
01/12/15
$1.90
E/V
$1.24
GDP
Goodrich Petroleum
U
01/12/15
$3.24
O/V
$0.27
HK
Halcon Resources
E
01/12/15
$1.59
O/V
$1.26
MHR
Magnum Hunter Resources
U
01/12/15
$2.87
E/V
$0.02
REXX
Rex Energy
E
01/12/15
$3.68
O/V
$1.05
TIF
Tiffany & Co.
E/V
01/13/15
$89.01
O/V
$76.29
PII
Polaris Industries
E
01/13/15
$142.45
O
$85.95
EPAY
Bottomline Technologies
O/V
01/15/15
$21.14
E/V
$29.73
CVS
CVS Health Corp.
O
01/20/15
$98.74
NR
$97.77
CTRX
Catamaran Corp.
O
01/20/15
$51.04
NR
NA
ESRX
Express Scripts
E
01/20/15
$85.38
NR
$87.41
CREE
Cree, Inc.
O/V
01/21/15
$32.34
E/V
$26.67
ADPT
Adeptus Health
O/V
01/22/15
$31.20
NR
$54.52
MCD
McDonald's
O
01/26/15
$89.56
E
$118.14
CONE
CyrusOne
E
01/26/15
$29.09
O
$37.45
MITL
Mitel Networks Corp.
O
02/02/15
$8.93
NR
$7.69
NGVC
National Grocers by Vitamin Cottage
E/V
02/02/15
$30.80
O/V
$20.37
WEN
Wendy's Co.
O
02/04/15
$11.31
E
$10.78
TUMI
Tumi Holdings
E/V
02/05/15
$22.31
O/V
$16.63
FRM
Furmanite
E/V
02/05/15
$7.93
O/V
$6.66
ATW
Atwood Oceanics
O
02/06/15
$30.89
E
$10.23
Stephens Inc.
37
January 4, 2016
Symbol
Company
Rating/
Volatility
Rating
Date
Price
Previous
Rating
12/31/15
Price
RES
RPC, Inc.
E
02/10/15
$13.44
O
$11.95
DF
Dean Foods
E
02/11/15
$15.92
U
$17.15
NILE
Blue Nile
O/V
02/11/15
$28.12
E/V
$37.13
UMPQ
Umpqua Holdings
O
02/12/15
$16.39
NR
$15.90
PACW
PacWest Bancorp
E
02/12/15
$46.11
NR
$43.10
CAKE
Cheesecake Factory
E
02/12/15
$53.04
O
$46.11
ACTG
Acacia Research
NR
02/13/15
$12.98
U/V
$4.29
ANAD
ANADIGOCS
NR
02/13/15
$1.19
E/V
$0.64
AJG
Arthur J. Gallagher
NR
02/13/15
$47.03
O
$40.94
BBRG
Bravo Brio Restaurant Group
NR
02/13/15
$13.49
E
$9.00
BRO
Brown & Brown
NR
02/13/15
$32.47
E
$32.10
FPI
Farmland Partners
NR
02/13/15
$10.62
O
$10.97
HERO
Hercules Offshore
NR
02/13/15
$0.89
E/V
$2.17
HGG
hhgregg
NR
02/13/15
$6.43
E
$3.66
HOLX
Hologix
NR
02/13/15
$30.05
E/V
$38.69
IDCC
InterDigital
NR
02/13/15
$50.77
E/V
$49.04
MMSI
Merit Medical Systems
NR
02/13/15
$17.43
E
$18.59
MCEP
Mid-Con Energy Partners
NR
02/13/15
$6.12
E
$1.14
OSIS
OSI Systems
NR
02/13/15
$71.15
O
$88.66
PGN
Paragon Offshore
NR
02/13/15
$2.95
E/V
$0.09
RVBD
Riverbed Technology
NR
02/13/15
$20.86
E/V
NA
SHW
Sherwin-Williams
NR
02/13/15
$277.95
E
$259.60
WSH
Willis Group Holdings
NR
02/13/15
$47.88
E
$48.57
PAGP
Plains GP Holdings
O
02/13/15
$27.80
E
$9.45
COR
CoreSite Realty
O
02/13/15
$47.00
E
$56.72
WSO
Watsco
O
02/13/15
$109.84
E
$117.13
AVGR
Avinger
O/V
02/14/15
$10.41
NR
$22.71
ABCO
The Advisory Board
NR
02/17/15
$53.69
O
$49.61
MDRX
Allscripts Healthcare Solutions
NR
02/17/15
$11.80
E
$15.38
ATHN
athenahealth
NR
02/17/15
$134.61
O/V
$160.97
CTRX
Catamaran Corp.
NR
02/17/15
$53.25
O
NA
CERN
Cerner Corp.
NR
02/17/15
$70.98
O
$60.17
Stephens Inc.
38
January 4, 2016
Symbol
Company
Rating/
Volatility
Rating
Date
Price
Previous
Rating
12/31/15
Price
CPSI
Computer Program and Syst.
NR
02/17/15
$53.11
E
$49.72
CVS
CVS Health Corp.
NR
02/17/15
$102.63
O
$97.77
ESRX
Express Scripts
NR
02/17/15
$84.90
E
$87.41
HWAY
Healthways
NR
02/17/15
$21.32
U
$12.87
HMSY
HMS Holdings
NR
02/17/15
$20.00
O
$12.34
IMPR
Imprivata
NR
02/17/15
$14.21
O
$11.30
MDAS
MedAssets
NR
02/17/15
$19.81
E
$30.94
OMCL
Omnicell
NR
02/17/15
$35.29
O
$31.08
PINC
Premier
NR
02/17/15
$36.37
E
$35.27
QSII
Quality Systems
NR
02/17/15
$17.04
E
$16.12
VCRA
Vocera Communications
NR
02/17/15
$9.86
E
$12.20
USCR
U.S. Concrete
O
02/19/15
$29.38
NR
$52.66
RAVN
Raven Industries
E/V
02/19/15
$21.55
NR
$15.60
AIMC
Altra Holdings
E/V
02/19/15
$27.58
O/V
$25.08
ESTE
Earthstone Energy
O
02/23/15
$28.14
NR
$13.31
SYRG
Synergy Resource Corp.
O
02/23/15
$11.52
NR
$8.52
MKTO
Marketo, Inc.
O/V
02/24/15
$27.26
NR
$28.71
ROSE
Rosetta Resources
E
02/24/15
$21.87
O/V
NA
CCOI
Cogent Communications
E
02/26/15
$36.56
O
$34.69
QEP
QEP Resources
E
02/26/15
$22.44
O
$13.40
FARO
FARO Technologies
E/V
03/02/15
$59.97
O/V
$29.52
ARUN
Aruba Networks
E/V
03/03/15
$24.65
O/V
NA
HLX
Helix Energy Solutions
E
03/03/15
$15.07
O
$5.26
ATLS
Atlas Energy
E
03/04/15
$8.89
O
$0.95
ANF
Abercrombie & Fitch
U/V
03/05/15
$20.27
O/V
$27.00
AAN
Aaron's, Inc.
O
03/09/15
$28.05
NR
$22.39
RCII
Rent-A-Center
E
03/09/15
$27.35
NR
$14.97
TTGT
TechTarget, Inc.
O/V
03/09/15
$11.82
NR
$8.03
CVGW
Calavo Growers
O
03/09/15
$45.05
E
$49.00
TRN
Trinity Industries
E
03/10/15
$31.74
O
$24.02
ENS
EnerSys
O
03/16/15
$64.43
NR
$55.93
NEOG
Neogen Corp.
E/V
03/17/15
$50.98
O/V
$56.52
Stephens Inc.
39
January 4, 2016
Symbol
Company
Rating/
Volatility
Rating
Date
O/V
03/23/15
$34.88
NR
$25.92
Price
Previous
Rating
12/31/15
Price
CAPL
CrossAmerica Partners LP
CJES
C&J Energy Services
U
03/27/15
$12.90
E
$4.76
DOOR
Masonite International
E
03/30/15
$67.00
NR
$61.23
PACB
Pacific Biosciences of California
E/V
03/30/15
$5.59
NR
$13.13
AMSG
AMSURG Corporation
O/V
04/01/15
$61.52
NR
$76.00
SCAI
Surgical Care Affiliates
E/V
04/01/15
$34.33
NR
$39.81
NCFT
Norcraft Companies
E
04/01/15
$25.67
O
$25.50
SPLK
Splunk
O/V
04/06/15
$59.23
E/V
$58.81
SWKS
Skyworks Solutions
E/V
04/06/15
$96.51
O/V
$76.83
BHI
Baker Hughes
O
04/07/15
$65.66
NR
$46.15
WFT
Weatherford International
E
04/07/15
$13.79
NR
$8.39
ADBE
Adobe Systems
O/V
04/08/15
$75.44
NR
$93.94
TRUE
TrueCar, Inc.
O/V
04/09/15
$16.03
NR
$9.54
BG
Bunge Ltd.
O
04/13/15
$84.91
NR
$68.28
RALY
Rally Software
E/V
04/13/15
$15.90
O/V
$19.49
HIVE
Aerohive Networks
E/V
04/14/15
$5.07
O/V
$5.11
FUEL
Rocket Fuel Inc.
E/V
04/15/15
$8.94
NR
$3.49
RUBI
Rubicon Project, Inc.
O/V
04/15/15
$16.84
NR
$16.45
CSAL
Communications Sales & Leasing
NR
04/20/15
NA
NR
$18.69
SUM
Summit Materials LLC
O
04/21/15
$23.59
NR
$20.04
CSAL
Communications Sales & Leasing
O
04/22/15
$30.05
NR
$18.69
TSC
TriState Capital Holdings
O
04/24/15
$11.97
E
$13.99
SSYS
Stratasys Ltd.
E/V
04/29/15
$51.30
O/V
$23.48
IBTX
Independent Bank Group
O
04/29/15
$39.18
E
$32.00
CONE
CyrusOne
O
04/29/15
$32.31
E
$37.45
CGI
Celadon Group
O
04/29/15
$25.74
E
$9.89
MTN
Vail Resorts
O
05/04/15
$99.83
NR
$127.99
MRC
MRC Global
O/V
05/04/15
$16.74
E/V
$12.90
XCO
EXCO Resources
E
05/04/15
$1.92
U
$1.24
SAFM
Sanderson Farms
O
05/05/15
$78.02
E
$77.52
QLTY
Quality Distribution
E
05/08/15
$15.74
O
NA
SFM
Sprouts Farmers Market
O/V
05/11/15
$27.23
E/V
Stephens Inc.
$26.59
40
January 4, 2016
Symbol
Company
Rating/
Volatility
Rating
Date
Price
Previous
Rating
12/31/15
Price
UNFI
United Natural Foods
O/V
05/11/15
$66.60
E/V
$39.36
NATI
National Instruments Corp.
O/V
05/13/15
$28.72
NR
$28.69
HP
Helmerich & Payne
E
05/14/15
$75.81
O
$53.55
KEG
Key Energy
E
05/14/15
$2.66
U
$0.48
SSE
Seventy Seven Energy
O
05/14/15
$5.74
E
$1.05
ATML
Atmel Corp.
O/V
05/14/15
$8.47
E/V
$8.61
GTIM
Good Times Restaurants
O/V
05/15/15
$9.05
NR
$4.80
CALM
Cal-Maine Foods
O/V
05/18/15
$54.95
E/V
$46.34
HZO
MarineMax, Inc.
O/V
05/19/15
$33.02
NR
$18.42
MTZ
MasTec, Inc.
O/V
05/20/15
$17.00
NR
$17.38
PWR
Quanta Services
O/V
05/20/15
$29.43
NR
$20.25
TFX
Teleflex Inc.
O
05/22/15
$128.91
E
$131.45
PRTY
Party City Holdco Inc.
O
05/26/15
$21.80
NR
$12.91
CNSL
Consolidated Communications Holdi
E
05/26/15
$19.96
NR
$20.95
TUMI
Tumi Holdings
O/V
05/26/15
$19.77
E/V
$16.63
BJRI
BJ's Restaurants
O
05/26/15
$45.62
E
$43.47
COMM
CommScope Holding Co.
E/V
05/27/15
$30.87
NR
$25.89
TRIB
Trinity Biotech plc
O/V
05/28/15
$16.80
NR
$11.76
KORS
Michael Kors Holdings
E/V
05/28/15
$45.93
O/V
$40.06
ENS
EnerSys Inc.
E
05/29/15
$68.71
O
$55.93
BOJA
Bojangles', Inc.
E/V
06/02/15
$28.01
NR
$15.87
NGVC
Natural Grocers by Vitamin Cottage
O/V
06/05/15
$24.22
E/V
$20.37
FTAI
Fortress Transportation and Infrastru
O
06/09/15
$17.08
NR
$11.26
AWAY
HomeAway, Inc.
O
06/10/15
$29.91
NR
$35.77
MTSC
MTS Systems Corp.
E/V
06/11/15
$70.90
NR
$63.41
BBT
BB&T Corporation
O
06/17/15
$41.46
NR
$37.81
CMA
Comerica
O
06/17/15
$52.35
NR
$41.83
FITB
Fifth Third Bancorp
O
06/17/15
$21.23
NR
$20.10
HBAN
Huntington Bancshares
E
06/17/15
$11.49
NR
$11.06
KEY
KeyCorp
E
06/17/15
$15.44
NR
$13.19
PNC
PNC Financial Services
E
06/17/15
$98.54
NR
$95.31
STI
SunTrust Banks
E
06/17/15
$44.30
NR
$42.84
Stephens Inc.
41
January 4, 2016
Symbol
Company
Rating/
Volatility
Rating
Date
Price
Previous
Rating
12/31/15
Price
USB
U.S. Bancorp
E
06/17/15
$44.59
NR
$42.67
ZION
Zions Bancorporation
E
06/17/15
$32.26
NR
$27.30
RLGY
Realogy Holdings Corp.
E/V
06/18/15
$45.44
NR
$36.67
RMAX
RE/MAX Holdings
O/V
06/18/15
$34.00
NR
$37.30
FSB
Franklin Financial Network
E
06/22/15
$21.77
NR
$31.38
AVNU
Avenue Financial Holdings
E
06/22/15
$11.55
NR
$14.37
KEX
Kirby Corp.
O
06/22/15
$78.35
E
$52.62
BKFS
Black Knight Financial Services
E/V
06/29/15
$30.66
NR
$33.06
FANG
Diamondback Energy
O
06/30/15
$75.16
NR
$66.90
XEC
Cimarex Energy
O
06/30/15
$109.22
NR
$89.38
CLGX
CoreLogic
O/V
06/30/15
$39.27
E/V
$33.86
ABCW
Anchor BanCorp Wisconsin
O
07/01/15
$37.98
NR
$43.52
BKMU
Bank Mutual Corp.
E
07/01/15
$7.67
NR
$7.80
ICBK
County Bancorp
E
07/01/15
$19.00
NR
$19.50
FFBC
First Financial Bancorp.
E
07/01/15
$17.94
NR
$18.07
GWB
Great Western Bancorp
O
07/01/15
$24.11
NR
$29.02
LKFN
Lakeland Financial Corp.
O
07/01/15
$43.37
NR
$46.62
PRK
Park National Corp.
E
07/01/15
$87.37
NR
$90.48
MCHX
Marchex, Inc.
E/V
07/01/15
$4.95
O/V
$3.89
BSX
Boston Scientific Corp.
O
07/06/15
$17.57
NR
$18.44
ACIW
ACI Worldwide
E
07/06/15
$24.33
O
$21.40
RAX
Rackspace Hosting
NR
07/08/15
$36.51
E/V
$25.32
EOG
EOG Resources
O
07/13/15
$84.54
NR
$70.79
CHK
Chesapeake Energy
E
07/13/15
$11.37
NR
$4.50
SWKS
Skyworks Solutions
O/V
07/13/15
$100.20
E/V
$76.83
RL
Ralph Lauren
O/V
07/13/15
$129.70
E/V
$111.48
GARS
Garrison Capital
O
07/15/15
$15.39
NR
$12.17
MRCC
Monroe Capital
O
07/15/15
$14.86
NR
$13.09
SCM
Stellus Capital Investment
E
07/15/15
$11.76
NR
$9.64
TCAP
Triangle Capital
O
07/15/15
$23.04
NR
$19.11
POWR
PowerSecure International
O/V
07/20/15
$15.49
NR
$15.05
CBM
Cambrex Corp.
O/V
07/20/15
$49.04
NR
$47.09
Stephens Inc.
42
January 4, 2016
Symbol
Company
Rating/
Volatility
Rating
Date
Price
Previous
Rating
12/31/15
Price
FHN
First Horizon National Corp.
E
07/20/15
$15.91
O
$14.52
GPP
Green Plains Partners LP
O
07/21/15
$15.13
NR
$16.25
GPRE
Green Plains Inc.
E
07/23/15
$24.51
O
$22.90
NNBR
NN, Inc.
O
07/24/15
$24.29
NR
$15.94
TRUE
TrueCar, Inc.
E/V
07/24/15
$10.68
O/V
$9.54
HBHC
Hancock Holding
O
07/24/15
$28.30
E
$25.17
WCC
WESCO International
E/V
07/24/15
$62.30
O/V
$43.68
WLL
Whiting Petroleum
E
07/30/15
$23.18
O
$9.44
INT
World Fuel Services
E
07/31/15
$47.22
O
$38.46
ONB
Old National Bancorp.
O
08/03/15
$14.39
NR
$13.56
TLMR
Talmer Bancorp
E
08/03/15
$16.30
NR
$18.11
FMER
FirstMerit Corp.
O
08/03/15
$18.74
NR
$18.65
CSOD
Cornerstone OnDemand
O/V
08/05/15
$37.39
E/V
$34.53
LL
Lumber Liquidators Holdings
E
08/06/15
$13.27
O
$17.36
MG
Mistras Group
E/V
08/07/15
$15.32
O/V
$19.09
CJES
C&J Energy Services
E
08/07/15
$9.08
O
$4.76
SFM
Sprouts Farmers Market
E/V
08/07/15
$23.50
O/V
$26.59
FRED
Fred's Inc.
E/V
08/07/15
$16.80
O/V
$16.37
SN
Sanchez Energy
E/V
08/12/15
$7.45
O/V
$4.31
SD
SandRidge Energy
E
08/14/15
$0.54
O/V
$0.20
CPTA
Capitala Finance Corp.
E
08/17/15
$15.25
NR
$12.08
EGOV
NIC Inc.
E
08/17/15
$20.00
O
$19.68
FTR
Frontier Communications
O
08/18/15
$5.61
NR
$4.67
HLTH
Nobilis Health Corp.
O/V
08/19/15
$5.10
NR
$2.82
NCOM
National Commerce Corp.
E
08/20/15
$23.22
NR
$25.05
SFBS
ServisFirst Bancshares
E
08/20/15
$37.60
NR
$47.53
AEO
American Eagle Outfitters
E/V
08/20/15
$16.90
O/V
$15.50
ARP
Atlas Resource Partners
E
08/20/15
$3.25
O
$1.03
THS
Treehouse Foods
O
08/26/15
$74.89
E
$78.46
HUBS
HubSpot, Inc.
O/V
08/27/15
$45.15
NR
$56.31
SSE
Seventy Seven Energy
E
08/28/15
$2.51
O
$1.05
WFT
O
08/28/15
$9.29
E
$8.39
Stephens Inc.
43
January 4, 2016
Symbol
Company
Rating/
Volatility
Rating
Date
O
08/28/15
$55.09
E
$53.55
O/V
08/31/15
$10.06
NR
$11.38
O
09/03/15
$9.61
E
$13.30
E/V
09/03/15
$6.58
O/V
$6.69
O
09/04/15
$34.00
E
$35.02
O/V
09/08/15
$27.66
NR
$24.83
Price
Previous
Rating
12/31/15
Price
HP
Helmerich & Payne
DGII
Digi International
RATE
Bankrate
SURG
Synergetics USA
BGS
B&G Foods
IBP
Installed Building Products
UNP
Union Pacific
O
09/08/15
$84.78
E
$78.20
LION
Fidelity Southern Corp.
E
09/17/15
$20.58
NR
$22.31
ABCB
Ameris Bancorp
O
09/17/15
$28.58
NR
$33.99
HRL
Hormel Foods
E
09/17/15
$62.82
O
$79.08
BUFF
Blue Buffalo Pet Products
E
09/21/15
$20.45
NR
$18.71
FRPT
Freshpet, Inc.
E
09/21/15
$10.29
NR
$8.49
SIRO
Sirona Dental Systems
E/V
09/21/15
$97.46
O/V
$109.57
MSL
MidSouth Bancorp
E
09/21/15
$12.63
O
$9.08
CIEN
Ciena Corp.
O/V
09/22/15
$21.59
NR
$20.69
INFN
Infinera Corp.
O/V
09/22/15
$20.55
NR
$18.12
KATE
Kate Spade & Co.
O/V
09/24/15
$19.41
E/V
$17.77
PGI
Premiere Global Services
E
09/28/15
$13.57
O
$13.99
MSFG
MainSource Financial Group
O
10/01/15
$20.36
NR
$22.88
HBNC
Horizon Bancorp
O
10/01/15
$23.75
NR
$27.96
FRME
First Merchants Corp.
E
10/01/15
$26.22
NR
$25.42
MFSF
MutualFirst Financial
E
10/01/15
$23.40
NR
$24.80
WDAY
Workday
O/V
10/01/15
$68.86
E/V
$79.68
PACB
Pacific Biosciences of California
O/V
10/02/15
$5.45
E/V
$13.13
CLR
Continental Resources
E
10/05/15
$32.13
NR
$22.98
KN
Knowles Corp.
O/V
10/05/15
$19.64
E/V
$13.33
TUBE
TubeMogul, Inc.
O/V
10/06/15
$11.22
NR
$13.60
NSLP
New Source Energy Partners
NR
10/07/15
$0.15
E
$0.03
FMBI
First Midwest Bancorp
O
10/08/15
$17.70
NR
$18.43
PVTB
PrivateBancorp, Inc.
E
10/08/15
$38.97
NR
$41.02
UTIW
Uti Worldwide
E
10/12/15
$7.10
O/V
$7.03
SURG
Synergetics USA
NR
10/15/15
$6.61
E/V
$6.69
Stephens Inc.
44
January 4, 2016
Symbol
Company
Rating/
Volatility
Rating
Date
O/V
10/15/15
$12.94
NR
$9.85
Price
Previous
Rating
12/31/15
Price
ASNA
Ascena Retail Group
WMT
Wal-Mart Stores
E
10/15/15
$60.03
O
$61.30
HABT
Habit Restaurants
O/V
10/16/15
$24.11
E/V
$23.06
KR
Kroger Co.
E
10/19/15
$37.83
NR
$41.83
SFS
Smart & Final Stores
E
10/19/15
$16.54
NR
$18.21
GWW
W.W. Grainger
E
10/19/15
$207.65
O
$202.59
CALM
Cal-Maine Foods
E/V
10/20/15
$63.14
O/V
$46.34
EXAS
EXACT Sciences
O/V
10/21/15
$7.76
E/V
$9.23
RNST
Renasant Corp.
E
10/22/15
$34.48
O
$34.41
CAB
Cabela's
E
10/22/15
$41.67
O
$46.73
FITB
Fifth Third Bancorp
E
10/26/15
$19.11
O
$20.10
USB
U.S. Bancorp
O
10/26/15
$42.62
E
$42.67
UMPQ
Umpqua Holdings
E
10/26/15
$16.94
O
$15.90
TSS
Total System Services
E
10/28/15
$51.65
O
$49.80
TECH
Bio-Techne Corp.
E/V
10/29/15
$95.94
O/V
$90.00
GNC
GNC Holdings
O
10/30/15
$28.24
E
$31.02
ABTX
Allegiance Bancshares
O
11/02/15
$23.18
NR
$23.65
FRM
Furmanite
O/V
11/03/15
$7.40
E/V
$6.66
TISI
Team, Inc.
O/V
11/03/15
$35.61
E/V
$31.96
MHR
Magnum Hunter Resources
NR
11/06/15
$0.30
U
$0.02
PDCE
PDC Energy
E
11/12/15
$59.75
O/V
$53.38
XEC
Cimarex Energy
E
11/12/15
$115.50
O
$89.38
AREX
Approach Resources
NR
11/13/15
$2.20
U
$1.84
SSP
E.W. Scripps Co.
E
11/17/15
$20.51
NR
$19.00
GTN
Gray Television
O/V
11/17/15
$16.44
NR
$16.30
MEG
Media General
E
11/17/15
$15.23
NR
$16.15
MDP
Meredith Corp.
E
11/17/15
$45.67
NR
$43.25
NXST
Nexstar Broadcasting Group
O/V
11/17/15
$58.76
NR
$58.70
SBGI
Sinclair Broadcasting Group
E
11/17/15
$34.10
NR
$32.54
TGNA
TEGNA Inc.
O/V
11/17/15
$26.77
NR
$25.52
TRCO
Tribune Media
E
11/17/15
$36.19
NR
$33.81
ADTN
ADTRAN, Inc.
E/V
11/20/15
$16.27
E/V
$17.22
Stephens Inc.
45
January 4, 2016
Symbol
Company
Rating/
Volatility
Rating
Date
Price
Previous
Rating
12/31/15
Price
ARRS
ARRIS Group
NR
11/20/15
$29.72
O/V
$30.57
CAMP
CalAmp Corp.
NR
11/20/15
$18.62
O/V
$19.93
CALX
Calix, Inc.
NR
11/20/15
$7.16
O/V
$7.87
CIEN
Ciena Corp.
NR
11/20/15
$23.98
O/V
$20.69
COMM
CommScope Holding Co.
NR
11/20/15
$27.37
E/V
$25.89
DGII
Digi International
NR
11/20/15
$12.63
O/V
$11.38
SATS
EchoStar Corp.
NR
11/20/15
$39.48
O
$39.11
FLIR
FLIR Systems
NR
11/20/15
$29.85
O
$28.07
HLIT
Harmonic Inc.
NR
11/20/15
$5.32
E/V
$4.07
INFN
Infinera Corp.
NR
11/20/15
$20.99
O/V
$18.12
ROVI
Rovi Corp.
NR
11/20/15
$10.34
E/V
$16.66
RPXC
RPX Corp.
NR
11/20/15
$13.55
O/V
$11.00
RKUS
Rukus Wireless
NR
11/20/15
$11.14
O/V
$10.71
SWIR
Sierra Wireless
NR
11/20/15
$16.21
E/V
$15.74
TIVO
TiVo Inc.
NR
11/20/15
$8.84
E/V
$8.63
UBNT
Ubiquiti Networks
NR
11/20/15
$34.26
E/V
$31.69
VSAT
ViaSat, Inc.
NR
11/20/15
$60.75
E/V
$61.01
ADM
Archer Daniels Midland
E
11/20/15
$36.43
O
$36.68
HRL
Hormel Foods
O
11/25/15
$71.32
E
$79.08
BECN
Beacon Roofing Supply
E/V
11/30/15
$43.16
O/V
$41.18
BNCN
BNC Bancorp
O
12/01/15
$25.62
NR
$25.38
PSTB
Park Sterling Corp.
E
12/01/15
$7.59
NR
$7.32
SSB
South State Corp.
E
12/01/15
$79.05
NR
$71.95
YDKN
Yadkin Financial Corp.
O
12/01/15
$25.93
NR
$25.17
PLNT
Planet Fitness
E
12/02/15
$16.11
NR
$15.63
BOBE
Bob Evans Farms
E
12/03/15
$39.60
U
$38.85
WFT
E
12/03/15
$10.77
O
$8.39
EQBK
Equity Bancshares
O
12/07/15
$24.00
NR
$23.39
TSN
Tyson Foods
E
12/07/15
$52.04
O
$53.33
LTXB
LegacyTexas Financial
E
12/09/15
$27.33
O
$25.02
HBHC
Hancock Holding
E
12/09/15
$25.47
O
$25.17
IBTX
Independent Bank Group
E
12/09/15
$36.76
O
$32.00
Stephens Inc.
46
January 4, 2016
Symbol
Company
Rating/
Volatility
Rating
Date
Price
Previous
Rating
12/31/15
Price
ETM
Entercom Communications
E
12/10/15
$11.91
NR
$11.23
TSQ
Townsquare Media
O
12/10/15
$10.62
NR
$11.96
BOBE
Bob Evans Farms
NR
12/11/15
$40.34
E
$38.85
JAX
J. Alexander's Holdings
O
12/14/15
$10.27
NR
$10.92
BBW
Build-A-Bear Workshop
E/V
12/14/15
$12.09
NR
$12.24
CJES
C&J Energy Services
U
12/14/15
$4.81
E
$4.76
BLD
TopBuild Corp.
O
12/16/15
$29.00
NR
$30.77
CCBG
Capital City Bank Group
E
12/16/15
$15.46
NR
$15.35
DDD
3D Systems
O/V
12/17/15
$9.45
E/V
$8.69
BUSE
First Busey Corp.
O
12/18/15
$20.95
NR
$20.63
CTBI
Community Trust Bancorp
E
12/18/15
$35.77
NR
$34.96
SYBT
Stock Yards Bancorp
E
12/18/15
$38.74
NR
$37.79
YCB
Your Community Bankshares
O
12/18/15
$31.80
NR
$31.52
Stephens Inc.
47
January 4, 2016
Glossary of Industry Terms:
• 10-Year Treasury Spread: calculated as the difference between the current distribution rate and the 10-year
treasury yield
• Annualized distribution: the most recent announced quarterly distribution annualized
• Baa Corporate Spread: calculated as the difference between the current distribution rate and the Baa
Corporate bond index
• Bbl: barrel of oil
• Boe: barrel of oil equivalent
• Boepd: barrel of oil equivalent per day
• Book Value: net asset value of a company (difference between assets and liabilities)
• Book Value/Share: calculated as book value (defined above) divided by shares outstanding
• CapEx: capital expenditures
• CFPS: cash flow per share. Also referred to as DCF per unit
• Cash/Share: cash and cash equivalents divided by shares outstanding
• Current Spread: Difference between the distribution rate and Baa Corporate Bonds yield or the 10-Year
Treasury yield
• Debt: the sum of short term and long term debt
• Debt/Cap: calculated as debt divided by debt plus equity
• DCF: distributable cash flow
• Distribution Coverage (DCF coverage): calculated as the DCF per unit divided by distribution per unit
• Distribution Rate: A financial ratio that shows how much a company pays out in dividends each year relative
to its share price. In the absence of any capital gains or return of capital, the dividend rate is the return on
investment for a stock.
• Dividend distribution classification: According to our model, dividends will be covered by taxable earnings.
That said, it is possible that over time some dividends are covered by a return of capital or capital gains. This
would likely occur when dividend distributions are not covered by taxable earnings. Further, it
• is possible that some companies issue dividends in the form of stock periodically, or that investors may
participate in dividend reinvestment programs.
• Distribution rate: calculated as current distribution annualized divided by the current stock price
• Distribution Discount Model: 10 years of estimated distributions that are discounted to present value based on
a specific discount rate
• Dividend: referred to as a distribution for MLP securities and is a return of capital paid to the unitholders
• EBITDA: earnings before interest, taxes, depreciation, depletion and amortization
• EPS: earnings per share
• EV: enterprise value
• EV/EBITDA: current enterprise value divided by annual EBITDA (see above for definition of EBITDA)
• EV/Production: current enterprise value divided by estimated oil, gas and NGL production
• Float: total number of shares publicly owned and available for trading
• Fully Diluted Shares Outstanding: total number of shares outstanding if all sources of conversion were
exercised. Also referred to as Diluted Units
• GAAP: generally accepted accounting principles
• IPO: initial public offering
• Leverage: calculated as Debt divided by EBITDA
• Liquidity: calculated as cash on hand plus availability on the Company’s credit facility
• Market Cap: calculated as shares outstanding multiplied by current share price
• MBoepd: thousand barrels of oil equivalent per day
• MLP: master limited partnership
• Mbbls: thousands of barrels
• Mbbl/d: thousands of barrels per day
Stephens Inc.
48
January 4, 2016
Glossary of Industry Terms (continued):
• MMBoe: million barrels of oil equivalent
• Mmcfpd: million cubic feet per day
• Net Debt / Cap: Debt minus cash and cash equivalents divided by debt plus equity
• Net Debt / EBITDA: Debt minus cash and cash equivalents divided by EBITDA (defined above)
• NGL: natural gas liquids
• PDP: proved developed producing oil and gas reserves
• P/CFPS: current price dividend by annual cash flow. Also referred to as P/DCF
• P/E: current price divided by annual earnings
• Previous 3-Year CAGR: calculated as the distributions paid for the last full fiscal year divided by the
distributions paid in the fiscal year three years prior raised to the 0.3 minus 1
• Subordinated units: units that receive distributions after common unitholders have been paid distributions
• Target Yield: calculated as the annualized distribution 12 months out divided by a specified yield
• TTM: trailing twelve months
• WAAC (weighted average cost of capital): calculated as ((Equity / (Equity + Debt))*cost of equity) + ((Debt /
(Equity + Debt))*cost of debt*(1-tax rate)). Defined as the firm’s cost of capital when each category of capital
is proportionately weighted.
Stephens Inc.
49
January 4, 2016
ANALYST CERTIFICATION
The analysts primarily responsible for the preparation of a portion or portions of this report certify that (i) all views
expressed in this report accurately reflect the analysts’ personal views about the subject company and securities, and
(ii) no part of the analysts’ compensation was, is, or will be, directly or indirectly, related to the specific
recommendations or views expressed by the analysts in this report.
REQUIRED DISCLOSURES
The research analysts principally responsible for preparation of this report have received compensation that is based
on the firm’s overall revenue which includes investment banking revenue.
Valuation Methodology for Plains All American Pipeline:
We use multiple valuation techniques, including price/DCF, EV/EBITDA as well as a Distribution Discount Model
(DDM) and a Target Yield, to arrive at our price target for Plains All American Pipeline.
Risks to Achievement of Our Price Target of Plains All American Pipeline:
• Reduced permitting and drilling activity in Plains All American’s areas of operations could pose a risk to our
price target.
• While we believe Plains All American’s Eagle Ford joint venture is a positive, Plains All American has not
participated in many joint ventures and dealing with a partner could pose its own challenges and ultimately a
risk to our price target.
• As with other MLPs, Plains All American faces regulatory risk that could hinder its daily operations or affect its
tax advantage status. A disruption on either of these fronts would pressure Plains All American units and
pose a risk to our price target.
• While we understand that interest rates will go higher eventually, the most recent tone from the Federal
Reserve is that rates will remain low for some time. However, a sudden increase in interest rates could pose
a risk to our Plains All American price target.
• Investors should also review company risks as disclosed in documents submitted to the SEC, found
at SEC.gov. Link to Plains All American Pipeline SEC filing.
Risks as Filed in Plains All American Pipeline’s SEC Documents.
• PAA may not be able to fully implement or capitalize upon planned growth projects.
• PAA’s results of operations are influenced by the overall forward market for crude oil, and certain market
structures or the absence of pricing volatility may adversely impact PAA’s results.
• A natural disaster, catastrophe, terrorist attack or other event, including attacks on PAA’s electronic and
computer systems, could interrupt operations and/or result in severe personal injury, property damage and
environmental damage, which could have a material adverse effect on PAA’s financial position, results of
operations and cash flows.
• If PAA does not make acquisitions or if they make acquisitions that fail to perform as anticipated, future
growth may be limited.
• PAA’s acquisition strategy involves risks that may adversely affect its business.
• PAA’s growth strategy requires access to new capital. Tightened capital markets or other factors that increase
PAA’s cost of capital could impair its ability to grow.
• Loss of PAA’s investment grade credit rating or the ability to receive open credit could negatively affect its
ability to purchase crude oil, natural gas and NGL supplies or to capitalize on market opportunities.
• PAA is exposed to the credit risk of its customers in the ordinary course of business activities.
• PAA’s risk policies cannot eliminate all risks. In addition, any non-compliance with PAA’s risk policies could
result in significant financial losses.
Stephens Inc.
50
January 4, 2016
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PAA’s operations are also subject to laws and regulations relating to protection of the environment and
wildlife, operational safety, climate change and related matters that may expose PAA to significant costs and
liabilities.
PAA’s profitability depends on the volume of crude oil, refined product, natural gas and NGL shipped,
processed, purchased, stored, fractionated and/or gathered at or through the use of PAA’s facilities, which
can be negatively impacted by a variety of factors outside of PAA’s control.
Fluctuations in demand, which can be caused by a variety of factors outside of PAA’s control, can negatively
affect operating results.
PAA’s assets are subject to federal, state and provincial regulation. Rate regulation or a successful challenge
to the rates charged on PAA’s U.S. and Canadian pipeline systems may reduce the amount of cash PAA
generates.
Some of PAA’s operations cross the U.S./Canada border and are subject to cross-border regulation.
PAA sales of oil, natural gas, NGL and other energy commodities, and related transportation and hedging
activities, expose them to potential regulatory risks.
The adoption and implementation of new statutory and regulatory requirements for derivative transactions
could have an adverse impact on PAA’s ability to hedge risks associated with its business and increase the
working capital requirements to conduct these activities.
Legislation and regulatory initiatives relating to hydraulic fracturing could reduce domestic production of crude
oil and natural gas.
PAA may not be able to compete effectively in the transportation, facilities and supply and logistics activities,
and PAA’s business is subject to the risk of a capacity overbuild of midstream energy infrastructure in the
areas where PAA operates.
PAA may in the future encounter increased costs related to, and lack of availability of, insurance.
The terms of PAA’s indebtedness may limit its ability to borrow additional funds or capitalize on business
opportunities. In addition, PAA’s future debt level may limit its future financial and operating flexibility.
Increases in interest rates could adversely affect PAA’s business and the trading price of its units.
Changes in currency exchange rates could adversely affect PAA’s operating results.
An impairment of goodwill or intangibles could reduce PAA’s earnings.
PAA’s natural gas storage facilities may not be able to deliver as anticipated, which could prevent PAA from
meeting the contractual obligations and cause PAA to incur significant costs.
Marine transportation of crude oil has inherent operating risks.
Maritime claimants could arrest the vessels carrying PAA’s cargos.
PAA is dependent on use of third-party assets for certain of its operations.
Non-utilization of certain assets, such as PAA’s leased rail cars, could significantly reduce its profitability due
fixed costs incurred to obtain the right to use such assets.
Rating Definitions:
Company Stock R atings: OVERWEIGHT (O) – The stock’s total return is expected to be greater than the total
return of the company’s industry sector, on a risk-adjusted basis, over the next 12 months. EQUAL-WEIGHT (E) –
The stock’s total return is expected to be equivalent to the total return of the company’s industry sector, on a riskadjusted basis, over the next 12 months. UNDERWEIGHT (U) – The stock’s total return is expected to be less than
the total return of the company’s industry sector, on a risk-adjusted basis, over the next 12 months. VOLATILE (V) –
The stock’s price volatility is potentially higher than that of the company’s industry sector. The company stock ratings
may reflect the analyst’s subjective assessment of risk factors that could impact the company’s business.
Distribution of Stephens Inc.'s Ratings (as of 12/31/15)
Rating
BUY
Stephens Inc.
%
58
% Investment Banking Clients
(Past 12 Months)
18
51
January 4, 2016
HOLD
SELL
41
1
11
0
OTHER DISCLOSURES
This report has been prepared solely for informative purposes as of its stated date and is not a solicitation, or an offer,
to buy or sell any security. It does not purport to be a complete description of the securities, markets or developments
referred to in the material. Information included in the report was obtained from internal and external sources which
we consider reliable, but we have not independently verified such information and do not guarantee that it is accurate
or complete. Such information is believed to be accurate on the date of issuance of the report, and all expressions of
opinion apply on the date of issuance of the report. No subsequent publication or distribution of this report shall mean
or imply that any such information or opinion remains current at any time after the stated date of the report. We do not
undertake to advise you of any changes in any such information or opinion. Prices, yields, and availability are subject
to change with the market. Nothing in this report is intended, or should be construed, as legal, accounting, regulatory
or tax advice. Any discussion of tax attributes is provided for informational purposes only, and each investor should
consult his/her/its own tax advisors regarding any and all tax implications or tax consequences of any investment in
securities discussed in this report. If applicable, when reading research on Business Development Companies,
you should consider carefully the investment objectives, charges, risks, fees and expenses of the investment
company before investing. The prospectus, and, if available, the summary prospectus, contain this and other
information about the investment company. You can obtain a current prospectus, and, if available, a
summary prospectus, by calling your financial consultant. Please read the prospectus, and, if available, the
summary prospectus, carefully before investing as it contains information about the previous referenced
factors and other important information. Also, please note other reports filed with the Securities and Exchange
Commission by the relevant investment company at www.sec.gov. Additional information available upon request.
Stephens Inc.
52
RESEARCH DEPARTMENT DIRECTORY
Director of Research: Nik Fisken, CFA, Executive Vice President (501) 377-6335
Executive Assistant/Supervisor: Dena Page (501) 377-6368
CONSUMER
Banks – Midwest
Food & Agribusiness
Erik Zwick, CFA, Analyst
(302) 234-4294
Nate Tower, Associate
Russell Warden, Associate
Christy Barker, Assistant
(207) 808-5026
(501) 377-8095
(501) 377-2057
Farha Aslam, Analyst
Greg Nep, Associate
Dan Shapiro, Associate
Yerlie Chatelain, Assistant
Healthy Living
Joe Edelstein, CFA, Analyst
John Brick, Associate
Grace Tokarski, Assistant
Restaurants
(212) 891-1778
(212) 891-1762
(212) 891-1784
(212) 891-1706
(312) 292-5762
(312) 292-5752
(312) 292-5750
Will Slabaugh, Analyst
(501) 377-2259
Billy Sherrill, Associate
Angela Crowe, Assistant
(501) 377-8513
(501) 377-2347
Retail – Broadlines
Ben Bienvenu, Analyst
Retail – Hardlines
Rick Nelson, CFA, CPA,
Analyst
Banks – Southeast
Tyler Stafford, Analyst
Gordon McGuire, Associate
Wes Zwiegers, Associate
Banks – Southwest
(501) 377-8511
(501) 377-2347
(312) 292-5768
Nicholas Zangler, CFA, Associate (312) 292-5753
Grace Tokarski, Assistant
(312) 292-5750
Retail – Softlines
Banks – Midwest & Super-Regional
Matt Olney, CFA, Analyst
Aaron Fogle, Associate
Matthew Sealy, Associate
(212) 891-1715
Shreya Jawalkar, Associate
Yerlie Chatelain, Assistant
(212) 891-1709
(212) 891-1706
John Campbell, Analyst
Hayden Blair, Associate
Sonja Kenyon, Assistant
Exploration & Production
Exploration & Production
Ben Wyatt, Analyst
Kat Gregg, Assistant
(817) 900-5711
(817) 900-5715
(817) 900-5713
(817) 900-5700
(817) 900-5714
(817) 900-5711
(817) 900-5715
(817) 900-5713
(817) 900-5700
Matthew Marietta, Analyst
Brooks Braden, Associate
Christopher Denison, Associate
Natasha Sykes, Assistant
(713) 993-4211
(713) 993-4204
(713) 993-4205
(501) 377-2250
Banks – Mid-Atlantic
Austin Nicholas, Analyst
(207) 808-5027
(207) 808-5026
(501) 377-8095
(501) 377-2057
(501) 377-8231
(501) 377-8104
Transportation/Trucking: Truckload &
Less-Than-Truckload
Brad Delco, Analyst
(501) 377-8215
(501) 377-8104
Brett Huff, CFA, Analyst
Healthcare Services
(501) 377-2347
(501) 377-8068
(501) 377-2303
(501) 377-8104
Jonathan Ruykhaver, CFA
Analyst
(615) 279-4331
Nathan Leiphardt, Associate
(501) 377-2369
(501) 377-8221
(501) 377-2057
Kyle Evans, Analyst
(615) 279-4376
(501) 377-2250
(501) 377-6376
(501) 377-6306
(501) 377-2250
Power & Industrial Technology
(615) 279-4329
Jacob Johnson, CFA, Associate
(615) 279-4355
(501) 377-2057
Ben Hearnsberger, Analyst
Semiconductors
(501) 377-2516
(501) 377-8506
(501) 377-2057
(901) 681-1344
Richard Sewell, Associate
(901) 681-1345
(501) 377-2347
Building Materials
Scott Wilson, Associate
Alex Zukin, Analyst
(501) 377-8046
(501) 377-2108
(501) 377-2057
(512) 542-3273
(501) 377-8104
Harsh Kumar, Analyst
Software as a Service
(501) 377-2318
(512) 542-3272
Brandon Wright, Associate
INDUSTRIALS
Trey Grooms, Analyst
(501) 377-2532
(501) 377-8104
Infrastructure Software and Security
(501) 377-8237
Dana Hambly, CFA, Analyst
Chris Cooley, CFA, Analyst
(501) 377-8057
James Rutherford, Associate
Tommy Moll, Associate
Blake Hirschman, Associate
Drew Lipke, Associate
FINANCIAL SERVICES
(501) 377-2036
Brian Colley, Associate
Business Services
(501) 377-6362
(501) 377-2021
(501) 377-2562
(501) 377-8104
Justin Long, Analyst
Garrett Phelps, Associate
Blevin Brown, Associate
Oilfield Services
(817) 900-5700
(501) 377-2298
Transportation/Railroad & Transportation
Suppliers
Media
Drew Jones, Analyst
(817) 900-5700
(817) 900-5716
(501) 377-6312
(501) 377-8303
(501) 377-2347
Jonathan Deng, Associate
Andrew Hall, Associate
Diagnostics and Life Science Tools
Medical Devices
(817) 900-5716
(501) 377-8065
(501) 377-3721
(501) 377-2347
HEALTHCARE
Master Limited Partnerships
(501) 377-2101
Jack Atkins, Analyst
TECHNOLOGY
J.R. Bizzell, Analyst
(817) 900-5712
(501) 377-3717
(501) 377-2284
(501) 377-2347
(501) 377-3723
Transportation/Airfreight, Logistics &
Maritime
Specialty Finance
(501) 377-8362
Blake Anderson, Associate
Will Steinwart, Associate
Business Development Companies
ENERGY
Will Green, Analyst
(207) 808-5026
(501) 377-8095
(501) 377-2057
Matt Duncan, CFA, Analyst
Scott Schoenhaus, Associate
Real Estate Services
Rick Patel, CFA, Analyst
(207) 808-5025
Industrial Products & Services
(415) 548-6907
(415) 548-6906
(501) 377-8104
Telecommunications Services
Barry McCarver, Analyst
(501) 377-8131
Brian Hawthorne, Associate
(501) 377-6372
(501) 377-2250
PRODUCT MANAGEMENT GROUP
Kelley Wilkins, Director, Supervisory
Analyst
Betty Farrar, Supervisory Analyst
Martha Graham, Supervisory Analyst
Jennifer Keeling, Supervisory Analyst
Natacha Hammerstad, Editorial Assistant
(501) 377-2020
(501) 377-8183
(501) 377-2260
(501) 377-8004
(713) 993-4233
stephens.com
111 Center Street • Little Rock, Arkansas 72201 • (800) 643-9691
www.stephens.com
In Arkansas
Conway • Fayetteville • Hot Springs • Jonesboro • Rogers
Outside Arkansas
Atlanta • Austin • Baton Rouge • Boston • Charlotte • Chicago • Columbia • Dallas • Ft. Worth • Houston •
Jackson • Memphis • Nashville • New York • Portland • San Francisco • Shreveport • St. Petersburg •
Wilmington • Winston-Salem

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