CER Spring 2023 Publication by cornellequityresearch

SPRING 2023

MESSAGE FROM EXECUTIVE BOARD Cornell Equity Research is eager to report an exceptional spring semester filled with dedication and enthusiasm. We added ten new members to our team, proudly representing five of the undergraduate colleges at Cornell. The new member education program continued to be a success with internship panels and special speakers. This semester, we incorporated new chair positions and fostered club culture through unique social events. Our executive board also added an ESG sector to the publication and even graduation cords for our seniors. This spring, our report reflects the economic climate of high inflation and its effects on the financial markets. The Fed has continued its interest rate hikes alongside circulating notions of a potential recession. Credit Suisse bank collapsed in March 2023 and was purchased by Swiss rival UBS for $3.3 billion. Several regional banks, including SVB, Signature Bank, and First Republic Bank, also failed. The turbulence in the banking sector caused a ripple effect throughout the economy. Investors began losing confidence, and thus banking regulations are expected to increase in the near future. Given these economic conditions, our team is proud to present the selected stocks for this spring. A huge thank you to our executive board, sector analysts, associates, alumni, and guest speakers for another remarkable semester!

EXECUTIVE BOARD

Gracelyn Goodridge President gfg36@cornell.edu

Andy Tan Executive Vice President axt6@cornell.edu

Emily Hong Vice President of Recruitment ech224@cornell.edu

Ioana Nechiti Vice President of Education in55@cornell.edu

EXECUTIVE BOARD

Lavinia Burchielli Vice President of Publishing lb742@cornell.edu

Zoe Robbins Rutkovsky Vice President of Public Relations axt6@cornell.edu

Beau Gillam Treasurer bbg35@cornell.edu

Andrew Grinzayd Professional Development aeg264@cornell.edu

EXECUTIVE BOARD

Raquel Kanner Women's Group Leader rk747@cornell.edu

Kathey Chen Junior Member Liaison kc837@cornell.edu

May Ton Executive Administrator ct528@cornell.edu

MEMESTOCKS

Isaac Sosnoff | Date: 4/18

Rating: Buy Current Price: $4.47 Price Target: $6.52 Company Updates / News 52 Week High: $6.90 52 Week Low: $3.22 Mkt-Cap: $2.61 Billion Beta 3y: 1.68 P/E: -28.2 Competitor Statistics from Q3 2021

BlackBerry Limited (TSX:BB) Potential For More? Investment Thesis: BlackBerry Limited (TSX:BB) is an international tech company specializing in providing intelligent secure software and services to governments and enterprises. With a strong emphasis on leveraging artificial intelligence (AI) and machine learning, BlackBerry offers innovative solutions in the fields of cybersecurity, safety, and data privacy. The company's expertise also extends to endpoint security, endpoint management, encryption, and embedded systems. My buy recommendation is based on three main factors. First, cybersecurity is a market that is not yet fully realized, and will only continue to grow in size as the tech age progresses. Second, BB recently completed a deal for its non core assets for $200 million cash, which can increase to $900 million. Third, and finally they can use this increased cash flow to fully invest in innovating their car tech and cybersecurity systems.

Valuation/Financial Modeling: Share Price: $4.47 Revenue: $338B

Share Price: $3.92 Revenue: $59M

As of April 18, BlackBerry Ltd. (BB) is trading at 4.47. I believe that this equity is undervalued and expected to increase to 6.52 within this year. I arrived at this conclusion by conducting a competitive analysis using both tech and cybersecurity competitors such as Apple, Acacia Research, and Crowdstike. Additionally due to BlackBerry being known as a “meme stock” I conducted research on popular online forums such as wall street bets. Based on my research, it appears that BlackBerry (BB) tends to experience more volatile stock price fluctuations due to its popularity on online forums, illustrated in its beta value of 1.68. While this is a scary number, I believe that this value illustrates that the stock may be oversold at the moment, and that upon any positive news it may be overbought, creating an attractive investment opportunity.

Diverse Suite of CyberSecurity Products: Share Price: $137.36 Revenue: $2.2B

As the digital age progresses, cybersecurity is no longer just needed for laptops and desktops. BlackBerry is leveraging its previous experience in the mobile phone market to offer encryption technology for all endpoints, and McKinsey recently announced that it is a leader in the field. “McKinsey states that few companies can converge enterprise IT cybersecurity solutions with IoT platforms, and BlackBerry is a company that is well-positioned to do so”.

Government Contracts:

BlackBerry has secured multiple contracts with the Canadian federal government for its cybersecurity tech. This guarantees stable cash flows for years to come. Additionally BB military and encryption tech is trusted by approximately 70% of US labs and a good portion of the US military utilizing their technology.

Isaac Sosnoff | Date: 4/18

Yearly Price Against Competitors:

Source: Yahoo Finance Risk Potential Negative Net Income:

Blackberry does have some concerning patterns in their financials, for the past 12 years they have had a negative net income. They have a concerning pattern of selling off patents for large amounts of cash, burning through all the cash as they cannot operate at a profit, and then sell off more patents to keep the business afloat. While negative net income does not always signal financial risk, this pattern for the past 12 years is concerning. If BB is unable to successfully transition to a profitable business model in the future it will eventually run out of cash, leading to a default..

CyberSecurity Competition:

BlackBerry has faced significant challenges due to competition in the cybersecurity industry, which has led to declining revenues and market share. Gartner, a tech research and advisory firm, estimated that spending on information security will total $172 billion in 2022, with companies such as Palo Alto Networks, Symantec, and Cisco dominating the market. In contrast, BlackBerry's market share in the cybersecurity industry has steadily declined over the past few years. In 2020, BlackBerry's cybersecurity revenues declined by 4%, while their total revenue decreased by 15%. The emergence of new and innovative cybersecurity companies further intensifies the competition for BlackBerry, making it difficult to maintain its position in the market.

Melenie Mendez | April 20, 2022

Rating: Hold Current Price: $5.10 Price Target: $10.45 Company Updates / News ● EBITDA: $9.5 M ● Shares Outstanding: $519.2 M ● Notable movie theatre market share as they account for an estimated 36.5% ● AMC Investor Connect (AIC) was launched in June 2021 ● Recent collaboration with Walmart to exclusively shelf AMC’s all-new lines of both microwave and ready-to-eat popcorn items Competitor Statistics from Q4 2022

AMC Entertainment Holdings Inc. (AMC) Investment Thesis: AMC Entertainment is the world’s largest movie theater chain headquartered in Leawood, Kansas. The holding company provides movie theater services worldwide including movie screenings, performing arts, food and beverage facilities, etc. through its subsidiaries. My hold recommendation reflects a belief that there’s potential for AMC to increase revenues through strategic partnerships, and new pricing models. Despite this, given the volatility of the market, macroeconomic trends, and the rising popularity of streaming services there is still significant risk associated with the company’s business model. Additionally, AMC has $10,019.6 of debt which is 59.4% of its Enterprise Value.

Valuation:

As of April 20th, AMC is trading at $5.10 which is amongst its lowest share prices ever recorded. Yet, I believe that this equity might be undervalued and has the potential to increase to $10.45.I arrived at this conclusion by conducting a comparable company analysis. I used these assumptions based on historical data and an optimistic view given the fact that AMC’s trading price is not reflective of the company’s potential future revenue streams.

Innovation at AMC: Revenue: $3911.4 M

Revenue: $2454.7 M

Revenue: $300.8 M

Revenue: $ 643.8

This ticketing pricing option strategy offers moviegoers a variety of seating options based on sightline preferences. The initiative has been launched in several markets, with plans to expand to all of AMC’s domestic and dine-in locations by the end of the year proving AMC’s commitment to innovation and enhancing customer experience. The company is also working on implementing experience-based pricing on their seating. Allowing customers to select features they value, and pay accordingly, which in turn will provide a better experience. Sightline at AMC is expected to drive increased customer traffic and revenue, as well as improve customer loyalty and satisfaction which will further strengthen customer loyalty and set AMC apart from its competitors.

Visa Partnership Driving New Revenue Streams:

AMC Theatres has partnered with Visa and Deserve to launch the AMC Entertainment Visa Card, the only co-branded movie theatre credit card in the United States. The card offers customers the ability to earn rewards points on all their purchases, including at AMC Theatres, with bonus points offered on everyday purchases like dining, groceries, and gas. The partnership with Visa and Deserve has enabled AMC to create a unique value proposition that sets it apart from its competitors, driving customer loyalty and incremental revenue.

Melenie Mendez | April 20, 2022

Daily Stock Performance of AMC & Cinemark:

Source: Yahoo Finance Risk Potential Pending Litigation:

During a shareholders meeting on March 14, 2023, the Share Increase Proposal and the Reverse Split Proposal were both approved. The Share Increase Proposal allows the company to combine AMC common shares and APE units and significantly increase the capacity to issue additional common shares. In addition, the Reverse Split Proposal would reduce the number of outstanding shares and increase the stock price, potentially making the stock more attractive to institutional investors. The results of this shareholders meeting can be seen as a positive development for AMC as it gives the company more flexibility to raise capital and strengthen its balance sheet. However, the pending Judicial approval of a proposed lawsuit settlement remains a key risk factor that could potentially delay the implementation of these proposals. The court hearing is rumored to have been set for June 2023, after which the company can seek to implement the will of its stockholders.

Shift Towards Digital Steaming:

Competition from other streaming platforms and changing consumer preferences could pose a risk to AMC's future growth prospects. The shift towards digital streaming and the increasing popularity of at-home entertainment options could lead to a decline in demand for traditional movie theaters. With streaming platforms offering a vast selection of movies and TV shows, that can be accessed from any device with an internet connection, it is now easier than ever for individuals to consume content. Additionally, the COVID-19 pandemic accelerated this shift as movie theatres were closed or had limited seating capacity to comply with social distancing measures.

Sources:

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Lavinia Burchielli | April 2023

Rating: Hold Current Price: $69.50 Price Target: $74.07 Company Updates / News ● Market Cap: 20.422B ● P/E: 204.41 ● EPS: 0.34 ● 52 Week High: 124.05 ● 52 Week Low: 63.55 ● Zoom Video Communications will be acquiring Workvivo in the first quarter of the 2024 financial year to transform into a digital workplace. Competitor Statistics from Yahoo Finance

Zoom Video Communications, Inc. (ZM) Unpromising Future? Investment Thesis: Zoom Video Communications, Inc. (ZM) is a communications technology company founded by Eric S. Yuan in 2011. The company is headquartered in San Jose, California, and provides video conferencing services through its software program, Zoom. The platform was one of the fastest-growing apps during the pandemic with 350 million participants in December 2020 engaging within the remote world. My hold recommendation reflects a belief that although Zoom Video Communications is currently undervalued, the company is not predicted to perform well over the next year, given its stalling sales, troubling cash flow, and privacy concerns.

Valuation/Financial Modeling:

As of April 14th, Zoom Video Communications, Inc. (ZM) is trading at $69.50. I believe that this equity is undervalued and its price target for this year is $74.07. I arrived at this conclusion by conducting a Comparable Company Analysis against top competitors, including Cisco Systems, Inc. (CSCO) and RingCentral, Inc. (RNG). I recommend a hold due to a variety of external factors indicating the company may not be a favorable investment.

Enterprise Customers:

Revenue: $4.39B

Zoom Video Communications is shifting its strategy to focus on enterprise customers, who currently generate more than $100,000 in trailing-12-month revenue. The company’s enterprise business grew 27% in the fiscal year 2023 from 2022 and currently represents 54% of total sales. By shifting its strategy, Zoom Video Communications is able to improve its financial performance as contracts with enterprise customers last longer, ensuring revenue stability. Large enterprises are also unlikely to switch vendors, improving customer retention rates. In addition, the company is expanding its service to more specialized industries, like education and healthcare.

Expanding Services: Revenue: $53.16B

Revenue: $1.99B

The company has been adding services to its videoconferencing platform to improve the user experience and keep remote workers interested. Zoom Video Communications has been integrating chat, email, calendar, phone, and a digital whiteboard into its software. There is also a new contact center for customer questions and an analytics platform for organizations. The company is planning to transform into a digital workplace and will be acquiring Workvivo to achieve this objective. These expanding services make Zoom desirable for customers, especially in comparison to other platforms, such as Cisco Systems WebEx service and RingCentral video meetings.

Lavinia Burchielli | April 2023

Daily Share Price Performance of $ZM, $CSCO, and $RNG:

Source: Yahoo Finance Risk Potential Stalling Sales: Although Zoom Video Communications gained a lot of popularity during the pandemic, sales

seem to be stalling with the opening up of the economy. The company is struggling to generate positive growth, especially as persuading clients to pay for the video conferencing service is becoming more challenging. The platform is not only overpriced at hundreds of dollars per year, but Microsoft Office 365 already offers the same service at no additional cost. Convincing clients to buy a subscription when most already have access to a similar service proves to be a challenging task, especially with a possible recession on the horizon.

Troubling Cash Flow: In addition to the demand for video conferencing services decreasing in the

post-pandemic world, Zoom Video Communications has a troubling cash flow. Although investors state the cash flow is technically positive, stock-based compensation is making the company seem more profitable than it really is. The stock-based compensation is not a cash-based expense and thus, is excluded from the operating cash flow calculation. This has allowed the company to turn its loss into an “adjusted” positive profit.

Privacy Concerns: The company has also been experiencing problems with online harassment and breaches of

user privacy, especially due to its rapid growth during the quarantine era. The term “Zoombombing” emerged where trolls would hack into Zoom video chats and broadcast unwarranted content. These hackers would show content that was often disrespectful, graphic, or racist in order to cause chaos and disruption. As a result, many companies have chosen to change platforms. For instance, when Chipotle launched its new public video chat series, Chiptole Together, a Zoom participant displayed pornography during the meeting, causing the company to switch to a safer platform. Sources:

John Hanna | April 10th

Rating: Buy Current Price: $8.82 Price Target: $10.76 Company Updates / News ● Q4 Earnings with 10% Revenue growth, strong guidance, and EBITDA positive ● Advertising market slowdown due to macro conditions

Competitor Statistics from Q4 2022

Revenue Growth: 23%

Magnite (NasdaqGS: MGNI) Center of a new market Investment Thesis: With the evolution of the economic, regulatory, and business environments, corporate clients’ advertising needs are shifting to a world less reliant on Google and Facebook for advertising and instead diversifying their portfolio to include CTV, mobile, and programmatic advertising.

Valuation/Financial Modeling: As of May 9th, MGNI is trading at $8.82. I believe this equity is undervalued and expected to increase to $10.76 this year. I arrived at this conclusion by conducting a DCF analysis with a 7% growth, 10% long-term improvement to operating margins, and a WACC of 7% across 5 years. I used these assumptions based off of historical data and an optimistic view given secular trends in the industry.

Sell-Side vs. Buy-Side: Programmatic advertising is where firms that are seeking to advertise will attempt to optimize their reach to clients on a specific platform using automated bidding on specific slots (aka your phone or Hulu Account). They will have a programmed AI value an ad slot based on the platform and specific customer and then purchase it in the bidding environment. Within this industry, there is the sell-side and the buy-side. The buy-side are corporate clients who are seeking to purchase advertising slots on different platforms. The sell-side are platforms such as mobile apps, websites, and Smart TV platforms, that are looking to sell their slots as their mode of generating revenue. The Buy-Side is largely represented by behemoth The Trade Desk, which is the dominant industry player. The Sell-Side on the other hand is extremely fragmented. This is where Magnite comes in.

Magnite Overview:

Revenue Growth: 32%

Magnite is a sell-side programmatic advertising platform that handles the placement of advertising slots for platforms that seek to sell them to corporate clients. Magnite is the largest player in this industry after recent acquisitions of SpotX and Telaria. Mobile is the segment handling advertising on mobile phone applications, the primary mode of application based advertising. Magnite is dominant in CTV, of which revenue was up 20% YoY in Q4, and has in February 2023, integrated different CTV platforms into one Magnite centralized platform.

Path to Profitability:

Revenue Growth: 13%

Magnite is currently EBITDA positive, and has generated Net Income in recent quarters. Due to the current advertising slowdown due to macroeconomic conditions, MGNI has generated a net loss. While the market believes this will drag on for the year, I believe based on modeling consistent revenue growth, similar to 2022, and the realization of SG&A synergies from recent mergers, the company has better control of costs than comparable technology firms and will be profitable. On April 29, 2018, the T-Mobile/Sprint exchange ratio was 9.75 Sprint stocks (S) to T-Mobile stock (TMUS). Upon closing, T-Mobile entered an agreement with SoftBank to make an effective trade ratio of 11.31 S:TMUS.

John Hanna | April 10th

MGNI Vs. Info Tech Performance:

MGNI: Blue Russell 2000 Index: Orange

Source: Yahoo Finance Risk Potential

Macro Headwinds Persist: Advertising will be one of the expenses that firms are quickest to pull the trigger on during downturns.. However, with Magnite gaining share, and the sell side being less elastic as their revenue comes from advertising, these risks may be overstated.

Dominance of Major Players: The current state of the programmatic advertising industry is that it is

dominated by the Big Tech companies who have massive platforms for advertisers. However, with antitrust enforcement growing, and the growth of CTV and other channels in advertising, Magnite’s strengths are often in a different realm than these firms.

Interest Costs: The majority of Magnite’s debt load is in a Term Loan B, which holds a variable interest rate and as such will rise in costs as interest rates continue to rise. While I believe there are more rate rises to come, the vast majority have already occurred or are priced in, and as such, they are not a threat to the movement of the stock.

Sources:

Alia Piccinni | April 2023

Rating: Hold Current Price: $61.72 Price Target: $44.37 Company Updates / News • Market Cap: $24.199B • Beta: 1.45 • April 15, 2023 Blue Apron Holdings Inc. expanded its partnership with DoorDash, Inc. owned convenience store platform DashMart. • At the end of March 2023, DoorDash accounced several new retail partners including Lush Cosmetics, Victoria’s Secret, and Party City. Additionally, new shopping features to ensure a seamless experience such as delivery windows, express delivery, enhanced search within stores, and frictionless in-app communication. Competitor Statistics from 2022

Stock Price: $31.44 Revenue: $31,877

Stock Price: $102.40 Revenue: $513, 983

DoorDash (DASH) Leading the Food Delivery Industry Investment Thesis:

Founded in 2013, DoorDash, Inc. is a San Francisco based American company that operates an online food ordering and food delivery platform. Since going public in December 2020 on NYSE, it has dropped 64.21%. My hold recommendation reflects a belief that DASH is a generational business, but it is beyond its peak and promises little growth potential for a high price, however, they are expanding into new verticals.

Valuation/Financial Modeling:

As of April 14th, 2023DoorDash (DASH) is trading at $61.72. I believe that this equity is overvalued and to decrease to $44.37 within this year. I arrived at this conclusion by conducting a Company Comps analysis with a 2% projected revenue growth.

Wolt Transaction Finalized:

On November 9, 2021, DASH announced the all-stock acquisition of Wolt for ~$8.1B at $206.24/share. Alone, DASH has 25M material adverse changes (MACs) across 3 countries, and Wolt has 2.5M MACs across 23 countries and 55 cities. Thus, Wolt expands DASH’s global reach into the Nordic, Benelux, Eastern EU, and Japan with ~2.5M MACs in 23 countries. This acquisition will help DASH expand their international presence to generate more revenue.

Stable, Experieinced Management Team:

Tech firms are often known for frequent turnover, but DASH has proved resilience. DASH CEO and co-founder, Tony Xu, keeps a low profile and his management team is stable. Seven of the nine reports have been with Xu for an average tenure of five years, which is half the time DASH has existed. This stability in management has resulted in DASH’s ability to outpace competitors such as Uber Eats (UBER). As of February 2023, DASH had 65% market share of the U.S. restaurant-delivery market, whereas UBER has 23%. Having a stable management team that has implemented a successful business strategy so far provides promise for future business growth.

Alia Piccinni | April 2023

DoorDash’s Total Revenue Growth

Source: Capital IQ Risk Potential Market Share Expansion is Decelerating: DASH’s market share expansion has been impressive but has

been decelerating. In March 2022, DASH’s market share was 55-60%. DASH gained this market share at the expense of Grubhub (GRUB), while their largest competitor Uber Eats (UBER) maintained their market share at #2 since 2018. This deceleration of market share expansion for DASH is a result of market structures maturing and UBER remaining strong.

Behind Across All International Global Entity Online Systems: DASH has expanded internationally since 2015, but they are still behind compared to competitors. DASH entered Canada in 2015, Australia in 2019, followed by Japan and Germany in 2021. Despite this international expansion, DASH’s international revenue in 2021 totaled $11M, which accounted for <1% of total revenue. Compared to competitors, DASH is positioned last or second to last in any international market.

Shift in Key Purchasing Criteria: Key purchasing criteria’s (KPCs) have changed from selection to price. DASH achieved their #1 position due to the company offering the widest restaurant selection which was their primary advantage (formerly, #1 KPC). However, price has now become the #1 KPC. This enables substitutes, specifically UBER maintaining shares as a solid #2.

Sources:

Grant Travis | 4/11/2022

Rating: Buy Current Price: $61.52 Price Target: $78.75 Company Updates / News ● FY22 Revenue: $1.58 B ● Market Cap: $30.19 B ● The Open Internet Gains Prominence, Reaching Almost 600 Million in India Competitor Statistics from Q4 2022

The Trade Desk (TTD) Investment Thesis: The Trade Desk provides a wide variety of data processing and warehousing services, from site-based data-layering to 3rd party data management. The Trade Desk’s platform essentially allows clients to skip the middle-man (ad agencies) and directly purchase ads from off and online sources. My buy recommendation reflects a belief that The Trade Desk will continue to perform well, given their competitive advantages in customizability and their string client relationships and backed by industry trends toward automation of AD buying and the digitalization of media.

Valuation/Financial Modeling:

As of April 10th, TTD is trading at $61.52. I believe that this equity is undervalued and expected to increase to $78.75 with a 12 month time horizon. I arrived at this conclusion by conducting a DCF analysis with a 4% growth, 8% operating margin, and a WACC of 7.67% across 5 years. I used these assumptions based off of historical data and an optimistic view given TTD’s positive performance.

Integrated Technological Solutions: Meta Revenue: $32.2 billion

Hubspot Revenue: $469.7 million

Roku Revenue: $731 million

TTD developed a product called Koa, which is an AI and Machine Learning Tool that makes real-time recommendations for ad placements for optimal cross-device vendor service by leveraging data analyzed from over 600bn queries per day. They also integrated OpenPath product, which provides advertisers direct access to premium digital inventory to remove bottlenecks that can occur in the programmatic supply chain. Lastly TTD uses a product called Solimar that has capabilities for advanced data tracking and campaign optimization across multiple channels. This is especially important as third-party cookies are depreciated.

Strategic Partnerships:

Data partnerships further enhance TTD’s access to proprietary technology and traditionally hard-to access consumer data, which enables TTD to capture a larger % of ad budget. TTD partned with Walmart to help build the Walmart DSP (powered on TTD’s platform), making the relationship between campaign spend and customer purchase more transparent. The WMT partnership also provides advertisers access to unique shopper data and sales measurement data through the WMT self-service platform. TTD also partnered with Walgreens, expanding their data library. This also gives advertising clients more flexibility in managing the reach and frequency of campaigns on their preferred DSP, while dually building a better consumer experience through more relevant and optimized advertising.

Grant Travis | 4/11/2022

2021 Industry Spending Share:

Risk Potential Data Protection: If use of “third-party cookies” is rejected, clients’ ability to use data on their platform is

restricted. Further, privacy regulations could restrict the use of cookies, and the fines and penalties for breach may be significant. However, TDD is building support for Unified ID 2.0, an open-source identity framework, which aims to give consumers more transparency & control over their data without reliance upon third-party cookies.

Declining Media Consumption Post Covid-19: Post-pandemic overall media consumption may fall,

reducing the demand for digital advertising and TDD may be unable to diversify and therefore fail to sustain its profits in the long-run. Though, this is mitigated by TDD’s post-pandemic growth which has been driven by massive customer acquisition & retention.

3rd Party Dependency: TTD relies on the use of external advertising channels so any decrease in the use of the advertising channels, or unexpected shift in use among the channels that TDD is primarily dependent upon could devastate its clients. However, TTD invests in omni channels, including new inventory within CTV, digital radio, social, native, and digital out of home.

Sources:

Sarah Zhou | April 2023

Rating: Buy Current Price: $13.58 Price Target: $18.22 Company Updates / News ● Market Cap: 33.075B ● Beta: 1.48 ● 52 Week High: 21.94 ● 52 Week Low: 8.82 ● WBD unveiled Max (its enhanced streaming service) to be launched on May 23, 2023 ● Director Greg Berlanti signed an exclusive deal with WBD to remain at the studio through 2027 ● Undergoing restructuring (merger, organizational, and programming) until EOY 2024 Competitor Statistics from Q4 2022

Subscribers: 96.1M Revenue: $11.01B

Warner Bros. Discovery, Inc. (WBD) Successful Merger? Investment Thesis: Warner Bros. Discovery, Inc. (WBD) is a multinational mass media and entertainment conglomerate, formed after the spin-off of WarnerMedia by AT&T, and its merger with Discovery, Inc. in April, 2022. The company provides service to 96.1 million subscribers, with ownership of DC Entertainment, HBO, Food Network, and more. My buy recommendation reflects a belief that Warner Bros. Discovery’s share price will increase in the long run due to the synergies between the recent merger, the shift of consumer preference towards streaming, and WBD’s Max service, which will tap into their depth of content and expand globally.

Valuation/Financial Modeling:

As of April 24th,Warner Bros. Discovery, Inc. (WBD) is trading at $13.58. I believe that this equity is undervalued and its price target for this year is $18.22. I arrived at this conclusion by conducting a Comparable Company Analysis against top competitors, including Netflix, Inc.. (NTFX) and The Walt Disney Company. (DIS).

Streaming Service:

Warner Bros Discovery offers 3 different types of streaming methods: SVOD, AVOD, and TVOD, covering more types of consumers than any competition. SVOD (Streaming Video-On-Demand) lets users subscribe to a library full of content to watch at any time. AVOD (Ad supported) lets users watch content at a reduced price through the addition of ad interruptions. TVOD (Transaction) allows users to rent or purchase content at a one-off fixed price. Depending on the demographic of its subscribers, WBD can engage in some form of all 3 streaming models, earn more revenue per content, and directly compete with the multitude of entertainment companies. Revenue for SVOD is set to grow at an average rate of +10% for the next 5 years, and WBD’s ARPU (average revenue per user) sits at $10.66, ahead of the market average.

Continued TV & Film Production: Subscribers: 232.5M Revenue: $7.85B

Subscribers: 161.8M Revenue: $23.51B

With a greater scale of products from the Warner Media and Discovery merger, coupled with the assets from HBO, WBD is an industry leader in available content. WBD has the advantage of distributing its content, which includes the DC universe, TV franchises (e.g. The Bachelor, Euphoria, You) sports channels (Eurosport), and news content (CNN) combine a diverse amount of content across various categories. Given Discovery+ and HBO Max’s complementary strengths, WBD’s new app “Max” takes advantage of their synergies in one product. This will place the company’s breadth of products in one place for consumers to access, as well as reduce subscriber churn and increase acquisition.

Sarah Zhou | April 2023

Warner Bros. Discovery, Inc. 1-year Stock Price

Source: Yahoo Finance Risk Potential Range of Revenue Channels: While Warner Bros. Discovery is transitioning into the streaming space, it still earns revenue from 4 segments: linear TV, streaming, licensed content, and theater releases. WBD earns revenue from traditional cable tv subscriptions and the advertisements aired in between shows, the subscriptions users have for (currently) HBO Max and Discovery+, the licensed content to other media companies and game studios, and the box office releases in theaters. With these diversified revenue streams, WBD can rely on any one of them to boost revenue growth. If the streaming market gets too competitive, WBD can focus on their other three segments. This gives them a competitive advantage against Netflix, who only offers streaming services, as well as the opportunity to earn more revenue per content for the same number of subscribers.

Globalization: WBD Max, which combines the company’s current Discovery+ and HBO Max platforms,

will not be available globally. The launch on May 23rd only reaches the United States. It is however projected to roll out to LATAM later this year, and EMEA next year, but will still be behind many of the company’s competitors that already have worldwide services. Netflix is currently available in 190+ countries, Disney+ successfully launched in 60+ countries, and Hulu is offered in 90+ countries. Ultimately, WBD Max is an extremely new platform, and we have yet to see how successful it will be.

Management Team: Media and Entertainment is known for being an industry with high turnover rates. For

the most part, WBD has not been a company whose management team has vastly fluctuated. The company’s current President and CEO, David Zaslav, has been with the company since 2006 (starting out as the CEO of Discovery). Similarly, the higher management team has all been with the company since before 2010, and they are surrounded by supporting management, all hired within the last 5 years. This combination of depth and experience is something to look out for in the coming years, and WBD goes through restructuring and changes. Sources:

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Jeremy Herring|5/1/2023

Rating: Hold Current Price: $125.90 Price Target: $130.50 Company Updates / News ● Beat Q1 2023 Projections ● Broadcom’s acquisition of VMware is currently on hold due to regulator process ● VMware announced an advanced partnership with HPE to further commit to the digital transformation of the Cloud experience ● SEC fined VMware $8mm due to “misleading investors” ● VMware ranked #1 in IT automation and configuration management by global firm

VMware Inc. (VMW) Turbulent Tech Market Investment Thesis: VMWare Inc. has proven to be a strong standalone business since it successfully completed its spin-off from Dell. The company has maintained a consistent level of revenue and net income during this period of uncertainty. The business has positioned itself to maximize its capture of revenue opportunities over the course of both the short and long term.

Valuation/Financial Modeling:

As of April 14th, VMware Inc. (VMW) is trading at $125.90. I believe that this equity is fairly valued and expect a slight increase to reach a share price of $130.50 within the next 12 months. I arrived at this conclusion by conducting a comparable company analysis (COMPS). I found five other comparable companies with similar financial data within the same industry and ultimately used an EV/EBITDA multiple to reach the target price.

Acquisitions:

Competitor Statistics

A key part of the company’s business strategy to remain relevant is to acquire other competitive companies and add their products and services to their offerings. Most recently Mesh7 in 2021. This business model allows them to offer end-to-end products all in one place.

NOW: $444.53 Revenue: $7.3B

On the other hand, Broadcom reached a $61 billion deal to acquire VMware. This was announced in May of 2022 and has been under review by both European and United States courts. As of February 2023, Broadcom filed a 90-day extension of the planned merger, putting the close date on May 26, 2023 . The completion is still uncertain.

from FY 2022

Booming Market: WDAY: $179.34 Revenue: $6.2B

HPE: $14.14 Revenue: $28.5B

For the full 2022 fiscal year, the company only saw revenue growth of ~4% compared to ~10% for the past two years. This is mainly supported by higher subscription and SaaS sales. This reflects the market trend of companies transitioning their business to cloud-based services. Again, this is ideal positioning for VMware because they offer all the essential needs of companies from security to cloud services to networking. Total spending on cloud services is expected to grow 20% for the second straight year to almost $600 billion. This pattern is not expected to end anytime soon with increasingly more business being handled virtually. VMware is strategically placed to take advantage of new business opportunities due to its excellent track record of customer satisfaction and commitment to bringing new and improved technologies to market.

Jeremy Herring|5/1/2023

Competitive Market Share Performance YTD

Source: Yahoo Finance Risk Potential Merger Completion: The acquisition of VMware by Broadcom is a highly anticipated merger that will stand to give generous amounts of synergies and new business capabilities to both firms. It is still under review by two separate courts that can veto it because of monopoly laws. This would effectively eliminate planned projects and synergies and negatively impact projections for the company for years to come.

Inflation: The most recent CPI report shows an increase in YOY prices by 5 - 5.6%. While this is still a hot topic

issue being addressed by both the FED and elected officials it will still have negative short-term and long-term impacts on the company. Unless there is a parallel increase in pricing for customers, increasing labor costs to general expense increases will negatively impact the company’s bottom line. Annual net income saw a decrease, again, while revenue rose, implying that higher expenses are are a continuing problem for the company.

Consumer Demand: As the industry has seen coming out from the pandemic, expectations of a total virtual

takeover have been missed the mark by a long shot. While there is still an undoubtedly strong demand, it is not at the level that was anticipated. Tthe tech-heavy NASDAQ just exited a bear market from the previous two years.. Similar firms have announced major layoffs and it would not be out of the picture for VMware to follow suit.

Sources:

Raquel Kanner | April 2023

Rating: Buy Current Price: $178.98 Price Target: $181.20 Company Updates / News ● Market Cap: $162.19B ● PE Ratio: 19.04 ● While achieving similar EBIT margins in 2021, TXN revenue increased by 9.2% to $20B ● TXN is the third largest company in the iShares Semiconductor ETF, following NVIDIA Corp. and Broadcom ● The company plans to webcast its Q1 2023 Earnings on Tuesday, 4/25 ● Individuals investing in TXN beginning in 2018 are now up 105%

Texas Instruments (TXN) Winning Through Innovation Investment Thesis: Since Texas Instruments’ Initial Public Offering on October 1, 1953, the stock has grown immensely. More specifically, the share price has increased by 84% over the past three years, achieving a compound earnings per share growth of 22%. Since its founding, Texas Instruments has grown to become a leader in Information Technology, serving millions of customers through its broad portfolio of over 80,000 products. My buy recommendation reflects a belief that Texas Instruments will continue to perform well with significant tailwinds, given the rising popularity of microchips, semiconductors, and other technological products that are serving our modern world.

Valuation/Financial Modeling:

As of April 15th, Texas Instruments (TXN) is trading at $178.98. I believe that this equity is undervalued and expected to increase to $181.20 within this year. I arrived at this conclusion by conducting a COMPS Analysis. I used these assumptions based on historical data and an optimistic view given Texas Instruments’ performance history.

Diversified Product Line: Competitor Statistics from Q4 2022

Revenue: $14.04B

Texas Instruments carries a diversified product line through its semiconductors, enabling the company to produce audio instruments, clocks, sensors, and wireless connectivity, to name a few. Semiconductors are vital to our modern world, as these small materials power electronic devices for efficient and reliable computing, healthcare, transportation, communication, and clean energy. Texas Instruments currently leads as one of the top semiconductor companies that covers individuals around the entire globe, and with the expansion of semiconductor-powered devices, Texas Instruments has the opportunity to expand across more of our population.

Growth of Semiconductor Industry:

Revenue: $3.25 B

Revenue: $3.69B

Returning from COVID, the rising demand of working from home has driven the progression of data processing applications, driven through semiconductors. In 2021 pre-pandemic, the global semiconductor market size was $527.88B. In 2022, this value increased to $573.44B, and with a CAGR growth rate of 12.2%, the industry is projected to grow to $1,380.79B in 2029. Moving out of the pandemic, there has been a staggering increase in demand across all regions for these small yet powerful devices.

Raquel Kanner | April 2023

Texas Instruments Growth Rate Among Mature and Competition

Source: Yahoo Finance Risk Potential Trade War and Tariff Disruption: The semiconductor industry, at large, is dependent on the US which

holds a significant portion of the semiconductor market. Beginning in 2018, the US has imposed trade restrictions with China. With these restrictions persisting today, the US is at risk of losing a portion of its market share, both nationally and internationally, thus decreasing its power in the semiconductor industry. The tariffs being imposed on China furthermore negatively impact imports and exports, increasing manufacturing costs.

Supply Chain Issues: One major lingering effect of COVID-19 is the global shortage of semiconductors.

Research conducted by MIT and DENSO, a Japan-based automotive component manufacturer, highlighted the vulnerability of semiconductor supply chains to disruptions. The research conducted found that short-term disruption of 10 days could result in a year-long supply chain disruption of semiconductors. Thus, manufacturing facilities in the US will not suffice, and factories must find alternative ways to efficiently but carefully produce these powerful and essential products.

Sources:

Beliz Erdogmus | April 2023

Rating: Buy Current Price: 87.24 Price Target: 109.63 Company Updates / News ● Market Cap: $134.87 B ● 52 Week Range: 54.57-109.57 ● AMD revenue increased by 43.6% to $23.6B from 2021 ● AMD EBITDA increased by %46.7 to $6.6B from 2021 ● The stock value has increased more than 7-fold from 11.34$ in 2017 to its current price of $83.87, yielding high returns to investors. ● In April 2023, AMD signed a contract with tech provider ALSO Holding for server CPUs. Competitor Statistics from Q4 2022

Advanced Micro Devices (AMD) Leading the Charge in Semiconductors Company Overview: Advanced Micro Devices is an American multinational semiconductor company based in Santa Clara, California, that develops computer processors and related technologies for business and consumer markets. Its main products include semiconductors, microprocessors, integrated circuits, and embedded systems, and the company has recently expanded into data center and gaming markets. The company was founded in 1969 by Jerry Sanders.

Investment Thesis:

Since AMD’s listing on the New York Stock Exchange on October 15, 1979, the stock has grown immensely, and Advanced Micro Devices has grown to be one of the largest microchip producers globally. My buy recommendation reflects a belief that Advanced Micro Devices will continue to perform well, given the rising demand for microchips.

Valuation/Financial Modeling:

As of April 26th, Advanced Micro Devices (AMD) is trading at $87.24. I believe that this equity is undervalued and expected to increase by 24.8% to $109.63 this year. I arrived at this conclusion by conducting a Comparable Company Analysis (COMPS). I found five other comparable companies with similar financial data within the same industry to reach the target price.

Increased Demand for Semiconductors:

Market Cap: $120.56B Revenue: $63B

Market Cap: 153.69B Revenue: $19.5B

As the impact of digital on lives and businesses has accelerated, semiconductor markets have boomed, with sales growing by more than 20% to about $600 billion in 2021. The industry’s aggregate annual growth rate is expected to average from 6% to 8% a year up to 2030. As a result, the industry can be expected to reach $1T by the end of the decade; in recent years, the semiconductor industry’s profitability has improved relative to other industries. As a leading company within the semiconductors sector, Advanced Micro Devices has the opportunity to grow significantly in the next decade with demand for its products increasing exponentially.

Product Innovation: Market Cap: 665.81B Revenue: $26.91B

Advanced Micro Devices has announced the innovations in their products and services at CES 2023, an annual trade show and one of the most influential tech events worldwide. They will be expanding further into the PC and Gaming industries, AI, Healthcare, and Aerospace. CEO Lisa Su further stated that they have multiple new mobile, gaming, and AI chips that will make 2023 an exciting year for both AMD and the industry as a whole.

Beliz Erdogmus | April 2023

AMD Stock Price, Last Five Years:

Source: Yahoo Finance Risk Potential Global Supply Chain Shortage: In addition to long-standing issues within the semiconductor industry, such

as insufficient capacity at semiconductor fabs, the COVID-19 pandemic aggravated the existing supply chain issues. Semiconductor companies have increased throughput, which will contribute to expected revenue growth of about 9% in 2021 – up from the approximate 5% recorded in 2019. Some governments are also upping their investment in semiconductor technology to lessen the impact of global supply-chain disruptions, such as the CHIPS Act of 2022 which provides roughly $280 B funding to boost US domestic research and production of semiconductors. However, the current chip shortage is unlikely to be resolved in the near future, partly because of the complexities of the semiconductor production process. The war in Ukraine has also further disrupted the supply chain and access to raw materials, which is expected to persist for the foreseeable future.

Market Competition: While Advanced Micro Devices is a leading company within the semiconductors

industry, it is trying to expand into significantly contested markets with established tech giants such as Texas Instruments and NVIDIA. Even with their recent advancements and innovations branching into different tech products, it will be an uphill battle for AMD to grow its market share and presence within the sector. AMD suffered losses in its stock price along with other tech companies as a result of the pandemic and subsequent inflation and recession, as well as the consequent decreased demand for PCs, all of which have greatly hit the tech sector. Although it has been recovering since, and has exceeded pre-pandemic levels of revenue and margins, it will be a challenge to compete with bigger, better established firms. Sources:

Erin Limb | April 2023

Rating: Hold Current Price: $276.49 Price Target: $260.64 Company Updates / News ● Market Cap: $174.61B USD ● PE Ratio: 25.46 ● ACN revenue increased by 21.29% to $61.59B from 2021 ● ACN EBITDA increased by 22.99% to $10.41B from 2021 ● ACN, MSFT, and ULVR completed one of the largest and most complex cloud migrations in the consumer goods industry (April, 2023) ● ACN plans to slash 19,000 jobs worldwide (March, 2023) ● ACN predicts that generative AI will lead to a new future for businesses (March, 2023)

Accenture (ACN) Unleashing the Power of Technology and Acquisitions Investment Thesis:

Since Accenture’s listing in the New York Stock Exchange on July 19, 2001, the stock has grown substantially. Since then, Accenture has grown to one of the world’s leading professional services companies, with capabilities in strategy, consulting, digital, technology, and operations. My hold recommendation reflects a belief that Accenture is continuing to perform well, particularly given its focus on acquisitions; however, it is currently slightly overvalued.

Valuation/Financial Modeling:

As of April 24th, Accenture (ACN) is trading at $276.49. I believe that this equity is slightly overvalued and I expect the price to decrease to $260.64 next year. I arrived at this conclusion by conducting a COMPS analysis, analyzing the FY 24 EV/EBITA ratio, and finding the 75th percentile multiple.

“World’s Most Acquisitive Firm”:

Competitor Statistics

Acquisitions have been one of Accenture’s key growth strategies, enabling the company to enter new markets, diversify and broaden its product portfolio, and maintain its leading position. In 2021, Accenture was described as the “world’s most acquisitive firm” in a Bloomberg article, demonstrating its impressive growth from 3-4 acquisitions a year in their early years to 34 in fiscal 2020 with a total investment of $1.5B.

Revenue: $16.69B Current Price: $125.70

In February 2023, Accenture completed its acquisition of SKS Group, a consulting firm that helps banks across Germany, Austria, and Switzerland modernize their technology infrastructure and address regulatory requirements. This recent acquisition is expected to further enhance Accenture’s technology, consulting, and regulatory services capabilities.

from Q4 2022

Technology Consulting Services: Revenue: $4.66 B Current Price: $1,277.45

Revenue: $232.29B Current Price: $388.25

Accenture continues to experience strong demand for consulting services, particularly digital, cloud- and security-related services, and assistance in the adoption of new technologies. Consulting revenues of $8.4 billion increased 1% year over year on a reported basis and 10% in terms of local currency in the first quarter of fiscal 2023. The demand for these services aligns with Accenture’s Technology Vision for 2023: “The next decade will be defined by three mega technology trends—cloud, metaverse and AI—which collectively will collapse the distance of our digital and physical worlds,” said Paul Daugherty, group chief executive of Accenture Technology.

Erin Limb | April 2023

Accenture vs. IBM Share Price - Annually (Accenture in Dark Blue)

Source: Google Finance Risk Potential Higher Talent Costs: Higher talent costs are negatively impacting consulting services companies like

Accenture. The consulting industry is highly labor-investigative and heavily dependent on foreign talent; therefore, higher costs for talent are a potential risk when considering purchasing stock of Accenture. Accenture can consider the following strategies to mitigate higher talent costs: optimize staffing, increase employee retention, automate processes, utilize remote workers, use outsourcing, and improve productivity. By adopting a combination of these strategies, Accenture can mitigate higher talent costs and maintain its competitive edge in the market.

Integration Risks from Acquisitions: While frequent acquisitions do improve revenue opportunities,

business mix, and profitability, they do add to integration risks, such as leadership issues, the heavy workload on employees, and mismatched company culture. They are also a potential distraction for management, which could impact the organic growth of Accenture. To mitigate integration risks from acquisitions, Accenture can consider the following strategies: develop a comprehensive integration plan, conduct thorough due diligence, appoint an integration team, establish clear communication channels, align culture and values, invest in training and development, and monitor progress and adjust as needed. By adopting these strategies, Accenture can mitigate integration risks from acquisitions and ensure a smooth and successful integration process.

Sources:

Rory Sheppard | 4/13/2023

Rating: Buy Current Price: 221.67 Price Target: 297.91 Company Updates / News ● Market Capitalization: 114.458B ● Caterpillar and the United Auto Workers Union came to an agreement not to close union plants over the next six years ● Company head of construction industries reports high activity in the battery and chip plants sector ● Amidst market turmoil in the banking sector following recent crises, the construction industry has not slowed down. In poor economic situations, these types of companies tend to invest inwardly Competitor Statistics from Q1 2023

Caterpillar Inc. (CAT) From Caterpillar to Butterfly Investment Thesis: Over the past five years Caterpillar has experienced steady growth, plateauing at times, but with the potential to accelerate quickly. The company has consistently beat earnings-per-share expectations over the past year. My buy recommendation reflects a belief that Caterpillar will continue to perform well, given the recent R&D investments and an optimistic view of increases in nonresidential construction

Valuation/Financial Modeling:

As of April 13th, Caterpillar (CAT) is trading at $221.67 I believe that this equity is undervalued and expected to increase to $297.91 within this year. I arrived at this conclusion by conducting a comparable companies analysis with a 1.8% growth projection and a median 7.3 P/E multiple over the year. I used these assumptions based off of historical data and an optimistic view given Caterpillar’s performance history.

R&D Investment:

Caterpillar has always strove to beat the technology curve. This is why the company has spent the last decade focusing on creating electric-powered mining trucks, and accompanying mining “microgrids” to reach its sustainability goals. The new model 793 electric haul truck is expected to begin operations in 2027/2028. Additionally, the company is going forward with increased proportions of hydrogen fuel and biofuel in their new generator sets.

Revenue: $3.77B

Overview:

In January 2023, Caterpillar’s construction equipment arm brought in $6.85 billion, nearly a 20% increase from the previous quarter, reflecting the higher prices of the company’s goods amidst rising expenses. Manufacturing costs rose by $8.76 million last quarter. Revenue: $1.959B

Revenue: $5.71B

75% of Caterpillar’s construction sales are in the nonresidential construction sector, which includes warehouses and public works projects. Considering the continued roll-out of recent infrastructure legislation and private real estate investment in warehouse sites, the future appears bright for the company.

Rory Sheppard | 4/13/2023

Graph Title: Caterpillar Inc. Revenue Growth since Q1 March 2020

Source: Capital IQ Risk Potential Supply Chains: As noted above, Caterpillar experienced an increase in manufacturing costs, a reality in no small way attributable to inefficiencies in the global supply chains of goods such as semiconductor chips. Rising shipping costs also contributed to the increase in overall costs. If supply chain issues persist the consequences could be that projects are finished late, orders are left unfilled, and/or continued increases in manufacturing costs in attempts to speed up production.

Rising Interest Rates: Rising interest rates can make construction projects more expensive, especially when it

comes to residential projects. According to the U.S. Department of Commerce, the issuance of building permits as of February 2023 is down 17.9 percent from the same period last year. Additionally, the rate of construction starts on private homes is down 18.4 percent from the same period last year. After 15 years of interest rates below 1 percent, construction companies and real estate developers will be tested as the Federal Reserve attempts to combat the recent inflationary environment.

Climate Change: As regulatory pressure increases on industrial companies to meet stringent greenhouse gas

caps and other production-related limits, companies might be forced to take losses or attempt untimely, ambitious, and potentially costly efforts in order to achieve internal and external renewability targets.

Sources:

Adelyn Carney | April 8, 2023

L3Harris Technologies (LHX) Taking the Wheel… Autonomously

Rating: Buy Current Price: $197.40 Price Target: $224.34 Company Updates/News ● Market Capitalization: $37.42 B ● Secured a 5-year, $6 B contract with the U.S. Army to replace SINCGARS radios ● Selected to train all pilots of Japan’s All Nippon Airways ● DoD projected to spend $8 B on Tactical Radios through mid-decade Competitor Statistics from Q1 2023

Revenue: $17.06 B

Revenue: $36.6 B

Revenue: $65.98 B

Investment Thesis:

L3Harris Technologies, an aerospace and defense company, provides products within the realm of air, space, land, sea, and cyber. Operating under three business segments - Integrated Mission Systems, Space and Airborne Systems, and Communication Systems - L3Harris develops a wide range of products including night vision devices, surveillance technologies, data recorders, and navigation and display systems. With 350 locations across 30 countries, L3Harris is able to provide global services to its customers located in more than 100 countries. My buy recommendation reflects the belief that L3Harris’s share price will increase through its strategic acquisitions and technological innovations making it one of the most desirable contractors for its commercial and government customers.

Valuation:

As of April 5th, L3Harris (LHX) shares are trading at $197.40. I believe that this equity is undervalued and expected to increase to $224.34 within the next year. I arrived at this conclusion by conducting a Comparable Company Analysis, comparing L3Harris to Raytheon Technologies, Northrop Grumman, Lockheed Martin, BAE Systems, and Honeywell, and using the P/E valuation multiples.

Acquisitions:

In January 2023, L3Harris acquired the Tactical Data Links business segment of Viasat, a communications company providing networks in the aviation, defense, and space industries. This acquisition gives L3Harris access to advanced communication devices as well as access to Link 16, a communications system used by NATO, advancing the mission of the US Department of Defense, one of L3Harris’s biggest customers. The acquisition of Aerojet Rocketdyne, an aerospace and defense manufacturer, is expected to close in 2023. This acquisition will allow L3Harris to build bigger and better aircrafts, utilizing Aerojet’s propulsion and energetics systems. Talks of acquisitions of other related companies are also in the works.

Autonomous Vessels: Revenue: $35.47 B

L3Harris is developing autonomy technology that would allow for a single vessel to contain manned, remote, and unmanned capabilities. In warzone settings, the remote and unmanned features could put man out of harm’s way. L3Harris is implementing highly sophisticated AI and ML solutions to achieve such autonomy. These autonomous vessels will learn and evolve through real-world experiences in the water. This technology could also optimize vessel performance as the platform can analyze trends and recognize problems that man cannot do in real time.

Adelyn Carney | April 8, 2023

L3Harris Revenue:

Source: Macrotrends Risk Potential US Government Contracts: The US Government is L3Harris’s primary contractor, accounting for three

quarters of its sales. Consequently, L3Harris’s fiscal performance is highly dependent upon its objectives. If the Department of Defense is looking to scale back its purchasing of defense weapons, this could severely hurt L3Harris’s sales. Moreover, the Department of Defense is subject to the debt ceiling in which the limit is expected to be reached by September 2023. If this occurs, in the absence of any Congressional action, defense spending will likely be severely reduced or come to a halt, hurting L3Harris’s revenues.

Defense Contractor Competition: There are hundreds of defense contractors that customers can choose

from: Lockheed Martin, Raytheon Technologies, and General Dynamics, just to name a few. L3Harris must distinguish itself from its competitors in order to win contracts. This could include offering riskier contracts in order to attract customers. For example, L3Harris might offer a fixed-price contract with a smaller estimated profit margin in order to win a bid. However, if the initial cost was underestimated, this could result in a revenue loss.

Acquisitions and Mergers: Along with the L3 Technologies and Harris merger completed in 2019 making it

one of the largest defense contractors in the US, L3Harris has also acquired several companies. Now, due to the size and scope of L3Harris, the company could potentially face lawsuits due to antitrust concerns when it merges with or acquires other companies. This occurred when Lockheed Martin, one of L3Harris’s top competitors, attempted to acquire Aerojet in 2020. Now, L3Harris is in the process of acquiring Aerojet but could face a similar outcome. Furthermore, such an issue would only result after time and resources have been allocated towards the acquisition.

Sources:

Beau Gillam | April 16, 2023

Rating: Sell Current Price: $391.42 Price Target: $327.20 Company Updates / News ● John Deere just unveiled its new hybrid-electric 850 X-Tier Dozer which they hope will help set the standard for more sustainable farming ● John Deere reports first quarter net income of $1.959 Billion which represents more than a 100% increase from the end of 2022 Competitor Statistics from Q1 2023

Revenue: $52.51 B

Revenue: $59.43 B

John Deere (DE) Investment Thesis:

John Deere had a very profitable past few years during the pandemic. Its stock price nearly tripled while the majority of industries saw massive losses. Agriculture has always been a vital sector of the American economy and because of that the government provided farmers with billions of dollars in Covid-19 aid. This influx of cash coupled with extremely low interest rates for the first few years of the pandemic allowed farmers to purchase new equipment while they could get financing for next to nothing. John Deere saw a 23% growth in revenue in 2021 and another 20% in 2022. But with interest rates being raised in early 2023 John Deere stock has begun to slip from its $448.40 high. It is important to note that the agricultural industry is very cyclical and simply because I assert John Deere to be overvalued does not mean I believe the company’s fundamentals are not sound. It means that they had a few extraordinarily good years which are coming to an end.

Valuation:

As of April 16th, John Deere (DE) is trading at $391.42. I firmly believe that (DE is overvalued and, over the next two years, will reach a valuation of $327.20. I derived this valuation through a comparative company analysis with top competitors like Caterpillar and CNH International. It is clear that DE has seen a few of their best years yet but the current economic environment cannot sustain this type of growth.

Interest Rates:

In the beginning of 2022 the Fed started to raise interest rates and has continued to do so slowly since. Commercial agricultural equipment can cost in the millions of dollars and the majority of small to medium sized farms in America operate on razor thin margins. During the pandemic interest rates were at record lows and billions of dollars were being pumped into the agricultural sector in order to maintain production. This incentivised farmers to buy while prices were good and John Deere’s revenues reflect this uptick in sales. As interest rates have started to rise DE stock has plateaued and begun to drop. The value will continue to fall as business goes back to usual.

Revenue: $23.55 B

Beau Gillam | April 16, 2023

John Deere (DE) 5-year Stock Price:

Source: Yahoo Finance Risk Potential Competition: John Deere has dominated the agricultural industrial machinery market for decades. Their brand is ingrained in American culture so much so that songs are written about their legendary tractors. Many of their competitors like Caterpillar have tried to imitate John Deere’s success in agricultural equipment but have failed to make meaningful strides. John Deere still has a promising future, but even though they dominate their industry, the entire market has begun to shrink since interest rates start rising.

Shift Towards Electric: In early 2023 John Deere released their new hybrid-electric tractor line which is a

major step for the company towards alternative sources of power for their tractors. But they are by no way leading the way in electric farming equipment. Many smaller companies like Solectrac have centered their companies around developing the best environmentally conscious machinery. John Deere is starting to release products to compete but more and more farmers are seeing the benefits of electric tractors and making the switch. John Deere needs to continue to innovate in order to remain competitive in this ever changing industry.

Cyclical Market: Another key risk to John Deere’s current valuation is not something new. The agricultural

industry has always been very cyclical in nature. The buying power of farmers is very dependent on interest rates and with rates on the rise more farmers are going to be priced out of new farming equipment and will instead shop on the second hand market. It will be interesting to see just how much revenue has changed in the next quarterly report. Sources:

HEALTHCARE

JP Spak | May 9, 2023

Rating: Sell Current Price: $78.59 Price Target: $65.00

Gilead Sciences (GILD) Nothing Big Going Investment Thesis:

Since Gilead’s listing in the New York Stock Exchange in January 2022, the stock has grown more than 400%. During that time, Gilead has been one of the staples of the American biopharmaceutical market. However, in a very ● Market Capitalization: $103.8B saturated healthcare and pharmaceuticals sector, Gilead lacks the tools to take ● Revenue Growth (FY22): -0.08% its business to the next step. ● Positive Phase 1 data on HIV treatment drugs was announced My sell recommendation reflects a belief that Gilead will likely struggle over at the 2023 Conference on the next year, given its recent reliance on increasingly irrelevant COVID-19 Retroviruses and Opportunistic treatments and failure to reach a significant innovation other than initial Infections. success in Stage 1 trials for HIV treatments. Company Updates / News

Competitor Statistics from LTM

EBITDA: $13.1B Enterprise Value: $139B

Valuation/Financial Modeling:

As of the market close on May 8th, Gilead Sciences, Inc. (GILD) is trading at $78.59. I believe that this equity is overvalued and expected to decrease to $65.00 within this year. I arrived at this conclusion by conducting a comparable companies analysis. I used assumptions based off historical data, taking into account general trends in the healthcare sector. Over the last five years, Gilead’s stock has not shown major growth potential, remaining relatively stable. Even with this recent success, in general, Gilead has been outpaced by their competitors. Within the past 6 months, the healthcare sector has seen a spike in stock prices, well outpacing the S&P 500. Therefore, I project that once the healthcare market eventually ceases high growth rates, Gilead’s stock will be among the first to fall.

EBITDA: $13.5B Enterprise Value: $182B

Strong Presence in Virology and Oncology Pharmaceuticals:

EBITDA: $20.2B Enterprise Value: $198B

Potential for New Acquisitions:

EBITDA: $3.5B Enterprise Value: $53B

Gilead has long been one of the main players in the virology and oncology markets. They were quick to develop a treatment drug for COVID-19, allowing them to succeed financially in the midst of the majority of companies struggling due to restrictions. Many of their products are patent-protected, allowing them to price control the market and giving them a stable and reliable source of revenue. As an established player in the biopharmaceutical market, Gilead may seek to expand to other specialties or purchase the rights to drugs similar to their own within their existing specialties. Their size and established pedigree make them an attractive candidate for any smaller pharmaceutical companies looking to sell their business and products to a larger company. New acquisitions can be difficult to forecast but can immediately provide a reason for optimism about growth. As a common means for expansion in the healthcare sector, it is certainly plausible that Gilead could use such means to increase their market share.

JP Spak | May 9, 2023

Comparing Competitors’ Recent Growth:

Source: Yahoo Finance Risk Potential The End of the Pandemic: With the COVID-19 pandemic drawing to a close and the WHO having declared the major threat over, much of the revenue realized by Gilead from sales of products like Veklury will continue to diminish. Having already seen a massive drop in revenue from these products, it is reasonable to expect that these product lines will prove largely unprofitable in the short-term.

Over Reliance on Biktarvy Dominance: Many of Gilead’s endeavors in other product lines in the

healthcare field are highly contested. Their only true competitive advantage is their HIV-treatment drug BIktarvy. Should another biopharmaceutical company pioneer a similar treatment, their revenues would likely fall. In addition, HIV incidence has decreased over the past few decades, meaning fewer new HIV patients, and hence candidates for use of the drug, are emerging.

Stiff Competition in the Healthcare Sector: The healthcare sector has been fiercely competitive in

countries like the US, where major profits can be realized on products. Many companies have sought to expand their product line into other specializations or increase their market share in an existing one. Companies like Amgen and Merck are already larger (by both enterprise value and Market capitalization metrics) and focused on the oncology field, one of Gilead’s main markets. Gilead will continue to face stiff competition as other companies develop drugs that mimic those on which they rely heavily for long-term financial health. Sources:

Kaitlyn Lau | 05/09/2023

Vertex Pharmaceuticals (VRTX)

Rating: Buy Current Price: $344.83 Price Target: $366.20

Investment Thesis:

Company Updates / News

Vertex Pharmaceuticals is a global biotechnology company that engineers medical treatments for various diseases. The company is well known for creating the first medicines to treat the underlying cause of cystic fibrosis.

● ● ● ●

Market Cap: $89.84B P/E Ratio: 27.76 EPS: 12.42 Last month, Vertex announced that it entered a new non-exclusive license agreement with CRISPR Therapeutics to accelerate its development of hypoimmune cell therapies for Type 1 diabetes. ● Vertex also recently signed a multimillion-dollar partnership with ImmunoGen to develop a conditioning agent that can be used in gene editing.

My buy recommendation reflects my belief that Vertex will continue as a leader in the biotechnology industry and successfully diversify its product offerings, which will enhance the company’s long term financial health.

Valuation: As of May 9, Vertex Pharmaceuticals (VRTX) is trading at $344.83. I believe that this equity is currently undervalued and expected to increase to $366.20 within this year. I arrived at this conclusion by conducting a comparable companies analysis. I chose to give Vertex Pharmaceuticals a buy rating based off historical data and an optimistic view given the company’s strong growth potential.

Rapid Growth and Strong Financial Health:

Competitor Statistics As of 4/16/2023

Over the years, Vertex Pharmaceuticals has heavily invested into its brand portfolio. In order to achieve great success with its cystic fibrosis treatment, the company pushed for regulatory approvals that would make its product more available to a larger population. Therefore, the company has experienced rapid growth over recent years.

Stock Price: $333.52 Market Cap: $85.91B

Furthermore, the company has consistent strong financials that have frequently outperformed investor expectations. Vertex’s stock rose 33% in 2022 and 72% in the last five years. This rise can be attributed to many financial factors, such as the fact that its revenue rose 253% to $8.4 billion in 2022. Seeing how Vertex has maintained its financial strength over the course of the pandemic demonstrates its industry leadership.

Consistent Push to Innovate Further:

Stock Price: $288.13 Market Cap: $41.63B

Stock Price: $829.33 Market Cap: $88.51B

Even though Vertex already has an established product portfolio, the company consistently strives to achieve a higher level of innovation through diversification. Besides cystic fibrosis, the company is also developing treatments for other diseases such as sickle cell disease and Type 1 diabetes. For instance, with sickle cell disease, Vertex recently submitted its treatment developed alongside CRISPR Therapeutics to the FDA, bringing the world’s first CRISPR-based gene-editing therapy even closer to market. Furthermore, Vertex acquired ViaCyte for $320 million in order to accelerate its development of a cell replacement therapy for Type 1 diabetes. In an industry that is as saturated and competitive as the biotechnology sector, having diversified offerings helps keep a company more stable. Vertex’s heavy R&D investments into developing various other treatments as well as partnerships and acquisitions prime the company for higher growth potential in the long term.

Kaitlyn Lau | 05/09/2023

Vertex Pharmaceuticals OHLC and Stock Volume Over the Last Five Years:

Source: Yahoo Finance

Risk Potential Diversification Will Take a Long Time: Vertex has experienced great success in the cystic fibrosis market, and is now working to develop treatments for other diseases such as Type 1 diabetes and sickle cell disease. Although diversifying into different sectors provides strong opportunities for long term growth, there is no guarantee that Vertex can replicate its achievements in the CF space. Furthermore, diversification will require heavy investments in R&D. Therefore, investors should understand that Vertex’s diversification efforts will take a while before they can generate profits for the firm.

Battling with Criticism Against its Prices: Over the last few months, Vertex has been locked in a battle with insurers over its immense price increases. The company announced that it was going to slash the amount of financial assistance that it offers this year, which has hurt many patients who use Vertex’s cystic fibrosis medicine Trikafta. Activists from various countries have been campaigning their governments for more affordable generics of Trikafta. The criticism that Vertex is receiving not only negatively impacts its brand image, but will also decrease the company’s revenues if generics of its medications can be produced.

Biotechnology Industry is Very Saturated: The global biotechnology market size was valued at $1023.92 billion in 2021 and is expected to exhibit a CAGR of 13.9% from 2022 to 2030. The market’s strong growth has been largely driven through increased government support with the impact of COVID-19 as well as an increased interest in more personalized treatments for patients. Success in the biotechnology industry centers around having the most innovative technology, which requires a massive investment in R&D. Therefore, Vertex carries a consistent risk of potentially falling behind its competitors. Sources: Vertex Pharmaceuticals News | Seeking Alpha | The Motley Fool| Capital IQ | Fierce Pharma | IBISWorld | Yahoo Finance | Grand View Research | bccResearch | Forbes| BusinessWire

Siddhant Dahiya | 04/16/2023

UnitedHealth Group (UNH)

Rating: Buy Current Price: $488.75 Price Target: $595.60

Investment Thesis:

Company Updates / News

UnitedHealth Group is the largest healthcare company by revenue based in Minnesota. The group offers healthcare products and insurance services and has market cap of more than $400 billion.

● ● ● ●

Market Cap: $456.92B P/E Ratio: 21.42 EPS: 6.26 $8 billion acquisition of Change Healthcare should be a positive catalyst for its Optum unit

Competitor Statistics As of 4/27/2023

My buy recommendation reflects my belief that UnitedHealth Group will continue to dominate the healthcare space through its recession proof business models, its acquisitions and because of the post- Covid macro-environment which I believe will allow for less volatility and greater business certainty.

Valuation: As of April 27, UnitedHealth Group (UNH) is trading at $488.75. I believe that this equity is currently undervalued and expected to increase to $595.60 by the end of this year. By utilising financial models including a comparable companies analysis, I attainde the intrinsic value with respective to UNH’s competitors. I chose to give UnitedHealth Group a buy rating based off optimistic view of UnitedHealth’s growth prospects due to a variety of variables.

Healthcare Market Potential: Stock Price: $212.7 Market Cap: $69.64

The UnitedHealth Group faces several macro-economic catalysts including the fact that overall spending on health care will continue to grow in the future, due to inflation, medical technology and pharmaceutical advancement, regulatory requirements and national interest in health and well-being. The current growth in inflation has helped UNH sell at higher price-points although may impact its supply chains in the future. The balancing of the FED’s tapering has created an optimal situation for the company.

Optum Healthcare Growth: Stock Price: $465.4 Market Cap: $107.24B

Stock Price: $525.8 Market Cap: $65.7B

Optum, is subsidiary of UnitedHealth Group, it has steadily beat expectations over the last 5 years. Optum Health’s revenue grew from 4462 to 6032 million, Optum Insight grew from 12199 to 14581 and Optum RX’s revenue grew from 91,312 to 99,773. The steady and gradual growth of the optum business can be accredited to a multitude of factors including organic growth in patients served under value-based care arrangement, growth in technology and managed services, with managed services revenue growth driven by business combinations and new health system partnerships and higher script volumes from growth in people served, increased utilization and organic growth in pharmacy care services.

Siddhant Dahiya | 04/16/2023

UNH Group performance versus the S&P 500:

Source: fool.com

Risk Potential Smaller Margins: Medicate rates for Medicare advantage health plans have dropped in below peoples expectations. This in turn will impact the profit margins and overall revenue of care providers like Medicare. Whilst inflation helps in some angles, UnitedHealth has also faced inflationary costs pressures which in turn has squeezed margins. Whilst true, the CMS slightly adjusted rates back a little higher, although it is lower than the last year overall.

Regulation: Over the last few years, big monopolies in the healthcare space have been hurt by regulation. In specific firms in the insurance and PBM Industries are likely to remain strong targets by the government as a means to increase healthcare coverage around the United States. The recent acquisition of Change Healthcare by UNH was briefly questioned but was given leeway at the last minute.

Labor Shortages: Health insurers like UNH will have to face labor shortages that threaten and hinder the number of non-urgent procedures that hospitals perform during the year, potentially leading to lower costs from medical claims.

Amy Ren | May 4, 2023

Rating: Hold Current Price:$359.18 Price Target: $388 Company Updates / News ● 52-Week High: $401.78 ● 52-Week Low: $298.69 ● Market Cap: $49.28B ● P/E Ratio: $15.17 ● EPS: $7.71 ● Revenue: $70.50B ● Debts: $12.09B ● Net Income: $1.08B Competitor Statistics As of 4/21/2023

Revenue: $70.50B

Revenue: $32.6B

McKesson(MC) Survive the Golden Age Investment Thesis: Since McKesson’s listing in the New York Stock Exchange on June 27, 2001, the stock has grown more than 650%. Since then, McKesson has grown to one of the largest healthcare companies, providing service to a wide range of customers across the globe. My buy recommendation reflects a belief that McKesson will continue to perform well and diversify its services, given its huge distribution network and outstanding involvement during COVID-19.

Valuation/Financial Modeling:

As of April 21st, McKesson (Mc) is trading at $359.18. I believe that this equity is undervalued and expected to increase to $388 within this year. I arrived at this conclusion by conducting a comparable companies’ analysis. I used these assumptions based on historical data and an optimistic view given McKesson’s performance history.

Distribution Network:

Being the industry’s bellwether for a long time, McKesson has maintained a stable performance in building its nationwide distribution centers and networks. Over the years, its supply chain has continued to expand and aggregate to more than 1 million lines per day. The uniform distribution centers are advanced with VAWD accreditation, indicating a stable and effective service in the industry. McKesson’s efficient economies of scale enabled it to be the top healthcare company throughout decades, with a 99.98% order accuracy across North American distribution and services. These numbers show a solid future performance with its unified structure in the distribution network. It is also a critical element that allows the firm to maximize operational efficiency. Noticeably, McKesson demonstrated a solid mobilization ability during the pandemic by preparing and distributing millions of doses to more than 30 countries. In conclusion, McKesson’s ability to reach these milestones exemplifies its excellent distribution network.

Innovative Steps in Technology Solutions: Revenue: $80.9 B

Revenue: $44.8B

Despite having a solid distribution network and supply chain, McKesson works consistently on reducing operational costs in the healthcare sector. In recent years, it actively seeks efficient solutions by using better technology to manage the supply chain. The firm turns to a digital and technology-driven system by automating the supply chain, bringing healthcare providers more clinical and financial benefits. The wide range of technologies utilized in the process, such as Robotics Process Automation (RPA) and data analytics, allows the firm to maximize efficiency and minimize operational costs. It also establishes a collaboration between communities and healthcare providers by improving transparency and communication across regions.

Amy Ren | May 4, 2023

McKesson v.s Competitors (Growth Rate)

Source: Yahoo Finance Risk Potential Struggling with Regulatory Compliance: McKesson’s reputation and financial success will be significantly at stake from noncompliance with regulatory obligations. The Food and Drug Administration (FDA) has rules that apply to McKesson’s pharmaceutical distribution business. FDA laws not being followed could lead to penalties, product recalls, and legal action, which could harm the firm’s standing and bottom line. For example, McKesson recently agreed to a tentative $141 million settlement to shareholders who claimed the medication distributor concealed that it benefited from a price-fixing conspiracy among generic drugmakers. If McKesson continues to face risks in reputation and financial performance, it will damage the firm’s future growth more.

Patent Threat: As a major player in the healthcare industry, the enforcement of McKesson's patents on branded pharmaceutical items may come under increasing attack from generic medication makers. Such actions will raise competition and erode Mckesson’s market dominance if the firm does not keep pace with the market movement and patent protection.

Sources:

Raheem Amany | 4/12/23

Rating: Buy Current Price: $35.31 Price Target: $54.33 Company Updates / News ● P/E ratio: 6.64 ● Market cap: $45.9 B ● Revenue: $6.7 B

US Bank (USB) The People’s Bank Investment Thesis: For over a decade, US Bank has maintained a stock price of $35 and above. The company has solidified itself as one of the biggest and most successful commercial banks in the country, competing with the likes of Wells Fargo, Bank of America, etc.

My buy recommendation reflects a belief that US Bank will continue to perform well, given its established presence in the industry and reputation for ● After the collapse of both Silicon efficiency and customer satisfaction. Valley Bank and First Republic Bank, commercial banks were all Valuation/Financial Modeling: on edge as the industry looked As of April 13th, USB (US Bank) is trading at $35.21. I believe that this equity on the verge of implosion is undervalued and expected to increase to $54.33 within this year. I arrived at ● Government safety nets have this conclusion by conducting a DCF analysis with a 0% growth and 6.79% prevented a complete recession, discount rate across 5 years. I used these assumptions based on historical data while SVB was bought out by and a realistic view given the stature of a corporation like USB and the current First-Citizens Bank and First downtrend in the industry. Republic Bank was bought out by JP Morgan Customer Service: US Bank is the 5th largest bank in the United States, and the main reason for Competitor Statistics its ability to stay on par with its competitors despite their big names is because from Q3 2023 of their renowned customer service. US Bank currently has 3000 branches and over 5000 ATMs across the United States. USB is not just omnipresent across the country, however, it also consistently receives high reviews from satisfied customers. Revenue: $5.1B

US Bank is currently ranked #1 in the country in terms of online customer service according to data from Keynote Competitive Research. This suggests that with e-banking becoming a more common option, US Bank will only continue to grow their loyal clientele base.

Diversity and Culture: Revenue: $23.4 B

Revenue: $36 B

US Bank stands out in terms of its cultural reputation. USB ranked #1 on the Employee Net Reporter score over competitors like Bank of America and Wells Fargo. Furthermore, from a survey completed by over 600 employees, US Bank ranks #1 for overall culture. In terms of diversity, US Bank has staunch DEI initiatives, and the proof of their adherence to them lies in its #1 rankings for both Gender and Diversity, based on surveys of employees and their experiences in the organization. Having this positive relationship with both customers and employees ensures that USB can maintain its positive brand image and use that selling point to keep attracting customers.

Raheem Amany | 4/12/23

Comparison of USB’s Close Price vs JPM and BAC:

Source: Yahoo Finance Risk Potential Silicon Valley Bank: With the failure and subsequent bankruptcy of Silicon Valley Bank, the financial industry

took quite a hit after the lack of trust in banks and the fear of a recession looming. However, despite the initial fear, the federal reserve has provided enough security with the Bank Term Funding Program to allow US Bank and the rest of the industry to remain secure. Aside from government intervention, US Bank is also renowned for its risk management in the midwestern United States, and in 2022, claimed that risk management was now a top priority, even more so than revenue growth. Establishing risk management functions as the backbone of the company will help to ensure it does not succumb to the same fate as other commercial banks, like SVB.

Lack of International Presence: Although in the top 5 biggest banks in the United States, as the name

suggests, US Bank is certainly more focused domestically than on its international presence. Its lack of occupancy abroad could allow for competitors to take up that space and garner customer loyalty before US Bank has the chance.

Domestic Presence: As was previously mentioned, US Bank is one of the top 5 biggest banks in the United

States, having over 3000 branches and 5000 ATMs. Despite this, the corporation’s presence is limited to only 26 out of the 50 states. For a company with such a limited international presence and that also based its brand off of being the bank of the United States, it is imperative that they expand their sphere of influence to more areas and capitalize on that aspect of their marketing. Sources:

Anika Mittle | April 14, 2023

Rating: Buy Current Price: $127.89 Price Target: $155.53 Company Updates / News ● Market Cap: 376.56 B ● PE Ratio: 10.62 ● J.P. Morgan announced that it has entered into a definitive agreement to acquire Alumni, a leading provider of investment analytics software to the venture capital industry

Competitor Statistics from Q4 2022

J.P. Morgan Chase & Co. (JPM) Investment Thesis:

Since J.P. Morgan Chase & Co.’s listing in the New York Stock Exchange on December 1, 1984, the stock has grown more than 850%. Since then, J.P. Morgan has become a global leader in financial services offering solutions to the world's most important corporations, governments, and institutions. My buy recommendation stems from a number of recent global changes. Since March of 2022, the Fed has continuously raised the federal funds rate. J.P. Morgan Chase should benefit greatly as more of its interest-earning assets, such as loans, reprice higher and faster than its interest-earning liabilities, such as deposits, benefiting net interest income (NII).

Valuation/Financial Modeling:

As of April 11, J.P. Morgan Chase is trading at $127.89. I believe that this equity is undervalued and expected to increase to $155.53. I arrived at this conclusion by conducting a Comparative Companies Analysis using five companies with similar financial data within the same industry, such as Bank of America, Wells Fargo, Morgan Stanley, PNC Financial Services Group Inc, and Truist Financial.

Use of Acin and Purchase of Alumni

Revenue: $32.26B

J.P. Morgan and Acin announced that the global financial firm is expanding its use of the Acin platform to cover its Global Markets business. Acin is a company that has created a digitized platform and peer-to-peer network for operational risk management. The platform enables J.P. Morgan to access benchmarking data for risks and controls. Further, the company announce that it will purchase Alumni. an analytics firm serving the venture capital industry. The purchase reflects its broader objective to play a larger role in the startup space. This solidifies J.P. Morgan’s commitment to building the leading private markets platform for companies and investors.

Merge Commercial Banking and Investment Banking: Revenue: $18.7 B

Revenue: $12.8 B

J.P. Morgan acquired Chase bank, which serves as the commercial/retail arm of the company. The company has merged commercial banking and investment banking, something that neither of its large competitors have done. This integration allows the bank to better serve its customers by providing a broader range of financial services that span both traditional banking services (such as loans and deposits) and more specialized investment banking services. The merger also allows J.P. Morgan to operate more efficiently by reducing duplication of resources and streamlining its operations. Overall, the integration of commercial and investment banking can provide significant benefits to both the bank and its customers.

Anika Mittle | April 14, 2023

J.P. Morgan Chase & Co. and Competitors

Source: Yahoo Finance Risk Potential Rising Interest Rates: The Federal Reserve has repeatedly raised rates this year in an effort to mitigate

rampant inflation that has reached 40-year highs. This can start to hurt bank profits as demand from borrowers for new loans suffers and refinancings decline. A higher federal funds rate means more expensive borrowing costs, which can reduce demand among banks and other financial institutions to borrow money. Rising interest rates can affect large banks in a number of ways including increased borrowing costs, declining demand for loans, falling asset values, and reduced economic growth. Overall, rising interest rates can create significant challenges for large banks, and they may need to adjust their business strategies in response to changing market conditions.

Possibility of a Global Recession: Due to post-pandemic demand shock and the conflict between Russia

and Ukraine, economists have predicted that there is a possibility of a global recession. This will impact J.P. Morgan negatively. For example, in case of a recession or even rising interest rates, people’s living standard will fall, and the customer base of J.P. Morgan will also fall. Moreover, people will withdraw their money from the bank as the cost of living will skyrocket, resulting in the demand for the financial services provided by J.P. Morgan falling as well. If a global recession does occur, then clients may become risk averse and halt investing money. This will result in lowering fees from financial services, such as trading, advising, as well as fund fees.

Sources:

Andrew Grinzayd | April 14th, 2023

Rating: Hold Current Price: $74.96 Price Target: $76.27 Company Updates / News ● .CEO Daniel Schulman announced that PayPal’s priority over 2023 would be to emphasize efficiency and cost-reduction ● The goal would be to reduce operations by around $1.3 billion Competitor Statistics from Q1 2023

PayPal Holdings Inc. (PYPL) Investment Thesis

With economic conditions operating in a largely inflationary environment, and a predicted slowdown of consumer spending as the unemployment rate is slowly predicted to rise, payment-processing technology companies like PayPal are in a bit of limbo regarding opportunities for future growth and how they can expand their reach further while increasing revenue and profit margins. PayPal’s financial aspirations seem cautious at best, as the overarching thesis within the executive class has been that looking at the rest of 2023, there are few reasons to think that things will get better. In spite of a difficult economy, CEO Daniel Schulman indicated that PayPal stock hit revenue growth of 9% year-over-year in Q4 2022. At the same time, Schulman has indicated that the company would move towards prioritizing its high-growth initiatives (such as its Venmo-suite of products) and controlling expenses, the latter of which it had successfully reduced by $800 million in 2022 and anticipated it would reduce by $1.3 billion in 2023.

Valuation:

Customers: 209.3 M Revenue: $22 B

Customers: 2 M Revenue: $12 B

As of April 14th, PayPal Holdings Inc. (PYPL) is trading at $74.96. I believe that this equity is fairly valued and expected to increase to only $76.27 within the next three years. I arrived at this conclusion by conducting a comparative company analysis with PayPal’s competitors including Stripe Inc. and Payoneer Inc. Additionally, due to the nature of the stock being driven by underlying financial conditions in the payment-processing space, I did research and analysis into the surrounding industry events occurring, including any major mergers in the space, pending government legislation that may impact the market or other externalities that may need to be accounted for.

Venmo:

Venmo has been the leading peer-to-peer payment platform in the US market for the past few years, and PayPal’s primary goal has been optimizing user-enabled features while at the same time, looking for further opportunities for market expansion and entry. For instance, the company but Honey in 2019 for approximately $4 billion, integrating its browser coupon-extension software into Venmo and the larger PayPal ecosystem as well.

Pandemic Boom-and-Bust: Customers: 4 M Revenue: $473 M

During the early stages of the pandemic, PayPal saw explosive growth of over 79% from FY2020-2022. However, the post-COVID economic reduction has driven deeply into the companies' growth, forcing the organization to focus on cost-reduction and savings while looking for opportunities to layoff nonessential staff.

Andrew Grinzayd | April 14th, 2023

PayPal Holdings Inc. 5-year Stock Price

Source: Yahoo Finance Risk Potential Inherent Ethical Issues: In 2022, nine of Axon’s ethical board resigned. Home-Grown Competition: The PayPal financial services model has relied heavily on companies needing

payment-solutions support that PayPal can provide. However, over the past few years, technology companies have been implementing their own payment support directly into their applications (take Apple Pay or Google Pay, for instance). As PayPal’s software interfaces directly into such technology providers, customers may find it easier to facilitate internal use rather than seek PayPal solutions to their financial problems. This does not mean that the relevance of PayPal’s solutions may go away (as Venmo provides a unique solution for peer-to-peer transactions) but is nonetheless a risk that needs to be identified.

Limitations for Growth: PayPal’s niche as a payment-processing platform has created bottlenecks for

expansion in new industries, even if such opportunities may have existed in the past. For instance, the company was originally purchased by eBay in 2002 for $1.5 billion before being spun out over a decade later. In order to continue surviving in a changing market and economic landscape, the organization must ensure that future acquisitions create a foray into uncharted markets in order to provide the best future growth outlook to shareholders and stakeholders. Sources:

Laurent VO | April 21, 2023

Rating: Hold Current Price: $232.57 Price Target: $240 Company Updates / News ● 52-Week High: $234.99 ● 52-Week High: $174.6 ● Market Cap: $488.8B ● LTM Revenue: $30.18B ● LTM EBITDA: $5.317B ● LTM N/I: $15.177B ● Net Debt: $3.186B Stock Trend Analysis Investor Sentiment: Bullish Suggested Stop-loss: (8%) at $215 Minimum forecast: $210 (-9.7%) Maximum forecast: $288 (+23.8% Competitor Statistics from Q3 2022

Revenue: $22.2B

Visa Inc. (V) Unscathed amidst banking crisis Investment Thesis: Since Visa’s listing in the NYSE on March 18, 2008, the stock has grown more than 1900%. Visa has grown as a multinational payment service operating in more than 200 countries. The company processes billions of transactions each year and offers other core services such as fraud protection, risk management and payment security solutions. Visa continues to outstrip its competitors in the US by holding (61.6%) market share, more than doubling its closest competitor Mastercard (25.7%). My hold recommendation reflects a belief that Visa Inc. will continue to weather through the robust banking environment, but is currently receiving an “over-appreciation” given the increase in cross-border transactions.

Valuation/Financial Modeling:

Using a Comps Analysis, Visa’s equity value is $557B. Using further assumptions through a DCF, the obtained equity value per share is $224. On May 4, 2023, Visa was trading at exactly $224 per share, but increased to $232 the following day. Visa has historically shown steady growth, leading to the assumption it will be on track with perpetual growth of 4%. However, their new venture in Visa+ will exert upward pressure on the company once it rolls out near the end of this year.

Overcoming the Liquidity Crisis:

The recent banking crisis caused concerns over liquidity owing to the Silicon Valley Bank downturn. Visa operates solely as a payment network unlike competitors like American Express, which works as both an issuer and a processor. As a mediator between an issuer and a client, Visa is not liable for payment defaults as they are not included in transactions. The company’s revenue structure derives most of its revenue through credit and debit transaction fees, which are immune to liabilities between the client, merchant and card issuer. Cross-border transaction volumes increased in the 1st quarter of 2023 by 23% to 2.3 billion as international travel improves and coronavirus effects continue to wane. Both Visa credit and debit volumes in the U.S increased in the same vein at 11% over year, indicating strong consumer strength.

Visa+:

Revenue: $52.1B

Interoperability is emerging as a key factor of contention across the digital landscape. Two users who send money through Paypal face no friction, but problems arise when juggling two or more P2P payment apps. Visa partnered with Paypal, Venmo and others to power interoperable digital payments. Owing to Visa’s network system, neither Paypal or Venmo users will need a Visa account. Visa+ fits in this broader push for connectedness, enabling users to easily send and receive money.

Overview: Revenue: $10.9B

In 2022, Visa saw a 24.3% increase in its diluted EPS from 5.63 to 7, reflecting higher earnings per share. Furthermore, this means that investors will likely be willing to pay a premium for each share, which enables higher valuations for the company. As of April 20, 2023, Visa is expected to post earnings of $1.97 per share for the first quarter, indicating a year-over-year change of +10.1%. Increased travel activity and consumer expenditure will likely remain the main driver of growth for Visa’s revenue.

Laurent VO | April 21, 2023

Visa Inc. VS Competitors (Growth Rate)

Source: Yahoo Finance Risk Potential Government-Imposed Obligations: Governments in a number of jurisdictions protect domestic card

payment networks from international competition, most notably in China and in India. China’s payment network is currently dominated by UnionPay and although Visa has filed a Bank Card Clearing Institution in China, the lengthy authentication process may undermine the company’s competitiveness of international payments abroad. Additionally, a number of jurisdictions are exploring the possibility of building central bank digital currencies for retail payments. Visa’s cross-border and international payments would hence face a number of implications including potential disintermediation.

High Interest Rates: Despite market turmoil, the federal reserve is poised to tighten monetary policies to raise interest rates by another quarter-point. Not only will this cause further cost-push inflation for the economy but this will likely drive consumption lower. A higher interest rate also means greater returns on savings which will lead to less transactions, exerting downward pressure on Visa’s revenue.

Sources:

Meghan O’Leary | 5/9/2023

NextEra Energy (NEE) Will Going Green Generate Green?

Rating: Hold Current Price: $75.58

Investment Thesis: Company Updates / News ● Announced evaluation of $20bn+ in hydrogen capital investment opportunities ● Announced plan to focus entirely on renewable energy for future strategy Competitor Statistics from Q3 2021

Market Cap: $81.5B P/B: 2.7

Market Cap: $75.8B P/B: 1.6

Despite consistent growth, NextEra Energy has significant debt and is overvalued compared to peers. Strategy for the company's future is highly speculative and involves much risk. Until more is known about the market for hydrogen energy and the long term stability of government funding for renewable energy, NextEra Energy is a hold.

Overview:

NextEra Energy is a leading provider of wind and solar energy, as well as some natural gas, nuclear energy, and oil holdings. With a market capitalization of 153.17 billion, NextEra Energy is both the largest electric utility company by market capitalization and the biggest generator of renewable energy in the world. NextEra Energy had a generating capacity of nearly 60 gigawatts in Q4 of 2022, with about 16,000 megawatts from wind energy and 3,148 megawatts from solar energy. Recently, NEE announced they planned to focus solely on their renewable energy portfolio, and sell natural gas pipeline assets.

Growth:

As of March 31st, 2023, NextEra Energy saw growth in revenues, profit, net income, and earnings per share. Revenue was about $25B LTM, a 52.7% growth year over year. Gross profit was $13.9B, an 89.9% increase YoY, net income was $6.7B, a 359% increase, and diluted EPS was $3.37, a 355.7% increase.

Debt:

However, just as NextEra Energy’s earnings have increased, so has its debt. NEE’s Net Debt/EBITDA ratio is 5.6x, which is fairly high. The Total Debt to Equity ratio is 133%, but that is in line with peers.

Market Cap: $46.9B P/B: 2.0

Additionally, the company's free cash flow has been negative, with a Levered Free Cash Flow of -$14.8B and Unlevered Free Cash Flow of -$13.8B. However, dividends per share have been steadily increasing, meaning NextEra Energy relies on debt to fund dividend payments, which may be problematic as interest rates rise.

Overvaluation Compared to Peers: Market Cap: $42.5B P/B: 1.7

NextEra Energy’s P/E ratio is 22.4, which is somewhat high compared to it’s peers. However, NextEra Energy’s P/B ratio is 3.6, which is much higher than its peers. This indicated that Nextera Energy is trading at a premium compared to competitors, and may be overvalued.

Meghan O’Leary | 5/9/2023

NextEra Energy and Competitor’s Ratios:

Source: Capital IQ Risk Potential Regulatory Issues: Allegations of the Florida Power & Light unit violating state and federal campaign finance statutes led to an internal review that found no wrongdoing, but retirement of FP&L's President has some questioning if NextEra Energy may still be found in violation.

Hydrogen Strategy: With the passage of the Inflation Reduction Act, NextEra Energy has announced they are considering investing $20 billion in developing hydrogen energy holdings. The hydrogen energy market is currently very limited, which would make a significant investment in developing hydrogen capacities highly speculative.

Policy Reliance: NextEra Energy’s recent announcement that they intend to transition to 100% renewable

energy is very reliant on governmental policies aggressively funding renewable energy, such as provisions in the Biden administration’s Inflation Reduction Act. A more conservative U.S. government may cut funding and subsidies favoring renewable energy.

Sources:

Arya Patel | Date

Rating: Buy Current Price: $70.62 Price Target: $94.07 Company Updates / News ● EPS for the twelve months ending December 31, 2022 was $14.18, a 157% increase year-over-year. ● EBITA for the twelve months ending December 31, 2022 was $1281 million, a 90% increase year-over-year. ● According to HTF MI, the Global Potash Fertilizer Market is anticipated to grow at a compound annual growth rate (CAGR) of 3.9% from 2023 to 2028. Competitor Statistics from Q4 2022

Nutrien (NTR) A Fertile Investment Opportunity Investment Thesis: Nutrien Ltd. (NTR) is a Canadian-based company that is one of the world's largest providers of crop inputs and services including fertilizers, protection products, and seeds. The company was listed on the Toronto Stock Exchange on January 1, 2018 after its formation from the merger of two large fertilizer companies, PotashCorp and Agrium. Nutrien's scale and expertise in the agriculture industry make it a leader in the sector. The company's diversified portfolio of its longstanding crop inputs products and its more recent digital agriculture services provides it with a competitive advantage in the marketplace. Nutrien's focus on sustainability and innovation is also noteworthy, as it is committed to helping growers produce more food with less environmental impact. My buy recommendation reflects a belief that Nutrien will continue to perform well, given advancements within agricultural technology, particularly with digital agriculture, and because of increasing demand for good due to population growth.

Valuation/Financial Modeling:

As of April 22nd, Nutrien (NTR) is trading at $70.62. I believe that this equity is undervalued and expected to increase to $141.34 within this year. I arrived at this conclusion by conducting a COMPS analysis, analyzing the FY 22 EV/EBITA ratio at the 75th percentile multiple.

Digital Agriculture: Share Price: $62.13 Revenue: $17.46B

Share Price: $46.99 Revenue: $19.13B

Digital agriculture is a rapidly growing sector that leverages cutting-edge technologies to help growers optimize crop yields and maximize efficiencies. Nutrien is well-positioned to capitalize on this trend, as the company has made significant investments in digital agriculture and has developed a suite of innovative digital products and services for growers. Nutrien's digital offerings, which include precision agriculture, data analytics, and farm management software, enable growers to make data-driven decisions and improve their operations. With the agriculture industry increasingly adopting digital technologies, Nutrien's leadership in this area makes it a compelling investment opportunity for investors seeking exposure to this growing sector.

Sustainable Products: Share Price: $77.08 Revenue: $11.19B

Nutrien is a leader in sustainable fertilizers, with a portfolio that includes some of the industry's most environmentally friendly products. In 2020, the company launched its ESN SMART nitrogen fertilizer, which is designed to reduce nitrate leaching and greenhouse gas emissions while improving crop yields.

Arya Patel | Date

Nutrien (NTR) Stock Price Versus Key Competitors Over 5-Year Period

Source: Yahoo Finance Risk Potential Ukraine-Russia Conflict: In a February 2023 interview with Financial Post, Nutrien CEO Mayo Schmidt

stated that the company's operations have not been significantly affected by the conflict between Ukraine and Russia. He mentioned that although there were some logistics challenges in the region, Nutrien did not face any significant disruptions in the supply chain. In fact, he said that the conflict created an opportunity for Nutrien in the market. Schmidt also emphasized Nutrien's commitment to responsible sourcing, as well as adhering to ethical and environmental standards.

Environmental Hazard: The fertilizer industry has been under scrutiny in recent years due to its impact on

the environment, particularly in relation to nitrogen and phosphorus pollution from fertilizer runoff. This has led to increased attention from regulators, environmental advocates, and the public, resulting in new policies and regulations to address these issues. Such examples include the Clean Water Act and the Chemical Accident Prevention Professions. As a leading producer, Nutrien has a responsibility to ensure that it operates in an environmentally responsible manner by developing sustainable products that comply with current and future regulations, as well as addressing consumer concerns about the environmental impact of its products. By doing so, Nutrien can not only meet its legal obligations but also position itself as a leader in sustainability within the fertilizer industry, and potentially even gain a competitive advantage.

Sources:

Victoria Gong | April 23, 2023

Rating: Hold Current Price: $25.46 Price Target: $26.78 Company Updates / News ● Coterra's fourth-quarter earnings provide optimism for investments and share buybacks ● Natural gas is the biggest loser from OPEC’s surprise production cut, prices slip 5.4% ● Earthquake in Oil Country Highlights Environmental Concerns due to wastewater production Competitor Statistics from Q4 2022

Barrels: 4.5M Revenue: $18.5B

Coterra Energy (NYS:CTRA) Out-rigging the competition Investment Thesis:

Coterra Energy is an exploration and production company primarily operating in the Appalachia, Permian Basin, and Oklahoma. The company was formed by a merger between Cabot and Cimarex in 2021 and achieved revenue growth of 135.27% and 162.42% in 2021 and 2022, respectively. 74% of Coterra’s production is natural gas. My hold recommendation reflects a belief that although Coterra still has a lot of potential to grow as natural gas adoption widens in the long term, the company is subject to short-term headwinds. With its small market cap at $19B compared to large competitors like ExxonMobil, Chevron, and Conoco Philips, Coterra remains profitable with high dividend payments and a free cash flow yield of 17.2%, greater than many of its peers. However, as the oil and gas industry embarks on a road to recovery, Coterra may suffer some losses in the short-run.

Valuation/Financial Modeling:

As of April 23, 2023, Coterra Energy (CTRA) is trading at $25.46. I believe that this equity is undervalued and expected to increase to $26.78 in the next 12 months. I arrived at this conclusion through my comparable company analysis model, comparing eight different mid-cap natural gas drilling companies, including Diamondback Energy, Ranger Oil, Pioneer Natural Resources, and others to guide my valuation of Coterra, using the median P/E multiple.

Stable performance despite shocks:

Barrels: 3.1M Revenue: $7.2B

Barrels: 500K Revenue: $12.9B

Coterra Energy benefits from diversifying into several energy sources, with proven reserves of approximately 78 percent natural gas, 10 percent oil and 12 percent natural gas liquids. With more options offered as compared to competitors, Coterra is better positioned to weather risks of oil price shocks and large increases or drops in energy supply. Moreover, Coterra practices relatively disciplined capital allocation in terms of continuing share buybacks and moderating exploration expenditures. In Coterra Q4 2022 earnings, the company stated that it expects to invest about 50% of its cash flow at recent strip prices, and are expecting production to remain flat for the remainder of 2023 but to continue modest growth in 2024 and 2025. Moreover, Coterra is planning to increase its base dividend and authorize an additional $2 billion of stock buybacks to support the strength of the stock.

Victoria Gong | April 23, 2023

Coterra Energy YTD Stock Price % Change Compared to Competitors and S&P 500:

Source: Pitchbook Risk Potential OPEC production cut and increased oil prices: OPEC made a surprise cut to oil production on April 2, 2023, and natural gas prices slipped 5.4% in addition to the decreased demand from Europe’s warmer winter and down 53% year over year. As the price of oil goes up, oil producers’ incentive to drill increases, disturbing shalerock formations that supply both oil and natural gas and increasing “associated gas.” However, the current oversupply of natural gas makes it unattractive to increase supply, causing a significant price drop.

Natural gas oversupply: Due to warmer winters in Europe and the US, there was not such a high demand for oil and natural gas to fuel heating facilities. This could cause a buildup in inventories and also put pressure on Coterra’s large natural gas reserves that they may not be able to sell. According to the U.S. Energy Information Administration February forecasts, 2024 would be the first time since 2015 that output rises for four years in a row, while demand declines two years in a row. This could significantly impact natural gas pricing and storage requirements.

Regulatory risks: With an increased focus on more sustainable sources of energy, increased regulation may hurt demand for natural gas. In late April, New York State took steps to position itself to pass legislation that bans natural gas in stoves, furnaces and other home appliances in favor of induction stoves and heating as more environmentally friendly alternatives. This could set precedent for other states to follow suit as fossil fuels are phased out, decreasing demand for natural gas. Sources: Coterra Investor Relations | Barron’s | Pitchbook | Statista | Capital IQ | CNBC

Liam Ardrey | 04/14/2023

Rating: Buy Current Price:161.83 Price Target: 190.07 Company Updates / News ● Recently announced continued investments in eMobility in Europe ● Facility in Raleigh, NC nationally recognized for environmental achievements

Eaton Corporation (ETN) Legislation Increases Investments Investment Thesis: Eaton Corporation (ETN) is a multinational power management company. Since its initial public offering in 1923, Eaton has grown into one of the largest energy manufacturers. With its focus on sustainable energy methods, specifically with commercial aircraft, Eaton has placed itself at the forefront of the fight against climate change. My buy recommendation reflects a belief that Eaton Corp. will continue to perform well given the increase in investments in the sustainable energy market, and the overall strength in this industry.

Valuation/Financial Modeling: Competitor Statistics from Q3 2021

As of April 14th, 2023, Eaton Corporation is trading at $161.83. I believe that this equity is undervalued and expect the share price to increase to $190.70 within this year. I came to this conclusion by conducting a comparable company analysis, as well as doing a DCF analysis using a WACC of 9.4% and a growth rate of 3.5%

Expanding EV Network:

Price: $85.6 Market cap: 48.91B

Eaton has recently announced a large investment to develop at-home electric vehicle charging technology. They have the goal to bring advanced, flexible load management, and value stag grid services by adding flexibility, which will, in turn, accelerate decarbonization. They are investing in the EV business in line with the goals set by the U.S. to have EVs make up half of all vehicle sales by 2030. This will require 30 million EV chargers, with a vast majority needing to be in homes and workplaces.

Energy Technology Development:

Eaton has recently developed a partnership with IES climate technology to build technology to boost sustainability in buildings. This tech with implement 3-D projections of all buildings and will show people the impact of their building on the environment

Recent Legislation: Price: $33.52 Market cap: 86.4B

The recent passing of climate-focused bills in the 117th congress last August gives over $500 billion dollars in government investment towards clean, renewable energy. As a major developer in clean tech, Eaton Corp. is sure to have an increase in funding, giving them more funds to develop technologies.

Liam Ardrey | 04/14/2023

Increase of Market Cap of EV Manufacturers V.S. Top 10 Automobile Manufacturers:

Source: IEA Risk Potential Climate Risk: There is a major risk with developing climate technology. On top of the high costs of investment, there is much risk involved. Investing in clean energy is a long-term investment, so solving these challenges presented by this transition will require further leaps forward in renewable energy and climate capture technology.

Political Battle: Climate change, specifically how much we should invest in developing sustainable technologies

is an extremely polarized topic currently in the United States government. While the fight against climate change has had major wins with passing the recent legislation, there is always the risk new legislation will pass decreasing the amount of financial backing from the government.

Sources:

May Ton | April 17, 2023

Rating: Hold Current Price: $78.54 Price Target: $65.85 Company Updates / News

NextEra Energy (NEE) Don’t be Electrocuted by a Hasty Decision Investment Thesis:

● Revenue FY22: $20,96B ● Current Market Cap: $158,916

Since NextEra Energy was founded in 1987 as Florida Power & Light Group (FPL Group), the company has risen to become one of the largest electric power and energy infrastructure companies with average yearly revenue growth by 22% and stock price increasing by 185.6% since its listing.

● As of Dec 31, 2022, the company had 32,100 mW of net generating capacity.

My hold recommendation reflects a belief that even though NextEra Energy will continue to perform well given their big reputation in renewable energy and electricity industry, the company has not achieved anything significant

● On April 24, 2023, state Valuation/Financial Modeling: regulators approved a decrease to As of April 17, NextEra Energy (NEE) is trading at $78.54. Through my FPL rates beginning in May to comparable company analysis with the target company’s 5 comparables, I reflect projected fuel savings. concluded that the stock is overvalued and will decrease to $65.85, approximately by 19.26%. I arrived at this conclusion by doing a comparable company analysis with the maximum EV/Revenue 10.9x and comparing NEE with other 5 performers Competitor Statistics in the energy industry. I used these assumptions based off of historical data from FY 2022 and a neutral view given NextEra Energy performance history.

Lack of Significant Improvements: Revenue: $31,05B

Revenue: $29,34 B

Though NextEra Energy continues to prove itself as a top performer in the energy industry, the company has not had any significant occurrence in its operation including M&A transactions or products to justify the buy recommendation. The price $65.85 is concluded through implied enterprise value from the 25th percentile multiple. I believe the price should be derived from the 25th percentile multiple is because all the comparables that NextEra Energy company is compared with are small companies which are continuously growing significantly. Therefore, by using the median value, the implied share price will be tremendously inflated.

Overview: Revenue: $4,01B

In 2022, NextEra Energy witnessed total revenue increase from $ 17.06 billion to $20.96 billion and gross profit increase from $8.56 billion to $10.14 billion, increasing 48.4% indicating the company’s good financial standing.

May Ton | April 17, 2023

NextEra Revenue FY17 – FY22:

Source: Capital IQ Risk Potential Weather Patterns: As NextEra Energy has its business generated by the weather and with variable weather

patterns in the locations that the company operates, the weather could potentially impact the firm’s performance. As different parts of the United States experience different weather conditions such as hurricane and drought, the company’s electricity generation sites could be harmfully impacted, thus affecting the business operations.

Government Regulation: The company operation is subject to the state and government legislation. This can potentially affect the business’ operation as the local and national political, regulatory and economic environment has had an adverse effect on regulatory decisions with negative consequences for NextEra Energy and Florida Power & Light Group.

Sources:

John Werner | May 2023

Rating: Buy Current Price: $116.94 Price Target: $130.50 Company Updates / News ● Exxon receives regulatory approval for 5th project in Guyana ● Exxon moves forward with construction of world’s largest renewable diesel facility ● Exxon 2022 profits beat estimates and break record for Western oil companies Competitor Statistics

Share Price: 4/18/23; Revenues: 2022

Exxon Mobil (XOM) Well-Positioned for Future Growth Investment Thesis:

Exxon Mobil is an American multinational oil and gas corporation and the largest investor-owned oil company in the world. Formed in 1999 as a merger between Exxon and Mobil, the firm has an expansive presence across oil and gas exploration, production, refining, and chemical manufacturing. My buy recommendation reflects a belief that ExxonMobil will continue to perform well, given the continued volatility in the global economy and broad strength in global energy markets.

Valuation/Financial Modeling:

As of April 17, ExxonMobil (XOM) is trading at $114.70. I believe that this equity is undervalued and expect the share price to increase to $130.50 within this year. I arrived at this conclusion by conducting a public comparable companies analysis, utilizing data from 6 major and similar competitors within the same industry and utilized an enterprise value/revenue multiple.

Economies of Scale:

ExxonMobil’s size and scope enable the company to benefit from industry leading economies of scale, with production equivalent to 3.8 million bbl per day in Q4 2022. The company’s expansive operations in the exploration, production, and processing of oil and gas are spread across six continents and dozens of companies, ensuring a steady flow of production and revenues despite conflict, instability, and natural disasters and reducing risk. Share Price: $170.52 Revenue: $246.25 B

Exxon is currently positioned as the largest non-state producer of oil and the 10th largest chemical producer in the world. Through the company’s industry-leading levels of R&D spending and resource development, Exxon anticipates continued growth and expansion in both volume and diversity of production capabilities.

Guyana Exploration and Expansion: Share Price: $129.06 Revenue: $177.43B

Share Price: $61.91 Revenue: $386.21B

In Q4 2022, ExxonMobil announced two more discoveries offshore of Guyana, where the company has previously made over 30 other discoveries. Two existing projects, Liza Phases 1 and 2, began production in 2020 and 2022; presently production at both sites exceeds design capacity. Exxon’s currently operational sites in Guyana produce approximately 360,000 bbl per day, and Exxon expects this to reach 1M bbl per day by the end of the decade. The company’s third major development in the region will be operational by mid 2023, and the fourth will be functioning in 2025.

John Werner | May 2023

XOM vs CVX vs SHEL Share Prices:

Source: NASDAQ

Risk Potential Kazakhstan and Caspian Pipeline: ExxonMobil maintains a significant stake in Kazakh oil fields.

Resulting in $2.5 billion in revenues in 2021, this production is essential to Exxon’s Asian and global operations. Exports from these fields are taken from Kazakhstan to Novorossiysk, Russia, where they are loaded onto tankers in the Black Sea. ExxonMobil has warned that Russia's proximity to and influence in Kazakhstan, as well as the thousands of miles which its products pass through Russia (a country the company has divested from) place these operations at risk of closure or seizure.

The War in Ukraine: Higher energy prices, import restrictions of fossil fuels, and shortages of oil and gas have been a source of significantly increased revenues for energy companies. Continuing since the Russian invasion in February 2022, energy companies have experienced substantial growth in revenues (+45% for XOM from 2021-2022) and earnings. A rapid shift in the conflict favoring one participant, or a halt to the conflict, would weaken these gains and reduce the chance of further benefits from elevated prices and global economic stressors. Sources:

CONSUMER & RETAIL

Kristian Suh | December 5, 2022

Rating: Buy Current Price: $51.84 Price Target: $64 Company Updates / News ● KKR Leads $450 Million Investment in Hero Group's Renewable Arm ● KKR Earnings Rise, as Private-Equity Portfolio Climbs 9% ● KKR's Earnings Fall in Line With Expectations

KKR (KKR) Investing for the Future Investment Thesis: KKR’s integrated approach in its investment business model has leveraged itself as an industry leader in the private equity business. As global events constantly shift the market for investment companies, KKR continues to expand its geographical presence and enter in new businesses such as capital markets and real estate. My buy recommendation reflects my belief that KKR will perform well in the long-term due to demographic and other macroeconomic trends which show an increase in demand for retirement investments, IRAs, and the private equity business which KKR dominates.

Valuation/Financial Modeling: Competitor Statistics from Q3 2022

As of November 18, KKR is trading at $51.84. I believe that this equity is undervalued and expected to increase to $64 within the next twelve months. I arrived at this conclusion by conducting a DCF analysis with 1.8% growth, 10% operating margin, and a WACC of 5% across 5 years. I used these assumptions based on historical data and an optimistic view given KKR’s performance history.

Private Equity: AUM: $496 B

AUM: $7.96 T

AUM: $369 B

Despite short-term market volatility, demographic trends show a promising future and increased demand for private equity services. Although the markets are predicted to remain volatile with inflation, employment seems to remain relatively stable and healthy in the future. As Baby Boomers keep up with their retirement investments, millennials too are also beginning to save for retirement. Furthermore, businesses today are increasing their 401(k) matching contributions.

Energy Transitions:

KKR believes the energy transition business is a $1.5-2 trillion opportunity per year, with the majority going to de-carbonization practices. KKR is increasing their investments behind technologies that support clean energy practices (solar, electric vehicles, wind). Furthermore, as of March 16, 2022 KKR announced a $17 billion infrastructure fund that will invest in clean energy projects.

Kristian Suh | December 5, 2022

Stock Price Change for APO, CG, BLK (December 5th, 2021-2022):

Source: Yahoo Finance Risk Potential COVID-19: COVID-19 has upended the market and has permanently shifted macroeconomic patterns. The

pandemic has caused supply-chain disruptions and a labor shortage which continues to drive inflation and increase the volatility of the market. Furthermore, China’s zero-covid policy has sparked concerns about its future economic growth and the possibility of another major supply-chain disruption.

Inflation Risk: Inflation continues to impact consumer spending and remains a topic of concern. Trends show that inflation has forced consumers to incur debt in order to maintain their current living standards. Furthermore, inflation has also undermined the value of bonds where traditional relationships of bond values increasing and stocks decreasing have been reversed.

Geopolitical Concerns: The war in Ukraine has led to increased economic uncertainty. Ukraine has been a key supplier in the exports of agricultural products. With the war in Ukraine causing supply-chain disruptions, there is increased concern about the geopolitical stability of countries that were reliant on Ukraine’s exports. Furthermore, sanctions targeting Russian gas have also disrupted the energy market in Europe and accentuated distrust in institutions and governments.

Alexander Chung| April 14, 2023

Costco Wholesale (NASDAQ: COST)

Rating: Hold Current Price: $497.18 Price Target: $488.12 Company Updates / News ● Costco E-commerce Sales Drop Nearly 6% in April ● Cases of Hepatitis A connected to frozen fruit sold at Costco, Trader Joe’s ● Costco Outperforms Expectations with Strong Financials and Positive Market Performance

Competitor Statistics from Q3 2021

What’s the only thing overpriced at Costco? Its Stocks. Investment Thesis:

Since the merging of Costco Wholesale with Price Club in 1993, Costco has experienced a 6114.75% increase. It has shown steady growth since it went public, and showed unparalleled stability in the customer & retail industry through the pandemic. Since its establishment in 1976, Costco has grown to become one of the largest retail chains in the world, generating revenue of $234.39 billion dollars in the past twelve months. My hold recommendation reflects the belief in Costco’s unmatched low prices and consumer retention, despite its shares potentially being overvalued.

Valuation/Financial Modeling:

As of April 13, 2023, Costco Wholesale (COST) is trading at $497.18. I believe that this equity is overvalued, with an expected range of $260.79 and $427.21. Although the stock is currently overvalued, considering the company’s financial stability due to its pricing strategy and membership, the stocks of Costco Wholesale were rated as a hold.

Memberships:

Revenue: $234.39B Net Income: 5.91B

Revenue: $611.3B Net Income: 11.29B

Memberships are Costco’s secret to stability and success. Their unique business model, proven as their competitive advantage through success over the years, is what allows for a loyal customer base and consistently high revenues. Most of Costco’s revenues are driven from membership fees: in 2019, costco made $4.2 billion from membership fees out of an entire net income of $5.8 billion. Costco currently boasts 120.9 million members and a 90% membership renewal rate worldwide. Using the consistent flow of revenue from memberships, Costco is able to allow its members to shop for unbelievably low prices. This provides them another competitive advantage, an additional reason for its steady success and growth. A retention of loyal customers due to memberships and low prices, allows Costco a steady expansion worldwide.

Overview:

Revenue: $513.98B Net Income: 278M

Costco is an industry outlier thanks to its unique business model. Memberships, loyal customer base, low prices, bulk sales, low operation costs are only a few of Costco’s competitive advantages. As a result Costco has experienced continuous success throughout the years. Due to its steady growth, especially through the Pandemic, Costco’s shares may be overpriced. This provides a dilemma for many stockholders and potential stockholder’s of Costco. Despite this, Costco’s unique and unparalleled competitive advantages may prove to be worth the premium price.

Alexander Chung| April 14, 2023

Share Price Growth of Costco Wholesale and Comparable Companies

Source: Google Finance Risk Potential The E-Commerce Issue: As e-commerce becomes more prevalent worldwide, it is questionable whether

Costco will be able to replicate its competitive advantage in this playing field. With smaller, quicker orders becoming the norm, Costco’s bulk sale strategy falls short. Additionally, in-store sales prove to generate significantly more revenue than current e-commerce options for Costco.

Steep Price: Costco remains to hold a high PE ratio of around 40, proving high for the consumer & retail

industry. Though the dividend yield proves high at around 0.73, its competitors show to have better numbers. Walmart has dividend yields of 1.54%, at $148.48 per share.

California: Though Costco is well-established worldwide, much of its revenue is dependent on domestic sales. In addition, 28% of Costco’s domestic sales were from California in 2021. A change in California’s economy, or the U.S. economy in general, can prove detrimental.

Sources:

Emiri Fukuchi | 5/5/23

Rating: Buy Current Price: $203.54 Price Target: $220.52 Company Updates / News ● Estee Lauder temporarily sinks after a slow recovery in Asian retail ● Estee Lauder completes acquisition of Tom Ford Beauty

Estee Lauder (EL) Beauty Without Boundaries Investment Thesis: Estee Lauder (EL) is a leading player in the global beauty industry, with a well-diversified portfolio of premium brands, a strong digital presence, and an extensive distribution network. The company is committed to innovation and customer engagement which has allows the company to maintain a leading position and consistent growth over the years. My buy recommendation reflects a belief that T-Mobile will continue to perform well, given the rising popularity of 5G and the synergies between the recent merger.

Valuation/Financial Modeling: Competitor Statistics from Q1 2023

As of May 5th, Estee Lauder (EL) is trading at $203.54. I believe that this equity is undervalued and will increase to $220.52 within the next few years. I arrived at this conclusion by conducting a DCF analysis with market risk premium of 4.7%, Beta of 1.01, and a WACC of 7.9%. These assumptions are based on historical data.

Brand Equity: Revenue: $40.311B

Revenue: $8.00B

The strong brand equity that Estee Lauder holds is due to their portfolio of reliable and recognizable brands such as Clinique, MAC, and La Mer. This provides Estee Lauder with a significant competitive advantage as it allows the company to set premium pricing, differentiate themselves from competitors, and create a loyal customer base. Estee Lauder is a major player within the beauty industry, ranging from makeup to skincare and fragrances. Their continuation of innovation of products and services allows the company to remain competitive.

Overview:

Revenue: $85.9B

In 2021, Estee Lauder reported revenue of $17.4 billion, which reflected a 9% increase compared to the previous year. The company’s revenue growth was driven by strong performance across all regions and categories, but specifically within the skincare and fragrance segments. Estee Lauder also reported a net income of $1.8 billion for 2021, which was a 33% increase compared to the previous year. This was mainly caused by higher revenue and lower expenses caused by the COVID-19 pandemic.

Emiri Fukuchi | 5/5/23

Estee Lauder Companies Inc. 5 Year Stock Price:

Source: Yahoo Finance Risk Potential Competition: The beauty industry is extremely competitive and many players are competing for market share. Because of the popularity of this industry, there are constantly many new players entering the market which can impact the companies profitability.

Change in Consumer Preferences: Within the beauty industry consumer preferences are constantly

changing with different trends, and therefore Estee Lauder must adopt these changes quickly in order to maintain their popularity. Failure to do so can cause a loss in sales and less market share.

Supply Chain Disruptions: Due to Covid-19 there have been many disruptions within the supply chain that can affect the amount and price of production. Specifically because Estee Lauder’s supply chain is complex, they must rely on numerous supplies and manufacturers which can be difficult to regulate and keep track of.

Sources:

Avery Carter | April 19th, 2023

Rating: Buy Current Price: $370.12 Price Target: $437.97 Company Updates / News ● Lululemon is looking to sell Mirror, their at-home fitness instruction device. ● Lululemon recently created shirts made from plant-based nylon to further its commitment to making the business completely sustainable by 2030. ● Lululemon announced a growth plan to double revenue by 2026

Competitor Statistics from Q1 2023

Revenue: $8B

Lululemon (LULU) Leader for the Legging Industry Investment Thesis: I’m sure you’ve seen the omega sign on someon’s pair of black leggings. Since Lululemon was listed on the New York Stock Exchange in 2007, the corporation has compounded earnings per share of 38.3% annualized rate. Since then, the company has grown to be a leader in the athletic apparel industry. My buy recommendation reflects a belief that Lululemon will continue to perform well, increasing their market share, given the growth of the wellness industry, their sustainability initiatives, their potential sale of Mirror, and their Power of Three x 2 growth strategy.

Valuation/Financial Modeling:

As of April 19th, Lululemon (LULU) is trading at $370.12. I believe that this equity is undervalued and expected to increase to $437.97 this year. I arrived at this conclusion by conducting a COMPS analysis, analyzing the Q1 2023 EV/EBITA ratio, and finding the 75th percentile multiple.

Wellness:

Lululemon has the ability to capitalize on the ever-growing wellness industry. They not only sell yoga and additional athletic apparel but also sell workout plan memberships and wellness beauty products, as of recently. Furthermore, the corporate wellness market globally is estimated at $1.5 trillion dollars with an annual growth of 5-10 percent. Lululemon created Like New, the brand’s trade-in and resale program which supports industry ESG initiatives and is appealing to consumers. Crude-oil-based nylon, which is needed in the creation of their leggings, now has the ability to be replaced with plant-based versions from plant sugars.

Overview: Revenue: $50B

From 2018 to 2021, their revenue grew from $3.3 billion to $6.25 billion. During this time period, they gained more market share internationally than any other industry competitor. In 2022, Lululemon announced they would use the Power of Three x 2 growth strategy to double revenue by 2026 through growth in product innovation, guest experience, and market expansion. Lululmeon is looking to sell its at-home fitness device Mirror. With the sale of Mirror, which accounts for 2% of their business, Lululemon will have more cash to reinvest in more successful business ventures.

Revenue: $11B

Avery Carter | April 19th, 2023

Stock Price Change for LULU, VFC, Nike (May 2022 - 2023)

Risk Potential Competitors: The athletic apparel industry is rapidly growing. In 2022, the global athletic apparel market was

valued at approximately 319 billion dollars. Furthermore, it is forecast to rise over 450 billion dollars by 2028. However, that implies that new companies have room to emerge and become competitors of Lululemon. The recent emergence of Alo, another athletic apparel brand, saw over a 200% growth from 2019 to 2020. Lululemon’s apparel is more expensive than its peers, like Nike. Additionally, is also one of the most expensive consumer discretionary stocks trading today. Lululemon’s apparel is designed for the high-end athletic consumer with the intent of promoting wellbeing. Their goal is “to elevate human potential by helping people feel their best.” Nonetheless, Lululemon can take advantage of the modern trend towards athleisure in everyday attire.

Production: Labor shortages, from the 2022 Great Resignation including 50 million workers, and trade

restrictions, such as President Trump invoking Section 301 of the Trade Act of 1974, may impose a burden on the production abilities of key suppliers. Additionally, the fashion industry is driven by tastes and trends, constantly changing; therefore fashion stocks are volatile as a result. Furthermore, changes in tariffs can affect the imports and exports of raw materials like cotton, wool, silk, and other fabrics. Specifically, according to 2022 import levels, tarrics impact over $350 billion of trade and increase consumer costs by approximately $51 billion each year. Sources:

SECTOR ANALYSTS SPRING 2023 John Hanna Telecommunications jlh462@cornell.edu Isaac Sosnoff Meme Stocks ias42@cornell.edu Jeremy Herring Information Technology jdh363@cornell.edu Rory Sheppard Industrials rps238@cornell.edu JP Spak Healthcare jps434@cornell.edu Declan Beran Financials djb384@cornell.edu Anthony Lopardo ESG al835@cornell.edu Victoria Gong Energy vxg3@cornell.edu Kristian Suh Consumer & Retail ks964@cornell.edu

ASSOCIATES SPRING 2023 John Hanna

Victoria Gong

May Ton

jlh462@cornell.edu

vxg3@cornell.edu

ct528@cornell.edu

Beau Gillam

Andrew Grinzayd

Arya Patel

bbg35@cornell.edu

aeg264@cornell.edu

acp236@cornell.edu

Anika Mittle

Jeremy Herring

Liam Ardrey

am3336@cornell.edu

jdh363@cornell.edu

wa62@cornell.edu

Raquel Kanner

Amy Ren

Adelyn Carney

rk747@cornell.edu

jr984@cornell.edu

ac964@cornell.edu

Alexander Chung

Grant Travis

Rory Sheppard

ac2487@cornell.edu

gt325@cornell.edu

rps238@cornell.edu

Kaitlyn Lau

JP Spak

Meghan O'Leary

kl737@cornell.edu

jps434@cornell.edu

mco56@cornell.edu

Sarah Zhou

Erin Limb

Siddhant Dahiya

sz644@cornell.edu

el597@cornell.edu

sd542@cornell.edu

Isaac Sosnoff

Raheem Amany

Laurent Vo

ias42@cornell.edu

rba52@cornell.edu

lv232@cornell.edu

Melenie Mendez

Lavinia Burchielli

John Werner

mm2583@cornell.edu

lb742@cornell.edu

jmw536@cornell.edu

Kristian Suh

Emiri Fukuchi

Beliz Erdogmus

ks964@cornell.edu

ejf234@cornell.edu

bme43@cornell.edu

Avery Carter

Alia Piccinni

atc77@cornell.edu

ajp325@cornell.edu

Illustration Credit Freepik freepik.com

Logo Credit Allen Luo akl389@cornell.edu