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CORNELL EQUITY RESEARCH
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Issue 12
Spring 2026
MARCH 6TH - July 24TH 2026
Biannual Equity Research Report
A LETTER FROM THE PRESIDENT
Dear Reader, Welcome to the latest issue of Cornell Equity Research. This semester we welcomed a talented class of ten new members, and their diverse backgrounds, interests, and ambitions have strengthened our effort to give readers an interdisciplinary view of equities and a forum for exchanging ideas. From their induction to the club, this cohort has shown the commitment and curiosity that keep this club moving forward, and we're excited to watch their personal development and future involvement. We are glad to continue the initiatives we began over the past two years, chief among them the CER Newsletter, which has become our primary connection to our readers. Alongside it, we have reimagined our visual presentation, and this issue is the first to carry our new design language. We also continue working closely with our senior members and our advisor, Professor A. J. Edwards, to sharpen both the quality of our reports and the education we offer our members, since serving them is what the club exists to do. At its core, CER gives our members a rigorous analytical foundation, a forum to exchange ideas and grow, and the experiences and skills they carry into whatever comes next. It has been the great privilege of my time at Cornell to lead a thoughtful executive board and a group of sector leads who never stopped pushing to raise the quality of our research and the experience of our members. We remain a young club, and I have come to see that youth not as something to outgrow but as the very force that shapes us: each semester leaves CER a little sharper than the one before, and this one was no exception. Spring 2026 was one of our strongest semesters yet, and it has been a genuine honor to stand at the forefront of this club for the past year. It is with real pride, then, that I pass the torch to Lindsey Price, Konrad Hartung, and Kashmir Tai. Their energy, and the distinct perspectives and experiences each of them brings, will serve CER well in the year ahead.
Sincerely,
Khanh Nguyen
PRESIDENT, CORNELL EQUITY RESEARCH
2025-2026
Executive Board The team behind Cornell Equity Research; leading its research, education, recruitment, publications, and operations
President
Executive Vice President
Vice President of Education
Vice President of Publishing
Vice President of Recruitment
Griffin Murphy
Vatsal Kalola
Konrad Hartung
Kaden Liu
gdm63@cornell.edu
vk366@cornell.edu
kfh37@cornell.edu
kl2226@cornell.edu
Vice President of Public Relations
Vice President of Research
Vice President of Research
Vice President of Prof. Development
Vice President of Finance
Emily-Jane Luo
Justin Li
Andy Cho
Spencer Hom
Kashmir Tai
el782@cornell.edu
jjp258@cornell.edu
hc877@cornell.edu
sh2573@cornell.edu
qt56@cornell.edu
Khanh Nguyen kpn27@cornell.edu
E V E RY R E P O RT, EV ERY S E CTO R
Scan for the full research archive cornellequityresearch.com/publications
2025-2026
Sector Leads Our six sectors are covered in this semester's edition; led by our sector leads, comprised of a team of analysts. Sector
TMT 01
Lead Analyst
Alex Salvatore ams874@cornell.edu
Healthcare
Laura Zhai
02
yz2395@cornell.edu
Industrials 03
Energy 04
Materials 05
Consumer 06
Justin Kaplowitz jjk355@cornell.edu
Thomas Lee tcl68@cornell.edu
Zaryab Kanjiani zk226@cornell.edu
Jarret Zundel jtz8@cornell.edu
MACROECONOMY OUTLOOK
Q4 2025 & Q1 2026 Dylan Wong, Chair of Research | April 30, 2026 EXECUTIVE SUMMARY The two quarters spanning the turn of the year will be remembered less for what the data did than for what happened to the data – and to the policy framework sitting on top of it. Between October 2025 and March 2026 the U.S. economy absorbed the longest government shutdown in history, the judicial demolition of the tariff regime that had defined trade policy for a year, a war in the Persian Gulf that closed the Strait of Hormuz, and the most contested Federal Reserve leadership transition of the modern era. Growth, remarkably, muddled through. Almost nothing else did. The headline arithmetic is deceptive. Real GDP grew just 0.5% annualized in Q4 2025 – revised down from a 1.4% advance print – after a scorching 4.4% in Q3. Roughly a full percentage point of that deceleration was the 43-day shutdown mechanically subtracting federal labour services, and much of the rest was payback in trade and inventories. Q1 2026 rebounded to 2.1%. Averaged across the two quarters, the economy grew at something close to 1.3% – below trend, but not recessionary, and consistent with the roughly 2.6% year-on-year pace the level data implied by March. Inflation is where the story turns. Through the winter, the tariff impulse that had worried the Fed all through 2025 was visibly fading: headline CPI ran 2.4% year-on-year in February, core 2.5%. Then two things happened eight days apart. On February 20, the Supreme Court ruled in Learning Resources v. Trump that the International Emergency Economic Powers Act does not authorise tariffs, wiping out the legal basis for the reciprocal and fentanyl duties overnight. On February 28, U.S. and Israeli strikes on Iran triggered the de facto closure of the Strait of Hormuz. Brent crude, which began the year at $61, ended the quarter at $118 – the largest quarterly increase in inflation-adjusted terms in EIA data going back to 1988. March CPI jumped 0.9% in a single month, with gasoline alone up 21.2%, the biggest monthly move since the series began in 1967. The inflation baton passed from tariffs to oil almost to the day. That matters more than the headline level, because the two shocks have very different half-lives and very different implications for monetary policy. A tariff is a one-time step change in the price level of traded goods. An energy shock is a relative price move that can propagate through wages, expectations, and every service that burns diesel. The Fed cut once more in December, to a target range of 3.50%–3.75%, then stopped. It has not moved since. Markets that entered 2026 pricing one to two further cuts had priced out essentially all of them by the March meeting. Meanwhile the institution itself was under simultaneous legal, political, and personnel siege: a Justice Department subpoena of the Chair, a Supreme Court case over whether a sitting Governor could be fired, and the nomination and eventual confirmation of Kevin Warsh on the narrowest margin in the history of the office. Equity markets registered all of this as a rotation rather than a rout. The S&P 500 returned 2.7% in Q4 to close 2025 up 17.9%, set a record high on January 27, then fell 4.3% over Q1 2026. But the equal-weighted index rose 0.7% and the Russell 2000 gained roughly 1% over the same quarter. The Magnificent 7 fell 10.5% and accounted for 89% of the index decline. For the first time since 2009, a clear majority of S&P constituents – 57.8% – outperformed the benchmark. After three years of the narrowest market in modern history, breadth finally arrived, and it arrived because the leaders broke rather than because the laggards healed.
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The following report reviews these two quarters across five channels: the macro data itself, the collapse and reconstruction of trade policy, the energy shock, the Fed’s transition, and the financial-market signals – AI capital spending, credit, the memory squeeze, and the violent repricing of gold, the dollar, and Bitcoin.
MACROECONOMIC INDICATORS: GDP, INFLATION, LABOR MARKET, SPENDING Growth was distorted before it was measured. The Q4 2025 GDP report was not published on schedule; the advance estimate slipped from January 29 to February 20, 2026 because the Bureau of Economic Analysis lacked the source data. When it arrived it showed 1.4% growth, badly under a consensus near 2.8–3.0%. Two revisions later the figure stood at 0.5% – a 0.9-point downgrade driven by exports, consumer spending, government spending, and, in the final pass, a larger inventory drawdown in wholesale trade. The shutdown ran from October 1 to November 12 and furloughed roughly 900,000 federal workers. BEA estimated that the reduction in labour services provided by the federal government alone subtracted about 1.0 percentage point from Q4 growth. Because furloughed employees received back pay, the hit showed up in real activity rather than in nominal compensation. Strip it out and the underlying quarter looks like something closer to 1.5% – soft, but not the near-stall the headline implied. Real final sales to private domestic purchasers, the cleanest read on domestic demand, grew 2.4% in Q4 versus 2.9% in Q3. Q1 2026 reversed most of it. The advance estimate came in at 2.0%, was revised down to 1.6% on a larger inventory decline, then revised up to 2.1% in the third estimate on a sharp downward revision to imports. That last revision is worth pausing on: imports were initially estimated to have grown 21.1% annualized and were marked down to 11.8%, cutting the net-export drag from 1.3 points to 0.4. Trade volumes in this period were being pushed around by tariff arbitrage on a scale that made the initial estimates close to unusable. Gross domestic income tells a slightly gloomier story than GDP – up 0.9% in Q1 against 1.6% in Q4, with the GDP/GDI average at 1.3%. Over the year through Q1, GDP rose 2.6% and GDI 2.2%. Corporate profits decelerated hard: a $246.9 billion increase in Q4 was followed by just $40.4 billion in Q1. The bottom line on growth is two very noisy quarters that average to roughly 1.3%, with the noise almost entirely explained by a shutdown, a trade-policy shock, and inventories – not by underlying private demand, which held near 2%. Inflation went sideways, then vertical. The disinflation everyone was waiting for in goods finally showed up, and was immediately drowned out. Core CPI ran 2.5% year-on-year in February and 2.6% in March. Headline CPI was 2.4% in February. Then March delivered a 0.9% monthly print that took the annual rate to 3.3%, the highest since May 2024. Energy rose 10.9% on the month and 12.5% on the year; gasoline rose 21.2% in a single month, the largest increase since the series began in 1967, and accounted for roughly three-quarters of the entire headline move. The Fed’s preferred gauge tells a less comfortable story than core CPI. Core PCE inflation never got below 3% during the period: 3.01% year-on-year in December, 3.06% in January, 3.0% in February, and 3.2% in March. On a quarterly annualized basis – the way the GDP accounts present it – the Q1 2026 PCE price index rose 4.5% and core PCE 4.3%, against 2.9% and 2.7% respectively in Q4. That gap between a 2.6% core CPI and a 3.2% core PCE is unusually wide and mostly reflects differences in weights and in the treatment of medical and financial services. Whichever series you prefer, underlying inflation spent six months stuck with a three-handle while the market was pricing a return to two. The labour market entered a genuinely strange equilibrium – low hiring, low firing, and almost no net job creation. Unemployment peaked at a four-year high of 4.5% in November 2025, then oscillated: 4.4% in December, 4.3% in January, 4.4% in February, 4.3% in March. Payrolls were violently noisy – roughly +50,000 in December, +160,000 in January, –133,000 in February (depressed by a Kaiser Permanente strike and birth-death model changes), and +178,000 in March, nearly three times consensus and the strongest since December 2024.
MACROECONOMY OUTLOOK · PAGE 3
Almost none of that is signal. Health care and social assistance contributed 90,000 of March’s 178,000, continuing a pattern in which one sector carries the entire headline. Federal employment fell another 18,000. The JOLTS hiring rate dropped to 3.1%, a level previously seen only at the depths of the financial crisis and the pandemic. Long-term unemployment kept rising even as the unemployment rate fell, and the March decline in the jobless rate came substantially from a shrinking labour force rather than from job finding. Wage growth cooled decisively: average hourly earnings rose 3.5% year-on-year in March, the slowest since May 2021. With core inflation near 3%, real wage growth is now close to zero for the median worker. The measurement problem deserves its own paragraph. The October 2025 household survey could not be collected and cannot be reconstructed, which means the October 2025 unemployment rate will never exist. October CPI was never published. The annual benchmark revision incorporated with the January 2026 report confirmed a record downward adjustment on the order of 911,000 jobs for the year through March 2025, and the preliminary benchmark for the year through March 2026 shaved another 79,000. Analysts spent two quarters making decisions with instruments that were partially inoperative, and the Fed’s December meeting took place before the delayed November jobs report was even released. That is not a footnote; it is a risk factor. Consumers kept spending, and paid for it out of savings. The personal saving rate fell from 4.5% in January to 3.9% in February to 3.6% in March – down from 5.1% in January 2025 and a 5.5% peak that April. Real disposable income fell 0.5% in February, the largest drop since May 2025, as energy prices ate into purchasing power. Nominal consumption held up; real consumption barely grew. The composition is the story. Total consumer debt hit a record $18.19 trillion in March. Bankcard originations set a record 21.9 million in Q4 2025, up 13% year-on-year, with subprime originations up 18.6% and subprime credit limits up 37.6% versus the prior January. Personal loan originations hit a record 7.6 million, up 21.7%. Aggregate delinquency data looked benign – all-card 60-day delinquency actually fell to 2.97% – but subprime auto delinquency sat at an all-time high near 6.8% and student loan 90-day delinquency reached 10.3% as forbearance-era balances finished rolling off. For investors, the aggregate consumer is fine and the marginal consumer is not, and the gap widened materially in these two quarters. Companies with revenue concentrated in the bottom two income quintiles – subprime lenders, dollar stores, rent-to-own, used autos, quick-service restaurants – are exposed to a cohort now funding consumption with newly issued revolving credit at high rates. Commercial Chapter 11 filings ran 42% above year-ago levels by April.
TRADE POLICY AFTER IEEPA: THE COURT, SECTION 122, AND THE REFUND PROBLEM On February 20, 2026, the Supreme Court decided Learning Resources, Inc. v. Trump, consolidated with Trump v. V.O.S. Selections, holding 6–3 that IEEPA does not authorise the President to impose tariffs. Chief Justice Roberts wrote for the majority, joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson – a coalition that cut cleanly across the Court’s usual ideological lines. The reasoning turned on the phrase “regulate … importation,” which the Court declined to read as encompassing the taxing power the Constitution assigns to Congress, reinforced by the observation that reading it otherwise would authorise export tariffs the Export Clause forbids outright. The practical effect was immediate and enormous. The ruling invalidated the April 2025 reciprocal tariffs, the fentanylrelated duties on Canada, Mexico, and China, and the Brazil surcharge – ab initio, meaning they had never been lawful. An executive order terminating all IEEPA-based tariffs issued the same day; Customs and Border Protection stopped collecting them at midnight on February 24. On a standalone basis, the trade-weighted average U.S. tariff would have fallen from 15.3% to 8.3% – a seven-point cut, larger than any single tariff action in the preceding two years, delivered by a court rather than a policymaker. It did not stand. Within hours the administration invoked Section 122 of the Trade Act of 1974, a balance-of-payments provision, imposing a flat surcharge on most imports – 10% initially, raised to 15% on February 22, effective February 24. Under the 15% surcharge the trade-weighted average tariff comes to roughly 13.0%; under 10%, roughly 11.4%. Section
MACROECONOMY OUTLOOK · PAGE 4
232 duties (steel and aluminium at 50%, autos and semiconductors at 25%, copper at 50%, lumber at 10%) and Section 301 duties on China were untouched, because they rest on entirely different statutory authority. Two features of Section 122 make it a genuinely different regime from what it replaced. First, it is flat: there are no countryspecific rates. Countries that had negotiated their way to high IEEPA rates – India at 18% after a deal struck in early February, Vietnam, Thailand – suddenly faced far less than before, while countries with low pre-existing rates saw little relief. A year of bilateral negotiating leverage evaporated in a weekend. Second, it carries a statutory 150-day limit and cannot be extended by the President. It expired in late July 2026, and only Congress could replace it. The refund question is the loose thread. The Court remanded the mechanics of repaying unlawfully collected duties to the lower courts, with estimates of the exposure running to roughly $175 billion. By mid-2026 customs duty refunds were running larger than gross collections in some months, producing a net outflow in a line item the administration had spent a year describing as a revenue pillar. For a fiscal position already deteriorating – $602 billion borrowed in the first three months of FY2026, $1.2 trillion through March, with CBO projecting a $1.9 trillion full-year deficit – this is not a rounding error. The durable read for investors is that the ceiling on executive tariff authority is now much lower than markets assumed, and the floor is much higher than tariff bears hoped. Section 232 and 301 survived intact and the administration has been steadily broadening 232 investigations, which is the more litigation-proof path. The effective tariff rate on actual customs collections fell from a peak near 11% to roughly 7.1% by June – meaningfully lower, but still triple the 2.3% of January 2025. Importers who spent 2025 building tariff-engineering and country-substitution capability now hold assets built for a regime that no longer exists.
THE ENERGY SHOCK: HORMUZ AND THE RETURN OF SUPPLY-SIDE INFLATION Oil entered 2026 as a consensus short. OPEC+ had spent the back half of 2025 prioritising market share over price, forecasters were modelling a 2026 supply glut, and Brent drifted toward $60 at year-end. Brent opened 2026 at $61 per barrel. Through January and February the price ground up to about $72 on rising conflict risk and Venezuelan supply concerns. On February 28, U.S. and Israeli strikes on Iran – which included the killing of Supreme Leader Ali Khamenei – set off a chain of retaliation that stopped most commercial shipping through the Strait of Hormuz, the chokepoint that had carried roughly one-fifth of global seaborne oil. Iraqi and Kuwaiti output was cut. Brent closed the quarter at $118, having traded as high as roughly $120 in March, with WTI at $101. The EIA’s characterisation is worth restating: this was the largest quarterly crude price increase, adjusted for inflation, in its data going back to 1988. The Brent–WTI spread – normally a few dollars – peaked at $25 on March 31 and averaged $11 through the month, the widest in more than five years, as U.S. inventories and a planned Strategic Petroleum Reserve release insulated the domestic benchmark from the shipping-cost and regional-flow disruption that hit Brent directly. The macro transmission was fast and clean. U.S. gasoline moved above $4 a gallon. March CPI energy rose 10.9% on the month. Real disposable income fell. And a Federal Reserve that had spent eighteen months arguing that tariff inflation was a transitory level effect it could look through now faced a second supply shock in the same direction, arriving before the first had fully washed out of the year-on-year comparisons. Two mitigating factors kept this from becoming a 1970s rerun. First, the shock was priced far faster than it was realised physically: the World Bank noted that most of the March move reflected expectations of supply loss rather than actual barrels missing from the market. Second, the policy response was coordinated and large – an IEA-organised release of roughly 400 million barrels, which helped drag Brent back to the low $70s by late June once ceasefire talks advanced. That the U.S. SPR subsequently fell below 290 million barrels, its lowest since 1982, is the cost of that stabilisation and a constraint on the next shock.
MACROECONOMY OUTLOOK · PAGE 5
The important structural point is that the U.S. is now a net energy exporter, so an oil shock is a large distributional event domestically rather than an unambiguous negative for national income – energy producers and energy-state economies gain what consumers and transport-intensive industries lose. The terms-of-trade mathematics that made 1973 and 1979 devastating for the U.S. does not hold in 2026. What does hold is the political economy: gasoline prices are the single most visible price in the American economy, and a 21% monthly move in an election year reshapes both consumer sentiment and the pressure applied to the central bank.
FED POLICY: THE EASING CYCLE ENDS AND POWELL HANDS OVER On December 10, 2025 the FOMC cut the federal funds target range by 25 basis points to 3.50%–3.75%, its third consecutive cut. The vote was 9–3, with dissents pointing in both directions: Governor Stephen Miran preferred 50 basis points, while Austan Goolsbee and Jeffrey Schmid preferred no cut at all. Four non-voting participants registered soft dissents. The minutes later revealed the decision was closer than the tally suggested, with some supporters describing it as finely balanced and several arguing the range should then stay unchanged for some time. Two things about that meeting mattered more than the cut. The dot plot showed a median of just one cut in 2026 and one in 2027, unchanged from September – a hawkish projection delivered alongside a dovish action, the classic “hawkish cut.” And the Fed announced it would resume purchasing Treasury securities, starting with $40 billion of bills, formally ending balance-sheet runoff and shifting to reserve management. Powell’s framing was that the committee was at the high end of the range of neutral estimates and well positioned to wait. Wait it did. The January 27–28 meeting held rates steady over two dissents favouring a cut, with Powell observing that it was difficult to look at the data and conclude policy was significantly restrictive. The March 17–18 meeting held again, 11– 1, with Miran the lone dissent. The accompanying projections raised 2026 growth to 2.4% and core PCE inflation to 2.7%, and the number of participants seeing upside risks to their core inflation forecast rose from 12 to 16 out of 19. The longerrun dot drifted up to 3.125%, the highest median estimate of neutral since 2016. Markets that began the year expecting one or two cuts were, by the March meeting, pricing none. The core tension was a labour market weak enough to justify easing and an inflation profile that made easing indefensible; the Fed resolved it by doing nothing, for the longest stretch of the cycle. The institutional story was larger than the policy story. Three separate threats to Fed independence ran concurrently through these two quarters, and investors had to price all three. First, personnel. On January 30, 2026, President Trump named Kevin Warsh to succeed Powell. Warsh, a Fed governor from 2006 to 2011 and a longtime critic of post-pandemic monetary policy, had argued that AI-driven productivity gains would permit lower rates without inflation – a position reconciling his hawkish record with the administration’s demands. The nomination was formally transmitted on March 4, cleared the Senate Banking Committee 13–11 on April 29, and was confirmed 54–45 on May 13, the narrowest margin in the history of the office, with only one Democrat crossing over. Warsh took office May 22. Second, prosecution. On January 11, Powell disclosed that the Justice Department had subpoenaed the Fed over his June 2025 Senate testimony regarding the $2.5 billion headquarters renovation. Senator Thom Tillis blocked committee action on Warsh’s nomination in protest until a U.S. attorney agreed to drop the probe – an unusual instance of the confirmation process being used to defend the institution the nominee was being confirmed to lead. Third, removal power. Trump v. Cook – testing whether a Fed governor can be fired over pre-appointment conduct – was argued January 21, 2026. Powell attended oral argument in person, the first Fed chair to do so since Volcker in the mid1980s, and described it as perhaps the most important legal case in the Fed’s 113-year history. The Court ruled 5–4 on June 29 that for-cause protections are constitutional and require notice and a hearing, allowing Governor Lisa Cook to remain. In a break with roughly eighty years of practice, Powell remained on the Board as a governor after his term as chair expired, with a governor term running to 2028.
MACROECONOMY OUTLOOK · PAGE 6
Markets priced Fed independence as a live variable rather than an assumption for the first time in decades, and the pricing was visible. The single sharpest market reaction of Q1 2026 to a policy event was not a rate decision – it was the Warsh nomination on January 30, which sent Treasury yields up, the dollar up, and gold and silver into their most violent one-day unwind in years. That is a market saying, unambiguously, that it expected the successor to be more hawkish than the incumbent, not less – the opposite of the administration’s stated intent.
FINANCIAL SIGNALS: AI CAPEX, CREDIT MARKETS, AND THE MEMORY SQUEEZE If there is one theme that connects equity, credit, inflation, and productivity in this period, it is that AI capital expenditure stopped being a sector story and became a macro variable. The first credit scare arrived in Q4 2025. Through November and December, the market stopped rewarding AI capital commitments and started interrogating how they were funded. Oracle fell roughly 47% from its September peak; CoreWeave fell 62% from its July peak, including a 45% decline in November alone. Oracle’s fiscal second-quarter free cash flow came in at roughly negative $10 billion against consensus near negative $5.2 billion, after an $18 billion bond sale in September that ranked among the largest corporate issues in tech history. Credit default swaps on CoreWeave implied a default probability in the low forties; parts of Oracle’s curve traded at high-yield-like levels despite an investmentgrade rating. What is notable is how contained it was: the S&P 500 fell a fraction of a percent on the worst day of that episode and finished 2025 up 17.9%. Investors were discriminating between balance sheets, not exiting the theme. Then guidance season doubled down. In late January and early February 2026, the four largest hyperscalers guided to roughly $630 billion of 2026 capital expenditure, against approximately $388–410 billion in 2025 – a 60%-plus increase. Amazon guided to about $200 billion, Alphabet to $175–185 billion, Meta to $115–135 billion (later raised toward $125– 145 billion on higher component costs), and Microsoft to $110–120 billion. Guidance was revised upward through the year; by mid-2026 the aggregate had drifted toward $725 billion. Equities did not applaud. Microsoft was down 17% year-to-date by early February and Amazon down 9%. Meta fell more than 9% in a single session on its raised guidance. The market’s revealed preference shifted from “who is spending” to “who can fund it out of operating cash flow” – which is precisely why the Magnificent 7 fell 10.5% in Q1 while the other 493 fell 1.3%. The funding gap is the thing to watch. AI-related debt reached roughly $1.2 trillion by October 2025 and became the largest single segment of the U.S. investment-grade market at about 14% of the JPMorgan Liquid Index, displacing banks. Morgan Stanley put global data centre investment through 2028 near $2.9 trillion against roughly $1.4 trillion of Big Tech operating cash flow – a financing gap on the order of $1.5 trillion, with private credit expected to supply the largest share. The Bank for International Settlements flagged the specific mispricing in a January 2026 bulletin: private credit lenders were pricing AI infrastructure loans at essentially the same spreads, maturities, and collateral terms as their non-AI loans, while AI equities implied dramatically higher expected returns. Both cannot be right. Its March Quarterly Review dissected the off-balance-sheet joint-venture and SPV structures now standard in the sector, in which the entity bearing the risk is deliberately separated from the entity assessing it. In January, four U.S. senators called for an investigation into Big Tech’s use of opaque debt markets. By May, a third of global fund managers named hyperscaler capex the most likely source of the next systemic credit event – double the share a month earlier. The collateral question is the sharpest one. Data centres are purpose-built assets with limited alternative use, and GPUs depreciate on a schedule that may run faster than the loans secured against them amortise. Oversubscription on hyperscaler bond deals ran near five times cover in February 2026 and had fallen below two times by July. Spreads stayed near cycle lows – but absorption, not price, is where stress shows up first. The memory shortage is the most underpriced macro consequence of the AI build. High-bandwidth memory consumes roughly three times the wafer capacity per gigabyte of standard DRAM, and Samsung, SK Hynix, and Micron – who together control more than 95% of DRAM production – shifted upward of 80% of advanced capacity to HBM and server DRAM. SK Hynix declared its 2026 capacity essentially sold out; Micron exited the consumer market entirely.
MACROECONOMY OUTLOOK · PAGE 7
The result was a price shock in a physical input. DRAM prices rose roughly 171% through 2025, and conventional DRAM contract prices rose a further 90–95% quarter-on-quarter in Q1 2026. DDR5 contract pricing moved from around $7 per unit in early 2025 to roughly $19.50. PC prices were projected to rise 15–20% in Q1 alone; 2026 smartphone shipments were forecast to fall 12.9% and PC shipments 11.3%. Cisco flagged potential margin erosion of 200 basis points. Meta cited component pricing directly when raising capex guidance. This is an AI-driven inflation channel operating entirely outside the tariff and energy stories, and it runs in the opposite direction from the productivity narrative – the same investment meant to lower the cost of cognition is currently raising the cost of every device that contains memory. Corporate earnings, for now, are outstanding. Q1 2026 delivered a 78% EPS beat rate, revenue growth of roughly 10.3% – the fastest since Q3 2022 – and a blended net profit margin of 14.8%, an all-time record in FactSet’s data, surpassing the 13.2% set the prior quarter. Two caveats: much of Q1 business activity predated the February 28 shock, so the results describe a pre-war economy; and a meaningful share of the 28.6% headline EPS growth came from non-operating GAAP items at a handful of megacaps, including a $37.7 billion equity securities gain at Alphabet and $16.8 billion of pre-tax gains at Amazon on its Anthropic stake. The market saw through it – companies that missed were punished 4.9% on average against a five-year norm of 2.9%.
CURRENCY, GOLD, AND BITCOIN: THE SAFE-HAVEN TRADE COMES APART The most instructive market action of these two quarters was not in equities. It was in the assets investors buy when they distrust institutions. Gold went parabolic and then broke. After rising roughly 65% in 2025 – its best year since 1979 – gold entered 2026 near $4,456 on COMEX and added about 24% in January alone. It crossed $5,000 for the first time on January 26 and peaked at roughly $5,602 intraday on January 29; the LBMA PM Fix averaged a record $5,405 for the month. Silver ran further, peaking near $121.64 after more than doubling in 2025. The drivers were real: record central bank buying, a weak dollar, record 2025 ETF inflows of $89 billion that doubled global gold ETF assets to $559 billion, and genuine institutional uncertainty. But a speculative layer had built on top of the structural one, and on January 30 the Warsh nomination detonated it. Yields rose, the dollar firmed, and leveraged positions unwound in a cascade. The BIS devoted a full analysis box in its March Quarterly Review to the episode, attributing the abrupt end of the rally in part to leveraged unwinds. Gold closed Q1 at $4,668 – still a tenth consecutive quarterly record high on a closing basis, and still up enormously over any horizon longer than a month, but roughly 17% below the peak, with the drawdown eventually reaching about 27%. Silver lost roughly half its value from its high. Physical demand did not blink: the World Gold Council recorded the secondhighest quarter ever for bar and coin demand in Q1, up 42% year-on-year. Realised volatility in gold briefly exceeded 50%, far above its twenty-year average. Bitcoin failed the test it had spent two years claiming it would pass. After an all-time high near $126,000 on October 2, 2025, a single-day liquidation cascade of roughly $19 billion – the largest in the asset’s history – hollowed out market depth in October. What followed was not a correction but a regime change: more than $12 billion of net outflows from U.S. spot ETFs between November and January, long-term holders distributing roughly 3.67 million coins near the highs, and a price below $60,000 by February, a decline of more than 52% in under four months, erasing over $1 trillion of crypto market value. Bitcoin fell 23% in Q1 2026. The critical observation is when: it fell hardest during precisely the episodes – the Warsh nomination, the war, the energy shock – that gold’s proponents describe as gold’s use case. In a quarter defined by geopolitical rupture and institutional stress, Bitcoin traded as a leveraged risk asset with a technology beta, not as digital gold. Investors who held it as a hedge held a correlated position they believed was uncorrelated. The dollar was the quiet story. The DXY stabilised near 98 through late 2025 after an 11% first-half 2025 decline, its worst since 1973, and traded near 99 in early 2026. It weakened in January on rate-cut expectations, then firmed on the Warsh nomination and again on the energy shock – a reminder that the U.S. is now a net energy exporter, which changes the –
MACROECONOMY OUTLOOK · PAGE 8
sign on the dollar’s response to an oil shock relative to the 1970s and 1980s. The 10-year Treasury yield ended Q1 at 4.3% after trading as low as 3.9% in late February, with the Bloomberg Aggregate flat on the quarter. The takeaway across all three is that gold’s structural bid – central bank diversification, fiscal anxiety, institutional distrust – survived the crash intact, and physical demand actually accelerated into it. The speculative overlay did not. Bitcoin’s institutional bid proved to be momentum capital in a different costume. And the dollar, whose obituary was written repeatedly in 2025, ended the period doing what reserve currencies do when the world becomes more dangerous.
CONCLUSION Four things carried out of these two quarters and are worth holding in view. First, the inflation problem changed shape rather than resolving. Tariff inflation is gone by judicial order; energy inflation replaced it; core PCE never got below 3% through either. A central bank facing a three-handle core, a labour market that is weak but not deteriorating, and a supply shock it cannot influence has very little room to do anything at all. The market has moved from pricing cuts to, at points in 2026, pricing hikes. Second, policy risk is now legal risk. The three most consequential macro events of this period were a Supreme Court tariff ruling, a Supreme Court removal-power case, and a Senate confirmation vote. None of them appeared on an economic calendar. Building a macro view without a view on litigation is now incomplete. Third, the AI trade is being repriced along the funding axis rather than the demand axis. Nobody in these two quarters presented credible evidence that AI demand is weakening – Q1 hyperscaler results were strong and backlogs grew. What changed is that the market began distinguishing between companies funding the build from cash flow and companies funding it from debt, and began asking what secures that debt. Breadth broadened in Q1 2026 not because the rest of the market got better but because the concentrated leadership got more expensive to finance. Fourth, aggregate resilience is masking distributional stress that is now large enough to matter. A 3.6% saving rate, record subprime card issuance, all-time-high subprime auto delinquency, a hiring rate at crisis lows, and commercial bankruptcies up 42% are not the signature of a healthy expansion. They are the signature of an expansion carried by the top of the income distribution and by one enormous investment cycle. Both of those supports are more fragile than the headline GDP and earnings numbers suggest. For portfolios, the implication is not to abandon the AI trade but to separate it along the balance sheet. The quarter that broke the mega-cap complex also delivered the broadest market since 2009, record corporate margins, and a functioning credit market. The risk is not that AI demand disappears; it is that a $1.5 trillion financing gap is being bridged by lenders who, on the BIS’s own reading, are pricing that risk identically to everything else on their books. Gold’s structural case survived its own crash. Bitcoin’s did not. And the single most important variable for 2026 is one no economic model contains: whether the Strait of Hormuz reopens.
SECTION 01
TMT
SECTOR LEAD
01
Alex Salvatore
CORNELL EQUITY RESEARCH
TECHNOLOGY, MEDIA, TELECOMMUNICATIONS · SECTOR OUTLOOK
1H 2026 Recap Alex Salvatore, Sector Lead | May, 2026 THE AI CAPEX SUPERCYCLE KEEPS ACCELERATING Semiconductors had one of the strongest half-years on record. Global chip sales hit $702 billion in H1 2026 alone, with memory the standout: memory revenue grew 305% year over year versus 45% for logic, as tight high-bandwidth memory supply collided with AI infrastructure demand. Micron rode that wave to a 200%+ share-price surge on the back of $13.64 billion in fiscal Q1 revenue, up 56.8% year over year. Nvidia's own fundamentals stayed strong — fiscal 2026 revenue rose 65% to $215.9 billion — but the stock badly lagged the group, gaining only modestly while the PHLX Semiconductor Index rallied roughly 79% through June, as investors rotated into AMD, Micron, and other names seen as relatively undervalued within the AI trade. BIG FOUR HYPERSCALER CAPEX
The demand side of that trade is hyperscaler capex. Microsoft, Alphabet, Amazon, and Meta used Q1 earnings (reported April 29–30) to raise combined 2026 AI infrastructure spending guidance to roughly $725 billion, up 77% from 2025's already-record $410 billion. Cloud growth broadly justified the spend — Google Cloud revenue grew 63% — but Meta stock fell 6% on the day it disclosed the size of its own capex hike, an early sign that investor patience has limits. Those limits showed up directly in early June, when a broad “AI bubble” scare sent the Nasdaq down 2.2% in a single session, with Nvidia, AMD, Intel, and Micron all selling off and South Korea's KOSPI briefly triggering a circuit breaker. The debate over “circular” financing arrangements between chipmakers, cloud providers, and AI labs continued to simmer as a structural risk through the half.
Source: The Motley Fool
NVIDIA VS SEMICONDUCTOR SECTOR
THE “SAASPOCALYPSE” RESHAPES ENTERPRISE SOFTWARE Enterprise software had the opposite half. What Wall Street nicknamed the “SaaSpocalypse” began February 3–4, when Anthropic's release of opensource Claude Cowork plugins covering legal, sales, finance, marketing, and support functions convinced investors that AI agents could replace entire SaaS categories rather than just sit on top of them. The initial move wiped out roughly $285–300 billion in software market value in a single week, with HubSpot down 39%, Figma down 40%, ServiceNow down 28%, and Salesforce down 26% year to date within days. A second leg hit on April 9, triggered by fresh model releases from Anthropic and Meta: Cloudflare fell 12%, Snowflake 9%, ServiceNow 7%, and Salesforce 4% in one session. By mid-year, Workday and Adobe were each down 26–38% year to date, and the software-heavy IGV ETF had underperformed the S&P 500 by roughly 24 points — a gap not seen since the 2000–2001 dot-com unwind.
Source: Yahoo Finance
SPENDING GROWTH GAP WIDENS BY INCOME GROUP
The layoffs told the same story from the inside. Salesforce CEO Marc Benioff said AI agents let the company cut its customer-support headcount from about 9,000 to 5,000, and Salesforce ran three separate rounds of cuts in – Source: Yahoo Finance
SECTOR REPORT · TECHNOLOGY, MEDIA, TELECOMMUNICATIONS · PAGE 2
the first nine months of the year even as Agentforce annualized revenue crossed $1 billion. SAP, Workday, and Oracle all cited AI-driven efficiency in their own reductions. Not everyone is convinced the sell-off is rational: Wedbush called the Salesforce/ServiceNow declines “disconnected” from fundamentals after CIO conversations suggested AI adoption is additive rather than purely substitutive, and JPMorgan's positioning data showed institutional exposure to software near historic lows — a setup some see as a contrarian buy signal heading into the second half.
MEDIA CONSOLIDATION AND PLATFORM DEALS CLOSE OUT The Warner Bros. Discovery saga resolved in Paramount's favor. WBD had agreed to sell its studio and streaming assets to Netflix in December 2025, but after Netflix granted a contractual waiver, Paramount Skydance returned with an all-cash, all-company bid of $31/share ($110.9 billion). WBD's board deemed it superior on February 26, Netflix declined to match, and Paramount and WBD signed a definitive merger agreement on February 27. WBD shareholders approved the deal on April 23 (holders separately rejected, in a non-binding vote, a compensation package that could pay CEO David Zaslav over $500 million). Regulatory clearance rolled in through the spring and summer — Germany, South Africa, Canada, Australia, South Korea, and the EU (both under the merger regulation and the foreign subsidies regulation) all signed off — and by mid-August Paramount had cleared nearly 70 countries, putting the combined DC/HBO/CNN/CBS/Paramount empire on track to close in Q3 2026. TikTok's five-year ownership fight also reached a conclusion in the first half. On January 22, ByteDance closed a deal handing roughly 80% control of TikTok's US operations to a joint venture led by Oracle, Silver Lake, and MGX, satisfying the 2024 divest-or-ban law. Oracle became the platform's “trusted security partner,” responsible for auditing US data handling and algorithm security, while ByteDance retained a minority stake and a licensing relationship for the recommendation algorithm — a structure two shareholder-plaintiffs argue still violates the statute's ban on an ongoing ByteDance “operational relationship,” in a suit filed in the D.C. Circuit that remained pending as of mid-year. Sources: The Motley Fool, EBC, Tom's Hardware, Value Add VC, PCWorld, Informed Clearly, Forbes, 24/7 Wall St., TechCrunch, Benzinga, ai2.work, TechFlow, Founder Reports, Axios, Paramount/WBD press releases, SEC 8-K filings, CNN, Bloomberg, Courthouse News, Wikipedia
MEDIA
Where Real Music Lives On
COMPANY
Kashmir Tai | April 6, 2026 INVESTMENT THESIS When investors think of music labels, they thought of the giants like Warner Music, Universal, or Sony, which reinforcing the perception that scale wins all in this industry. Reservoir Media (RSVR) is the counter-example: a smaller, independent music publishing company that has captured equity investor attention, with competing take-private proposals earlier this year. I recommended a Buy rating and a $10.66 price target, derived from a public comparables valuation applying the mean EV multiple to RSVR's normalized EBITDA. RSVR not as a traditional asset-light music company, but as a royalty investment fund that acquires durable, cash-generative copyrights, insulated from any single artist's popularity cycle or fleeting trend. As the global music industry becomes increasingly globalized and content production accelerates, RSVR is expanding its reach into new international markets such as India or Middle East. By combining the diversified sourcing paired with selective, long-duration asset quality, Reservoir deserves investors’ attention along with the big three in music label industry.
INDUSTRY OVERVIEW The global music publishing and recorded music industry has evolved into a high growth with intellectual property (IP) asset period. Revenue is increasing through digital streaming, licensing, and synchronization in films, television, advertising, and gaming platforms rather than traditional physical music sales. As the streaming platforms such as Spotify and Apple Music expand in the global market, the royalty revenue streams have become more stable and recurring for copyright owners. Industry forecasts suggest that the global music industry will continue to expand over the next decade. Total industry revenue is projected to grow from approximately $75 billion in 2024 to $141 billion by 2035, representing an annual growth rate of around 6%. Growth is largely driven by digital streaming adoption, emerging markets, and new monetization channels such as social media platforms and digital fitness ecosystem.
Reservoir Media NASDAQ: RSVR
BUY
UPSIDE
+10.9%
CURRENT PRICE
$9.61
PRICE TARGET
$10.66
COMPANY MARKET CAP
$630.42M
BETA
0.74
FWD EPS
$0.11
LTM EV/REV
6.27X
LTM EV/EBITDA
15.04X
52 WEEK HIGH
$10.32
52 WEEK LOW
$6.56
12-MONTH PRICE
BUSINESS OVERVIEW Reservoir Media, Inc. is an independent music publishing and recorded music company founded in 2007 by Golnar Khosrowshahi. The firm operates across two primary segments: Music Publishing: ownership of musical compositions and songwriter catalogs; monetization through streaming, licensing, and performance rights Recorded Music: Ownership of master recordings; distribution and royalty collection from streaming platforms and digital services
52 WEEK RANGE
TARGET $10.66
NOW $9.61
RESERVOIR MEDIA · NYSE: RSVR · PAGE 2
Currently, Reservoir owns more than 150,000 publishing copyrights and 36,000 master recordings, covering music across multiple genres and decades. Also, there is no single composition contributing more than 2% of publishing revenue, which shows the company is with strong diversity across the catalog. In terms of revenue mix, music publishing represents approximately 67% of total revenue, while recorded music accounts for about 28%, with the remainder coming from other sources.
VALUATIONS: PUBLIC COMP I selected a comparable companies set of U.S.-listed music and entertainment IP businesses of similar scale, including Marcus Corporation (MCS), Angel Studios (ANGX), Reading International (RDI), Cineverse (CNVS), and Kartoon Studios (TOON). While RSVR's TTM revenue of $179.98M sits below the comp set mean of $307.08M, its business quality skews notably stronger: RSVR's normalized EBITDA margin of 41.90% way exceed the comp set mean of -4.89%, and its EBITDA growth of 16.81% outpaces the peer average of 8.90%. Applying the comp set mean EV/EBITDA multiple of 16.24x to RSVR's TTM analyst-normalized EBITDA of $70.73M implies an enterprise value of approximately $1.15 billion. Backing out net debt of approximately $448.5 million yields an implied equity value of roughly $700 million. With a FDSO of ~65.7 million shares outstanding, the price target eventually comes to approximately $10.66 per share. Note that earlier this March, Wesbild/Richmond Hill raised a non-binding go-private proposal with a $10.50 per share price target, which indicates that my valuation is within range.
RECENT NEWS
At the end of Q1 FY2026, announced an investment in London-based immersive entertainment company Lightroom; acquired master rights to catalogs of 5 artists from Fool’s Gold Records COMPETITOR STATISTICS from Q3 2025
TEV/EBITDA:10.93x EBITDA Margin: 22.89%
TEV/EBITDA: 13.68x EBITDA Margin: 17.21%
A ROYALTY INVESTMENT VEHICLE TEV/EBITDA: NA EBITDA Margin: NA
Contrary to the market's perception of Reservoir as an asset-light music company, it is functioning, in substance, as a royalty investment fund: it acquires cash-flowing music copyrights and collects the resulting payment streams over time, rather than generating revenue through content creation or services. This shows up on the balance sheet. Per Reservoir's fiscal 2025 10-K, intangible assets comprised roughly $875 million of gross catalog value, or ~net $720 million. Although the company's asset turnover ratio is low (0.17~0.19 for FY2022 – FY2025), it is not a sign of weak operations: catalogs are capitalized in full at acquisition, while royalty revenue accrues gradually over a much longer horizon. This means that Reservoir is building on a strategic acquisition and long-term rights ownership that purchases are treated as asset acquisitions, rather than inorganic growth. No matter the volume of new music content produced each day, in essence all of it will require label rights and administration, which is a function Reservoir has built deep, specialized expertise in.
RESERVOIR MEDIA · NYSE: RSVR · PAGE 3
ROE (DUPONT ANALYSIS) One metric that equity investors are concerning about is RSVR’s low ROE in recent years. Admittedly, DuPont decomposition of RSVR's ROE highlights a sharp deterioration in FY2023 and FY2024, with ROE falling to just 0.18% and 0.72%, respectively, before recovering to 3.62% in FY2025. Isolating the three drivers (net profit margin, asset turnover, and financial leverage) shows that asset turnover (~0.17x–0.19x) and financial leverage (~2.1x–2.3x) remained broadly stable across the period, meaning the collapse in ROE was driven almost entirely by net profit margin, which fell to just 0.52% in FY2023 and 1.75% in FY2024, from 7.10% in FY2022. The income statement explains why. Net interest expense rose sharply, from ($2.3M) in FY2022 to ($12.0M) in FY2023 and ($22.2M) in FY2024. FY2024 net income was further compressed by a one-time $3.3 million recoupable legal fee write-off within administrative expenses. Together, these items explain why net income stayed minimal even as revenue and operating income continued to grow. Thus, the rising interest burden is a function of deliberate, acquisition-funding leverage rather than distress, as RSVR has continued to service its debt obligations without disruption.
RISK AND POTENTIAL RSVR amortizes its music copyrights over ~30 years, well beyond the 15-year benchmark under IRS Section 197. Given how quickly hits turn over in a trend-driven industry, this as an aggressive assumption that may minimize amortization expense and flatter earnings rather than reflect real catalog decay. Moreover, this is amplified by concentration: RSVR's catalog centers on a smaller number of legacy artists and estates (Tommy Boy, Louis Prima, John Denver, Isley Brothers), unlike the catalogs of majors like Universal Music Group, Sony Music, and Warner Music Group, which span thousands of songwriters across genres and eras. Nevertheless, catalog quality partially offsets this. Reservoir's holdings include enduring, multi-generational estates with decades-long royalty track records (like synchronization, streaming, reissues) already outlasting typical hit-cycle turnover. To put in simple words, RSVR has durability, if not in scale, to the legacy assets held by UMG, Sony, and WMG. If RSVR acquisitions continue prioritizing proven multi-decade durability over trend-driven hits, the 30-year assumption may be more defensible.
CATALYSTS As mentioned above, earlier this year, RSVR drew competing take-private proposals: (1) a $10.50/share bid from existing shareholders Wesbild, Inc. and Richmond Hill Investment Co., LP and (2) a $10.00–$11.00 indication from activist investor Irenic Capital Management. Although it is still an ongoing deal without further information, I perceive it as a meaningful catalyst. RSVR's value rests on durable, cash-generative royalty streams rather than any single artist's popularity or fleeting trend. Moreover, RSVR is broadening its channels: new publishing deals with T.I. and Jarrett Doherty, plus a joint venture with Latin music company TU Publishing. For a business functioning as a royalty investment fund, this is the strategy to diversify its portfolio positions and reducing reliance on any single catalog's popularity cycle. Sources: RSVR Company filings and investor materials | S&P Global Market Intelligence | CapIQ; Pitchbook | FactSet | IBISWorld | Seeking Alpha | Yahoo Finance
TECHNOLOGY
Outsized Demand Under WFE
COMPANY
Jerry Mao | April 21, 2026 INVESTMENT THESIS Ichor Holdings is a specialized Tier-2 supplier of gas and chemical delivery subsystems to semiconductor capital equipment OEMs, with ~76% of revenue concentrated in Lam Research and Applied Materials. The company sits at the exact intersection of the AI-driven WFE upcycle: HBM stacking, GAA logic transitions, and 3D NAND scaling all disproportionately increase etch and deposition intensity, the process steps where Ichor's gas panels are most highly levered. With Lam's January 2026 guide lifting the WFE market to ~$135B (from prior consensus of $110–115B) and Anthropic's enterprise ARR trajectory from $9B to $30B in five months validating the agentic compute demand curve, the picks-and-shovels layer is being structurally rerated. Ichor's thesis compounds two forces: (1) non-linear EPS amplification as fixed costs stay flat while revenue scales from $948M (2025) to $1.25B+ (2026E), and (2) a Malaysia/Mexico vertical integration step-function lifting Ichor-branded content from ~50% to ~75%. Consensus already models FY26 EPS at $1.14, a 5x jump from 2025's $0.23. The risk/reward favors conviction on an early-cycle amplifier over incumbents.
Ichor Holdings Ltd. NYSE: ICHR
BUY
UPSIDE
+50.5%
CURRENT PRICE
$64.46
PRICE TARGET
$97.00
COMPANY
$2.24B
MARKET CAP BETA
1.67
FWD EPS
$1.14
LTM EV/REV
2.43X
LTM EV/EBITDA
93.27X
52 WEEK HIGH
$67.76
52 WEEK LOW
$13.12
VALUATION As of April 19, 2026, ICHR trades at $64.46 per share on a market cap of $2.24B. My 3 month valuation uses a blended public-comparables approach anchored to the two OEMs that account for ~76% of Ichor's revenue: Lam Research and Applied Materials. The peer set trades at 12.2x EV/Sales FWD (LRCX 14.55x, AMAT 9.84x) and 32.3x P/E FY2 (LRCX 36.77x, AMAT 27.83x). I blend three multiples because each captures a different part of the thesis and no single one is reliable on its own at this point in Ichor's margin cycle. EV/Sales FWD carries the largest weight at 40% because revenue is the least distorted metric while gross margin sits at a trough of 12%, and it is neutral to capital structure. I apply ~25% of the peer average, or 3.0x, which mirrors the ratio of Ichor's gross margin to the OEMs' high-40s margins, with room for the discount to narrow as Malaysia vertical integration lifts gross margin toward 15 to 20%. On FY26E revenue of $1.25B, this yields an enterprise value of ~$3.75B. EV/EBITDA FWD receives a 30% weight because it is the metric that directly captures the operating leverage in the thesis, with gross profit dollars growing at 2x revenue starting in Q2. Here I use Ichor's own 29.0x multiple rather than the peer multiple, since the OEMs' EBITDA margins are structurally higher and not comparable, applied to expected FY26E EBITDA of ~$150M. P/E FY2 receives the remaining 30% at the peer 32.3x, since earnings are how the market ultimately values the OEM customers and a two-year-forward view looks through the current trough, with consensus EPS of $1.14 in FY26 growing to ~$2.30 in FY27. I cap its
12-MONTH PRICE
52 WEEK RANGE
TARGET $97.00
NOW $64.46
ICHOR HOLDINGS · NYSE: ICHR · PAGE 2
weight at 30% because EPS is the output most sensitive to the timing of margin expansion. The blended output yields a bull-case price target of $97, representing ~50.5% upside, with a secondary bull case at $110 if the Q2 2026 gross-margin step-function materializes and a bear case at $52 if customer qualification delays push margin expansion into 2027.
NON-LINEAR EPS AMPLIFICATION IN A STRUCTURAL UPCYCLE Cyclical companies amplify the value and growth in a short term, while Ichor's thesis is built on inflection and the potential transition to the structural upcycle from its previous cyclicality . As revenue scales from $948M to $1.25B+, fixed costs (R&D, G&A) stay flat while COGS declines through Malaysia vertical integration. The incremental margin on each new revenue dollar jumps from the historical 4–5% to 25–30%, driving EPS from $0.23 to $1.20+. The market is pricing gross margin improvement through a linear lens (~50 bps per quarter), but vertical integration creates step-functions: once Malaysia hits ~70% utilization, gross margin could step up 300–500 bps in a single quarter. Q1 2026 revenue guide of $240–260M implies +11.7% YoY growth, which roughly 10x UCTT's +1.2%, and management raised midquarter guidance in January 2026 on improving order visibility. CEO Phil Barros has explicitly stated gross profit dollars will grow about 2x revenue starting in Q2 2026. When Lam's order acceleration converges with Ichor's operating leverage simultaneously, Ichor's EPS growth will run 3–4x Lam's, driving rapid expansion in the EPS denominator even if the multiple holds flat.
THE MALAYSIA VERTICAL TRANSFORMATION Historically, Ichor operated as a systems integrator, from sourcing flow controllers from MKS, valves from Swagelok, and regulators from Parker Hannifin, to assembling gas panels and selling to Lam and AMAT at a thin integration margin. This structure caps gross margin at ~12–13%. The 2026– 2028 transformation pivots Ichor into a full-stack manufacturing company: designing, producing, and selling core components in-house, targeting ~75% Ichor-branded content by year-end 2026. Margin accrues at the component layer, not just at system integration. The execution path has four distinct product lines across three named facilities (Malaysia, Mexico, Minnesota) with four customer qualification timelines, every milestone independently verifiable on 90-day checkpoints. The Malaysia facility is already operational; Q2 2026 marks US decommissioning progress, Q3 the first customer qualification, and Q4 volume ramp confirmation. Long-term framework: 15% gross margin at $250M quarterly run-rate, 20% at $350M (targeting 2027– 2028).
RECENT NEWS
Management raised Q1 2026 revenue guidance mid-quarter from $240M to a $250M midpoint in January 2026 SpaceX disclosed as ICHR's fifthlargest customer on the Q4 2025 call; management targets ~10% of revenue medium-term Consensus already models the F2026 EPS around $1.14, a 5x jump from 2025's $0.23, with Q4 2026 alone expected to deliver +4,400% YoY growth COMPETITOR STATISTICS from Q3 2025
EV/Rev: 1.96x Revenue: $2.05B
EV/Rev: 10.97x Revenue: $28.21B
EV/Rev: 15.9x Revenue: $20.56B
ICHOR HOLDINGS · NYSE: ICHR · PAGE 3
ICHOR HOLDINGS, LTD 5 YEAR STOCK CHART
Source: Yahoo Finance
FINANCIAL ANALYSIS Ichor's revenue pattern is unambiguously cyclical. Over the past decade, revenue has swung between -36% and +62% year-over-year. The current 2025 recovery (+11.6%) is early in the upcycle. The key concern is that cost of revenue is growing faster than revenue (+12.1% vs. +11.6%), which is why gross margin has stayed at 12% despite revenue growth. The investment thesis hinges on one important financial metric: gross profit margin. I believe Ichor is starting to pivot from the year of 2026. First, its COGS growth must fall below revenue growth starting in Q2 2026. Driven by the Malaysia and Mexico vertical integration, Ichor is expected to push its self-made content from 50% to 75% over time. Second, EPS will grow 3–5x faster than revenue due to (i) fixed-cost absorption on rising volumes, (ii) richer product mix from proprietary components, and (iii) geographic footprint realignment. Management has publicly telegraphed this path, with CEO Phil Barros stating on the Q4 2025 call that he expects "gross profit dollars to grow about twice as fast as revenue starting in Q2." The company's long-term framework targets 15% gross margin at a $250M quarterly run-rate and 20% at $350M. Consensus already models F2026 EPS around $1.14, a 5x jump from 2025's $0.23, with Q4 2026 alone expected to deliver +4,400% YoY growth. Ichor has missed EPS estimates in three consecutive quarters in 2025 (FQ1 by -$0.14, FQ2 by -$0.11, FQ3 by -$0.05), before finally beating in FQ4 by +$0.07 off a depressed base. This pattern matters because consensus for Q2–Q3 2026 implies sequential EPS acceleration from $0.12 $0.22 $0.35.
RISK POTENTIAL CUSTOMER QUALIFICATION DELAY The single biggest risk to the 2026 margin trajectory. The entire vertical integration story depends on Lam Research and Applied Materials formally qualifying Ichor's Malaysia-made components for their production tools. Qualification is a 12– 18-month process involving sample testing, lab validation, fab field trials, and failure-rate comparison against incumbent suppliers. Any deviation in tolerance, contamination event, or customer platform revision can restart the clock. CEO Phil Barros explicitly acknowledged on the Q4 2025 call that Malaysia carries elevated qualification risk. If first customer qualification slips past Q3 2026, the step-function gross margin expansion likely pushes into 2027, compressing the nearterm thesis.
US DECOMMISSIONING CAPACITY GAP The mechanical act of relocating machining assets from US facilities to Malaysia creates a temporary production vacuum — US output declines before Malaysia output fully ramps. This gap is already built into H1 2026 guidance. The risk is not the transition itself, which management has planned for, but customer behavior during the gap. If AI-driven WFE demand accelerates harder than expected in H1 2026 and Ichor's total capacity cannot meet orders, Lam or AMAT may temporarily qualify a second source. Once a second source is qualified into a platform, winning back that volume is measured in years, not quarters. This risk is asymmetric: the upside scenario (demand accelerates) becomes the mechanism that triggers the downside scenario (share loss).
TECHNOLOGY
Securing the Platform
COMPANY
Tom Wang | April 19, 2026 INVESTMENT THESIS Palo Alto Networks is the largest pure-play cybersecurity vendor in the world and has built the most comprehensive "best-of-suite" security platform in its coverage universe, holding leadership positions in over 20 cybersecurity categories. Its three-pillar platformization strategy across network security, cloud security, and security operations —now extended into identity and observability through the pending CyberArk and Chronosphere acquisitions — creates a sticky, integrated offering that is difficult to replicate. Accelerating Next-Gen Security ARR, best FCF margins relative to major competitors, and a vast enterprise installed base give PANW a credible longterm share consolidation story, making it a compelling buy for durable exposure to enterprise cybersecurity and AI security.
Palo Alto Networks, Inc. NASDAQ: PANW
BUY
UPSIDE
+47.1%
CURRENT PRICE
$167.85
PRICE TARGET
$246.88
COMPANY
VALUATION As of April 19, 2026, PANW trades at $167.85 per share. My valuation uses a blended approach with the greatest weight on forward EV/FY27E FCF at 35%, reflecting the company's 40%+ FCF margin target by FY28. Forwardlooking multiples EV/FY27E Revenue and P/E FY27E are each weighted at 15%, alongside trailing multiples EV/LTM Revenue at 5% and EV/LTM FCF at 10%. The analysis is rounded out with a 20% contribution from a DCF using management's margin roadmap. This yields a base case target of $246.88, representing ~47.86% upside, with a bull case of $285.00 and a bear case of $165.00. I weighted forward FCF most heavily because PANW’s investment case is ultimately driven by its ability to convert platformization-led growth into structurally higher cash margins, while using forward revenue, P/E, trailing multiples, and a DCF as complementary checks across growth, earnings, current trading levels, and intrinsic value.
MARKET CAP
$128.39B
BETA
0.77
FWD EPS
$1.80
LTM EV/REV
13.34X
LTM EV/EBITDA
59.55X
52 WEEK HIGH
$223.61
52 WEEK LOW
$139.57
12-MONTH PRICE
PLATFORMIZATION AND STRATEGIC M&A PANW recently announced two transformative acquisitions that expand its platformization story. The $3.35B Chronosphere deal opens a new TAM in observability (Chronosphere has $160M+ ARR with triple-digit growth) and positions PANW to pursue AI-native enterprises beyond its traditional security buyer base. The pending $25B acquisition of CyberArk adds the categorydefining leader in privileged access management — securing over 10,000 organizations including 55% of the Fortune 500 — plugging the one remaining gap in PANW's portfolio: identity. Combined with ~1,450 net new platformizations in Q1'26 (>30% y/y), these deals reinforce PANW's role as the security consolidator of choice and expand its TAM into a projected ~$47B identity opportunity by 2028.
52 WEEK RANGE
NOW $167.85
TARGET $246.88
PALO ALTO NETWORKS · NASDAQ: PANW · PAGE 2
AI SECURITY AND THE GOOGLE CLOUD PARTNERSHIP
RECENT NEWS
In December 2025, PANW announced a landmark strategic partnership with Google Cloud that includes a ~$10B commitment over several years. The deal offers GCP customers the full breadth of Prisma AIRS — PANW's AI security platform — to secure AI workloads and data on Google Cloud, marking what Google calls its "largest security services deal." Unit 42 has documented daily cyberattacks growing nearly 3x to ~9 million per year, driven largely by attackers' own adoption of AI. Combined with the earlier $700M ProtectAI acquisition, PANW is well-positioned to capture sustained AI security demand across both hyperscalers and direct enterprise customers. Currently, the market is applying a heavy discount to any software companies due to the fear of AI replacing SaaS companies, but the market is ignoring how AI significantly lowers the cost of cyber attacks, which PANW stands to benefit from.
PANW's expected Q3 FY26 Earnings Call is Tuesday, May 19, 2026 PANW announced the ~$25B acquisition of CyberArk (CYBR), expected to close in F3Q FY2026 PANW announced the $3.35B acquisition of Chronosphere, opening a new observability TAM PANW and Google Cloud announced a strategic partnership with a ~$10B commitment over several years COMPETITOR STATISTICS from Q1 2026
PANW 5 YEAR STOCK CHART EV/Rev: 21.0x Revenue: $4,513.0M
EV/Rev: 5.0x Revenue: $6,187.9M Source: Yahoo Finance
RISK POTENTIAL VALUATION AND INTEGRATION RISK PANW trades at premium multiples (~15x EV/NTM Recurring Revenue and ~29x EV/NTM FCF), leaving little margin of safety if execution falters. The company is simultaneously integrating two sizable acquisitions — CyberArk ($25B) and Chronosphere ($3.35B) — both materially larger than the small tuck-ins that have defined PANW's prior M&A playbook. Slower than expected integration, cultural friction, or post-close attrition could delay synergy realization, pressure FCF margins by 150bps or more in FY26, and compress valuation multiples.
VALUATION AND INTEGRATION RISK The memory market has experienced a supply-driven price surge, with DRAM pricing up ~30% q/q in C4Q25 and expected to rise another ~60-70% q/q in C1Q26 as suppliers shift capacity to HBM for AI accelerators. PANW's FY27 memory/DRAM exposure from its physical firewall compliances is estimated at ~$38M, or ~7.8% of product COGS. Assuming no price pass-through, we estimate a ~$102M FY27 gross profit headwind, or an ~86bps margin impact, equating to ~2.2% of FY27 FCF. While not material in isolation, sustained memory inflation could complicate management's 40%+ FY28 FCF margin target.
EV/Rev: 28.5x Revenue: $1,935.8M
PALO ALTO NETWORKS · NASDAQ: PANW · PAGE 3
COMPETITION AND AI DISRUPTION Best-of-breed point solution vendors - including CrowdStrike in endpoint, Zscaler in SASE, and Wiz in cloud security continue to pressure PANW's "all-in-one" platform approach, particularly with AI-native buyers where purchasing decision come from the Chief Information Officer rather than the Chief Information Security Officer. If PANW cannot sustain innovation velocity and successfully integrate its recent acquisitions (ProtectAI, Chronosphere, CyberArk) into a unified AI security stack, share gains could decelerate. Macro headwinds or customer budget pressure could also elongate enterprise sales cycles, disproportionately impacting PANW given its large-deal concentration. Sources: Bloomberg | Company Reports | Evercore ISI | Google Cloud | Guggenheim Securities | Investing.com | JPMorgan | Reuters | TD Cowen | Trendforce | Unit 42 | Yahoo Finance
02
SECTION 02
Healthcare
SECTOR LEAD
Laura Zhai
CORNELL EQUITY RESEARCH
HEALTHCARE · SECTOR OUTLOOK
1Q 2026 Recap Laura Zhai, Sector Lead | April 16, 2026 LEDE AND ABSTRACT The healthcare industry underperformed the broader market in the first quarter of 2026: The Health Care Select Sector SPDR Fund (XLV) declined 5.29% in Q1, slightly below the broader S&P 500, which dropped 4.63%. This was mainly driven by inflationary pressures and stricter Medicare Advantage reimbursement policies. However, increased FDA approvals and robust earnings from diversified giants signal an optimistic outlook and resilience.
DRUG PRICING: IRA NEGOTIATIONS & PRICE HIKES On January 1st, 2026, pharmaceutical manufacturers raised prices on 948 brand-name drugs, including blockbuster oncology and diabetes. Simultaneously, Medicare’s new negotiating authority under the Inflation Reduction Act (IRA) began delivering negotiated discounts of 38% to 79% on the first ten selected drugs. The dual dynamic has created significant pricing uncertainty for pharmaceutical companies. Large-cap pharma companies are mostly cushioned by their diversified portfolio, while mid-cap and specialty drug makers that rely on a single high-priced drug face heightened investor scrutiny as the IRA’s reach expands. Additionally, the Centers for Medicare and Medicaid Services is expected to publish a list of the next 15 drugs subject to negotiation for 2027 pricing. These policies continue to pressure pharmaceutical valuations.
(Fig. 1) Source: Seeking Alpha
NIH FUNDING CUTS & BIOTECH PIPELINE RISK The Trump administration’s proposed FY2026 budget includes an approximately 40% reduction in the National Institute of Health (NIH) funding, which would bring NIH funding to its lowest in over 25 years. As a result, some of the largest NIH grant recipients, including John Hopkins, Harvard, and Yale, have begun laying off research staff, signaling the onset of a decline in early-stage drug discovery. For biotech companies, NIH cuts indicate heightened risk: reduced discovery-stage funding that determines long-term innovations and weakened academic industry collaboration that many biotechs rely on for translational research.
(Fig 2): S&P Global
ACA EXPIRATION The expiration of enhanced subsidies under the Affordable Care Act at the start of 2026 indicates a major disruption to healthcare coverage. The premium healthcare tax credits that supported over 22 million enrollees lapsed following a government shutdown and failed attempt to extend them. According to estimates from the Urban Institute, approximately 7.3 million individuals are expected to lose ACA coverage in 2026, with 4.8 million becoming uninsured. At the same time, average annual premiums are expected to increase by 114%, from about $888 to $1,904. –
(Fig 3): Health Affairs
SECTOR REPORT · HEALTHCARE · PAGE 2
If hospitals face more uninsured patients who can’t pay their bills, this will then introduce a negative demand shock across the healthcare system. For example, as the uninsured population rises, hospitals face increased uncompensated care, forcing costs to shift to commercial payers and ultimately resulting in system-wide pricing. Safety-net hospitals and rural facilities can be especially vulnerable. Also, higher costs could drive healthier individuals to drop coverage, worsening insurer risk pools and increasing margin pressure. In general, the policy-induced demand compression and increased regulatory risk create a more cautious near-term outlook for healthcare earnings, particularly for providers and payers.
FDA APPROVALS Q1 2026 has been an active quarter for FDA approvals. One of the most notable milestones is Eli Lilly’s oral GLP-1 receptor agonist for weight loss, the first oral GLP-therapy with no food or water restrictions. The GLP-1 market, already dominated by Novo Nordisk’s Wegovy and Ozempic injectables, undergoes a transformative period as this oral alternative lowers barrier to entry, expanding the target market. Other notable approvals include Awiqli (insulin icodec) and the first-ever gene therapy for Leukocyte Adhesion Deficiency. This has helped boost stock prices within the biotech sector in what has otherwise been a challenging macro environment.
CONCLUSION During the first quarter of 2026, the healthcare industry was defined by both increased innovation and policy headwinds. Oral GLP-1 and gene therapy approvals support the sector’s scientific momentum while price hikes, NIH funding uncertainty, and the expiration of ACA cause volatility. In the upcoming quarters, the industry is likely to face continued margin compression and the managed care industry may be especially susceptible to policy risks. However, innovationdriven subsectors are positioned for outperformance.
HEALTHCARE
Imaging the Future
COMPANY
Lindsey Price | April 14, 2026 INVESTMENT THESIS General Electric HealthCare Technologies (GEHC) is a healthcare solutions company that provides advanced technology diagnostics and data, and AI and software. The company became independent from General Electric (GE) in January of 2023, with the goal of operating as a more agile entity able to focus more distinctly on healthcare technology and solutions. GEHC produced advanced medical technology, focusing on complex diseases and innovating technology. Their goal is to aid clinicians in applying technology to patient care, specializing in imaging and ultrasound technology. They are at the forefront of AI imaging and technology in the healthcare space.
VALUATION/FINANCIAL MODELING As of April 14th, 2026, GEHC is trading at $74.67 per share. In order to value this company, I conducted a discounted cash flow analysis, using a weighted average cost of capital (WACC) of 8.30% and an EV/EBITDA Exit Multiple of 11.6x. This is based on GEHC’s financial statements for fiscal year 2025 and debt and equity holdings and calculations. I anticipate steady growth over the next few years at a conservative rate of 3% as GEHC continues to provide advanced patient services while investing in new measures. My analysis revealed a valuation of $95.24, implying an upside of 27.56%.
INNOVATIVE AI IMAGING In early April, GEHC announced its partnership with Stanford Radiology to collaborate on advanced AI Radiology research. The groups are co-founding a Center of Excellence at Stanford, which will focus on expanding AI to the radiology space, creating capabilities including MR and CT scan analysis, molecular imaging, and other pharmaceutical diagnostics in the radiology and ultrasound spaces. This expands the use of AI in imaging from diagnostics to clinical usage, increasing the efficiency and productivity of imaging processes.
GE Healthcare NYSE: GEHC
BUY
UPSIDE
+27.5%
CURRENT PRICE
$74.67
PRICE TARGET
$95.24
COMPANY
$34.07B
MARKET CAP BETA
1.30
EPS
4.55
EV/REV
1.92X
EV/EBITDA
10.48X
52 WEEK HIGH
$89.77
52 WEEK LOW
$59.95
12-MONTH PRICE
COMPETITION GEHC remains ahead of its competitors in multiple facets. Primarily, they have allotted more expenditures to AI innovation, specifically through their partnership with Stanford Radiology. While Philips is expanding into the AI space, GEHC’s collaboration with Stanford Radiology through the Center of Excellence provides a more stable revenue than Philips’ research campaign, providing GEHC with a higher chance of success at a lower cost. Additionally, many of GEHC’s financial indicators are stronger than that of competitors. GEHC has a relatively low P/E Ratio of 16.31, whereas competitors Philips,
52 WEEK RANGE
TARGET $95.24
NOW $74.67
GE HEALTHCARE · NYSE: GEHC · PAGE 2
Canon Medical, and Medtronic remain at 26.71, 11.98, and 24.20, respectively, as of April 15th. This demonstrates that GEHC may be undervalued, as its P/E ratio is lower than that of most competitors.
GEHC 5 YEAR STOCK CHART
RECENT NEWS
GEHC sets Q2 2026 Earnings Call for Wednesday, April 29 GEHC’s Updated CT Scan Device approved by the FDA on March 23rd, 2026 Clearfield Q4 2025 earnings beat expectations COMPETITOR STATISTICS from Q1 2026
Source: Yahoo Finance
RISK POTENTIAL
EV/Rev: 1.6x Revenue: $17.83B
EXECUTION RISKS One risk that GEHC faces is the execution risk of its investment in research with Stanford Radiology and the Center for Excellence. This investment is focused on AI innovation, which may not result in immediate successes. Though the implementation of AI into imaging is anticipated to be successful, there is a possibility that this partnership does not yield the expected results. However, GEHC has a wide range of revenue streams that extend far beyond their innovative investments. They produce a wide range of medical technology devices, ranging from MR and CT scanners to handheld ultrasound devices. The demand for these products will remain stable, regardless of the success of GEHC and Stanford Radiology’s innovative efforts.
EV/Rev: 0.89x Revenue: $4.62B
EV/Rev: 3.74x Revenue: $35.48B
GLOBAL CONTEXT Another risk faced by GEHC is geopolitical tensions speared by international trade and domestic shifts. As a global company in the healthcare space, GEHC faces risks locally and abroad. Over 10% of GEHC’s revenue comes from technology sales to China, which are greatly impacted by international tariffs, specifically those threatened or implemented by President Trump. Furthermore, as part of the healthcare sector, GEHC’s valuations may be influenced by drug prices. Both tariffs and drug prices have faced volatility over the last year, and it is uncertain whether or not that volatility and risk will continue. However, as GEHC is primarily focused on technology and innovation, the stock price will not be as influenced by these changes as other companies in the healthcare space.
Sources: GEHC Investor Relations| Yahoo Finance | S&P Capital IQ | The Wall Street Journal | Simply Wall Street | Reuters
HEALTHCARE
Derisked Pipeline, Awaiting ALKAZAR
COMPANY
Julian Seidenberg | May 17, 2026 Nuvalent, Inc.
INVESTMENT THESIS Nuvalent, Inc. (NASDAQ: NUVL) is a clinical-stage precision oncology company eveloping the next generation of tyrosine kinase inhibitors (TKIs) for ROS proto-oncogene 1 (ROS1)- and anaplastic lymphoma kinase (ALK)driven non-small cell lung cancer (NSCLC). Both programs have derisked over the past six months: the FDA accepted the zidesmtinib NDA in Nov 2025 with a Prescription Drug User Fee Act (PDUFA) action date of Sep 18, 2026, and the neladalkib NDA was filed in April 2026 based on pivotal ALKOVE-1 (name of Nuvalent clinical trial) data. This creates a potential dual commercial launch position for NUVL. The company holds $1.3B in cash with runway into 2029. The molecular design, especially the avoidance of TRKB (tropomyosin receptor kinase B)-mediated central nervous system (CNS) toxicity that has constrained incumbents, is a genuine moat. Despite this setup, we initiate at HOLD with a $104 price target. Our DCF implies an intrinsic value of 76$, while peer comparable analysis on unadjusted peak sales implies $116. The current $102.30 price is in the middle of this range, leaving limited margin of safety ahead of the Phase 3 ALKAZAR (trial name) readout in late 2027. The remaining binary catalyst determines whether neladalkib captures the larger 1L ALK+ opportunity.
VALUATION/FINANCIAL MODELING: The 104$ price target reflects a 30/70 blend of discounted cash flow analysis and peer comparables, weighted toward comps to recognize recent NDA derisking. The DCF uses a 15-year forecast with PoS-adjusted revenue of 92% for zidesamtinib, 65% for neladalkib, and 30% for NVL-330, and opex calibrated to management’s runway into 2029 guidance. A CAPM-derived WACC of 10.35% and 2.0% annual terminal growth rate yields $76 per share. The comps analysis applies a trimmed average EV / Peak Sales multiple of 2.00x across Exelixis, IDEAYA, Relay, and Cillinan, to unadjusted peak sales of $3.55B, implying $116. This spread reflects a gap between the risk-adjusted intrinsic analysis and the unadjusted peak-sales framing that drives precision oncology multiples. The blended target is consistent with current levels, reflecting the view that NUVL is fairly valued.
LATE-STAGE PIPELINE SETS UP DUAL LAUNCH POTENTIAL Zidesamtinib is NUVL’s lead ROS1 cancer drug. It avoids TRKB and other offtarget kinases, which have caused brain-related side effects for competing drugs like repotrectinib and entrectinib. In the ARROS-1 trial, the drug
NASDAQ: NUVL
HOLD CURRENT PRICE
$102.3
PRICE TARGET
$104.0
COMPANY MARKET CAP
$8.08B
BETA
1.15
EPS
-6.06
EV/REV
NM
EV/EBITDA
NM
52 WEEK HIGH
$113.01
52 WEEK LOW
$70.25
12-MONTH PRICE
52 WEEK RANGE
TARGET $104.0
NOW $102.30
NUVALENT · NYSE: NUVL · PAGE 2
showed strong and lasting activity in lung cancer patients who received other therapies, including those who had hard-to-treat G2032R resistance mutations. The Sep 18, 2026 FDA decision date gives NUVL a clear path to a late 2026 launch. NUVL’s second major drug, neladalkiib, targets ALKpositive lung cancer and reaches the brain while also avoiding TRKB toxicity. After positive data, NUVL filed its NDA in April 2026 and is expecting pivotal data at ASCO 2026. The remaining large upside driver is the Phase 3 ALKAZAR trial against lorlatinib in first-line ALK-positive lung cancer, a roughly $2.5-3B global market.
RECENT NEWS
TAILWINDS IN PRECISION ONCOLOGY
COMPETITOR STATISTICS from Q1 2026
Targeted therapies are now the dominant treatment within NSCLC, with comprehensive genomic profiling being a standard of care for newly diagnosed patients. ROS1 and ALK driver alterations together make up ~57% of NSCLC, representing a U.S. patient pool of 15,000-20,000 annually with high willingness to pay for differentiated therapies. Class economics provide support for attractive pricing: lorlatinib (Pfizer) generated over $700M in 2024, and repotrectinib (BMY/Augtyro) exceeded $300M in its first complete year. The FDA’s accelerated approval pathway has historically been receptive to single-arm pivotal data in NSCLC, reducing the time to revenue. Continued advances in liquid biopsy diagnostics and earlier-line targeted therapy use support a multi-year tailwind for different TKI launches.
Rep. Lisa C. McClain recently purchased between $1,001 and $15,000 in Vistra stock NUVL submitted neladalkib NDA on April 7 2026 Q1 2026 results: $109.3M net loss, $1.3B in cash and marketable securities, runway into 2029
EV/Peak Sale: 1.99x
EV/Peak Sales: 1.69x
NUVALENT PIPELINE AND CATALYST
EV/Peak Sales: 2.91x
Source: Nuvalent, Clinicaltrials.gov
RISK POTENTIAL PHASE 3 AKAZAR AND COMMERCIAL EXECUTION RISK The near term story is partially derisked due to both lead drugs moving through the FDA process for patients who have received prior targeted therapies. The bigger question is whether Nuvalent wins in earlier-line ALKpositive lung cancer, where the value sits. The most substantial catalyst is ALKAZAR, the Phase-3 trial comparing neladalkib against lorlatinib in first-line ALK-positive lung cancer. If it fails to beat, or at least match the competitors with a better safety profile, the drugs commercial opportunity will be limited, and NUVL will likely be restricted to the pre-treated market. This is a high bar
NUVALENT · NYSE: NUVL · PAGE 3
due to lorlatinib’s strong first-line results. Even if both drugs win approval, NUVL still faces launch risk because it has never commercialized before. A weak ALKAZAR result, slower zidesamtinib launch, or strong competition could reduce the stock all reduce the stock value.
PRE-REVENUE CASH BURN AND DILUTION RISK: NUVL generates zero commercial revenue through Q1 2026 and continues to report a $109.3M net loss, with burn expected to remain elevated into 2027. Despite the $1.3B cash balance providing a runway into 2029, any significant launch disruption or commercial underperformance could decrease this runway and require dilutive financing. The company has raised equity opportunistically during periods of share-price strength, but financing during a drawdown would likely carry higher dilution risks. While NOL carryforwards would shield taxes through the early profitable years, the post-2018 80% taxable income limitation reduces their value relative to legacy NOLs. Sources: S&P Capital IQ | Company 10-K, 10-Q, and 8-K Filings | SEC EDGAR | ClinicalTrials.gov | ASCO and AACR Abstracts | Nuvalent Investor Relations and Press Releases | The Wall Street Journal
HEALTHCARE
Beyond the One-Drug Story
COMPANY
Alex Zhong | April 19, 2026 COMPANY OVERVIEW Exelixis Inc. (Nasdaq: EXEL) is an oncology-focused pharmaceutical company. In 2025, Exelixis generated $2.32 billion in total revenue, of which $2.12 billion came from U.S. Cabozantinib franchise sales. Cabozantinib is used to treat several cancers, including renal cell carcinoma, and Exelixis generates revenue through direct product sales in the U.S. as well as royalty revenue from international partners. The business has grown consistently, with revenue increasing from $1.61 billion in 2022 to $2.32 billion in 2025, while maintaining low CAPEX and debt. Unlike other earlier-stage biotech companies that rely heavily on external financing, Exelixis uses cash flow from its current business to fund R&D and expand its pipeline. The most important pipeline is Zanzalintinib, an oncology drug used on solid tumors. If successful, Zanzalintinib can help Exelixis build a second oncology franchise in addition to Cabozantinib.
INVESTMENT THESIS The market is undervaluing Exelixis’ strong cash-generating business. In 2025, Exelixis generated $2.32B in revenue, $892.7M in operating income, and $782.6M in net income, implying a 38.5% operating margin and a 33.7% net margin. The business also produced $631.2M of levered free cash flow, while only carrying $200.9M of total debt and maintaining a $1.46B net cash position. These numbers show that EXEL operates efficiently with a single drug, which also gives it downside protection before assigning value to its new pipelines. Despite Exelixis’ strong base business, investors are viewing it as a one-drug business; thus, the stock is trading at low valuation multiples, around 14x P/E and 12–13x EV/EBITDA. However, the new opportunity is Zanzalintinib, a latestage pipeline drug with the potential to become the second franchise. The drug showed promising results in the STELLAR-303 – survival improved to 10.9 months versus 9.4 months for standard treatment- and the FDA has accepted the NDA with a December 3, 2026 PDUFA date. If Zanzalintinib continues, Exelixis can be re-rated from a single-product company into a multi-drug oncology platform, creating significant upside.
Exelixis Inc NASDAQ: EXEL
BUY
UPSIDE +16.95%
CURRENT PRICE
$44.89
PRICE TARGET
$52.50
COMPANY
$11.66B
MARKET CAP BETA
0.42
EPS
$2.78
PE RATIO
16.15X
EV/EBITDA
11.32X
52 WEEK HIGH
$49.62
52 WEEK LOW
$33.76
12-MONTH PRICE
VALUATION As of April 17, 2026, Exelixis is trading at $44.89 per share. I value the company using both a DCF and a public comps analysis. In my DCF, I project revenue to grow by 10%, 8%, 6%, and 4% from 2026 onward, supported by the continued strength of the profitable Cabozantinib franchise and the potential launch of a second growth driver, Zanzaurelin. Using a 9.5% WACC
52 WEEK RANGE
TARGET $52.50
NOW $44.89
EXELIXIS · NYSE: EXEL · PAGE 2
and 3.0% terminal growth rate, I arrive at an implied share price of $50.46, showing 12.4% upside. For the comps analysis, Exelixis trades at 14.41x forward earnings, below its biotech peers like Vertex, Regeneron, and BioMarin. Using the peer median forward P/E of 17.51x implies a share price of $54.55, or 21.5% upside. Taken together, these methods show that Exelixis is undervalued, with a fair value in the low-to-mid $50s.
EXEL EV/EBITDA COMPARED TO COMPETITORS OVER LAST 3 YEARS
RECENT NEWS
FY2025 revenue reached $2.32B, 2026 revenue guidance remains at $2.525B– $2.625B. FY2025 diluted EPS rose to $2.78 from $1.76 last year. FDA accepted Exelixis’s Zanzalintinib NDA; PDUFA date is Dec. 3, 2026. COMPETITOR STATISTICS from Q4 2025
EV/Rev: 3.3x Revenue: $48.19B
CATALYSTS Over the next 6 to 12 months, Exelixis's main catalysts are updates from the STELLAR-303 trial, the mid-2026 readout from STELLAR-304, and upcoming earnings results. Further data from STELLAR-303 can confirm the previous positive results of Zanzalintinib in 2025, while STELLAR-304 is a late-stage trial that will show whether Zanzalintinib can outperform current treatments. The quarterly earnings in May also matter because they will show whether the current business based on Cabozantinib remains stable as investors wait for Zanzalintinib’s next milestones.
RISKS AND MITIGANTS One key risk is that Zanzalintinib may fail to outperform current standard treatments. If that happens, Exelixis will remain a one-drug Cabozantinib story and the stock may not re-rate. However, this risk is mitigated by the current business’s ability to generate stable earnings and cash flows. In 2025, Exelixis generated $2.12 billion in U.S. Cabozantinib franchise revenue, with a 33.7% earnings margin and a 27.2% FCF margin. These numbers show that the company is already highly profitable and can generate stable cash flow, so the investment case does not entirely depend on Zanzalintinib’s success right away. The second risk is that the Cabozantinib patent is expiring on August 14, 2026, which concerns investors that the following competition will reduce Exelixis’ revenue and margin on the Cabozantinib franchise. This risk is partly mitigated because August 2026 does not mean immediate entry. Exelixis has additional Orange Book-listed patents, won a Delaware court ruling against MSN on later-expiring patents, and reached a settlement with Teva that prevents it from launching a U.S. generic version before January 1, 2031. In other words, 2026 marks the start of patent risk, not an immediate revenue drop, while more generic threats are pushed out to 2030–2031. Sources: Exelixis Investor Relations | S&P Capital IQ | Yahoo Finance | Bloomberg
EV/Rev: 5.1x Revenue: $65.01B
EV/Rev: 3.37x Revenue: $62.6B
HEALTHCARE
Repricing the Cost of Healthcare
COMPANY
Raghav Gupta | April 19, 2026 INVESTMENT THESIS Claritev Corporation (NYSE: CTEV) is a leading provider of data analytics and technology-enabled cost management, payment, and revenue integrity solutions for the U.S. healthcare industry. Following its rebrand from MultiPlan to Claritev in early 2025, the company is repositioning itself as an AI-driven healthcare technology platform, anchored by its claims intelligence engine and a database of more than $2.5 trillion in repriced claims. Although recent results have been pressured by client concentration losses and elevated leverage, revenue has stabilized with 3.7% growth in 2025, and management has guided to continued top-line expansion in 2026. Combined with new strategic partnerships, AI-enabled product launches, and a deeply discounted valuation, Claritev offers high upside for investors with a multiyear horizon.
Claritev Corporation NYSE: CTEV
BUY
UPSIDE +53.67%
CURRENT PRICE
$22.45
PRICE TARGET
$34.50
COMPANY
$340.8M
VALUATION/FINANCIAL MODELING
MARKET CAP
As of April 17, 2026, Claritev Corporation is trading at $22.45 per share. I completed two discounted cash flow analyses to arrive at a price target. The first used a perpetual growth bridge-to-equity method, applying a 2.5% perpetual growth rate derived from the company's stabilizing revenue trajectory and management's 2026 top-line guidance. This analysis projected an implied share price of approximately $32.00. The second used an exit multiple bridge-to-equity method, projecting an implied share price of $37.00 with an EV/EBITDA exit multiple of 9.0x, based on peer comparables and consensus estimates for FY2027. Under these assumptions, I reached a blended price target of $34.50, representing approximately 53.7% upside from the current price, reflecting a meaningful undervaluation relative to intrinsic value, with significant potential for re-rating as the company executes on its AI repositioning strategy over the next several quarters.
BETA
0.54
EPS
-$17.3
EV/REV
5.11X
EV/EBITDA
10.62X
52 WEEK HIGH
$74.07
52 WEEK LOW
$12.04
12-MONTH PRICE
AI POSITIONING Under CEO Travis Dalton, Claritev has launched the Completevue pricing analytics platform and signed a multi-year collaboration with Fractional AI to embed generative and predictive models into its claims and payment integrity workflows. Management is targeting incremental high-margin SaaS-style revenue from these AI tools, which carry gross margins above the legacy network business. Early customer wins, including the January 2026 Kinetiq Health partnership, validate that Claritev’s proprietary repricing dataset is a defensible moat that competitors such as Cotiviti and Zelis have struggled to replicate at scale.
52 WEEK RANGE
NOW $22.45
TARGET $34.50
CLARITEV CORPORATION · NYSE: CTEV · PAGE 2
TAILWINDS IN HEALTHCARE COST MANAGEMENT
RECENT NEWS
U.S. healthcare spending is projected to exceed $5.5 trillion in 2026, with payors and self-funded employers under intensifying pressure from the No Surprises Act, ACA compliance, and rising medical loss ratios. Claritev sits at the intersection of these pressures, repricing approximately one in every three commercial out-of-network claims in the United States. As payors look to consolidate vendors and capture savings, Claritev is positioned to monetize its scale advantage through expanded payment integrity, surprise billing, and Medicare secondary payer offerings, which are all areas where the company already possesses category leadership.
CTEV underperforms Q4 estimates, reporting a quarterly loss of $4.88 per share
CTEV STOCK PRICE OVER LAST 5 YEARS
Claritev’s Q1 2026 Earnings Call is scheduled for Wednesday, May 6, 2026 Claritev and Kinetiq Health formed strategic agreement (Jan 2026) to strengthen claims surveillance COMPETITOR STATISTICS from Q1 2026
EV/Rev: 0.6x Revenue: $1.88B
RISK POTENTIAL
EV/Rev: 0.5x Revenue: $2.53B
REVENUE VOLATILITY Claritev derives a substantial portion of its revenue from a small number of large national health insurers. According to the 2025 10-K, the company’s top five clients accounted for over 60% of revenue, with the largest single customer representing more than 25%. The previously disclosed contract step-down with a top-three payor drove the FY2024 revenue decline of 3.2% and continues to weigh on growth visibility. Any further decline or pricing concession from these key clients could materially impair top-line growth and depress operating leverage.
EV/Rev: 1.2x Revenue: $2.12B
ELEVATED LEVERAGE RISK Claritev carries one of the highest debt-to-capital ratios in the healthcare technology space at 103.8%, with enterprise value of approximately $4.87B against a market cap of just $340.8M. Interest coverage of -0.1x and a current ratio of 0.9x highlight the fragility of the balance sheet. While the recent $77.25M equity raise provides incremental liquidity, upcoming senior secured maturities in 2027 and 2028 will require successful refinancing in a higher-rate environment. Any disruption in capital markets access could force dilutive equity issuance or distressed asset sales.
Sources: CFRA Equity Research | GlobalData | LSEG Stock Report | Investing.com | S&P Capital IQ | Yahoo Finance | Company 10-K and Investor Materials | The Wall Street Journal
SECTION 03
03
Industrials
SECTOR LEAD
Justin Kaplowitz
CORNELL EQUITY RESEARCH
INDUSTRIALS · SECTOR OUTLOOK
1Q 2026 Recap Justin Kaplowitz, Sector Lead | April 26, 2026 OVERVIEW The Industrials sector continues to be a major benefiter of general market trends. With data center demand increasing, hyperscalers have continued to exponentially expand their capex spending (as can be observed in the graph below). This has led to massive order and revenue growth in the sector. Over the last year, this has also influenced the Industrials sector to rise 19.1% in 2025, outperforming the S&P500 by 17%.
INDUSTRIALS SECTOR OUTPERFORMS S&P 500
THE RISKS OF INFLATED DEMAND Such growth may not be as positive as it seems. If companies, and specifically hyperscalers, ever pull back on this spending, the currented inflated number of investments that Industrials companies have made to sustain increases in data center demand could become practically useless. Such a scenario would be a major hit to revenue expectations, and could force firms to hold onto an excess of low demand inventory worth far less than its purchase price.
Source: LSEG
HYPERSCALER CAPEX SPENDING
THE BACKLOG CONUNDRUM Some firms have experienced such high order growth that they are backlogged on equipment for years. GE Vernova for example, a power generation company in the Industrials space, has a $150 Billion backlog, and is sold out of equipment for a four year duration. This case is not unique. Companies across the Industrial sector, such as Caterpillar and Honeywell have reported record backlog at the end of 2025, with Caterpillar boasting a $51 billion backlog and Honeywell having a $37 billion backlog.
Source: Seeking Alpha
UNPRECEDENTED BACKLOG GROWTH
AEROSPACE Aerospace is currently one of the strongest areas in the industrial sector. The sector has outperformed the market by over 30% due to both commercial and defensive demand increases. On the commercial side, global travel demand continues to increase, leading to growing aircraft production and steady order backlogs for manufacturers like Boeing and Airbus as well as their suppliers.
Source: Seeking Alpha
SECTOR REPORT · INDUSTRIALS · PAGE 2
Additionally, the war in Iran alongside other geopolitical tensions, have led to robust defense spending, supporting companies such as Lockheed Martin and RTX Corporation. Even so, supply chain delays and labor shortages pose major challenges to the sector. These shortages have resulted in a backlog of 17,000 aircrafts, and 5,300,000,000 shortfalls in deliveries. Even so, overall disruption severity has fallen compared to 2024 levels, signaling improvement in these delays.
MACHINERY & HEAVY EQUIPMENT Recent trends of high capex spending have led this sector to perform strongly over the last few quarters, so much so that the Construction Machinery Index has risen 31.7% YTD, and is outperforming the S&P500 by around 15%. The reason for this is the industry is a major, if not one of the largest beneficiaries of capex spending. This is because any company that wants infrastructure built, must use machinery and construction equipment to do so. The rise in data center demand has significantly bolstered such capex spending and need for additional construction, represented by a 26% increase in Metalworking Machinery Orders.
ELECTRICAL EQUIPMENT AND POWER SYSTEMS This area is likely the largest benefiter of booming Data Center growth. Some reports portray that the industry has had a 125% increase over the last 12 months. Additionally, electricity demand is predicted to increase by around 25% in the United States over the next five years. Thus, immense grid modernization and increases in power generation must occur to meet that increase in demand. Over the last few years, the United States has begun to subsidize grid modernization projects, and will likely increase such trends going forward,
AUTOMATION Industrial automation companies have also experienced high growth in the last few months. Demand continues to remain strong as automation is needed to produce much of the equipment present in data centers. Recent labor shortages and underutilization headwinds actually benefit this industry, as more automation is required when less physical labor is present.
INDUSTRIALS
Robotics-Driven Spine Leader with Durable Growth
COMPANY
Elsie Lu | April 19, 2026 Globus Medical, Inc
INVESTMENT THESIS Globus Medical, Inc. (NYSE: GMED) is an Audubon, Pennsylvania-based medical device company focused on musculoskeletal health. The company develops and markets implantable spine devices, orthopedic implants, biologics, and surgical instruments across two segments: Musculoskeletal Solutions and Enabling Technologies. Globus serves orthopedic surgeons, spine specialists, and hospital systems in the United States and internationally. After acquiring NuVasive in 2023 and Nevro in 2025, the company became one of the world's largest independent musculoskeletal device companies. Full-year 2025 revenue reached $2.94 billion, up 16.7% year over year. In Q4 2025, the company reported non-GAAP EPS of $1.28, exceeding consensus of $1.06 by 21%, while sales grew 25.7%. For FY2026, management has guided to $3.2 billion in revenue and EPS of $4.40 to $4.50, ahead of prior Wall Street expectations. Thirteen analysts covering the stock hold a Strong Buy or Buy rating, with an average price target of $110.33, representing roughly 18% upside from the current price of $93.80. I give GMED a BUY rating with a price target of $112.00.
NYSE: GMED
BUY
UPSIDE
+19.4%
CURRENT PRICE
$93.80
PRICE TARGET
$112.00
COMPANY MARKET CAP
$12.73B
BETA
1.09
EPS
$3.92
EV/REV
24.30X
VALUATIONS / FINANCIAL MODELING
EV/EBITDA
13.83X
As of April 19, 2026, GMED trades at $93.80 per share with a trailing P/E of 24.3x and a forward P/E of approximately 21x, based on FY2026 EPS guidance of $4.40 to $4.50. The stock trades at an EV/Revenue multiple of roughly 4.8x, consistent with high-growth medtech peers but below its historical range during periods of comparable organic growth. Management has guided EBITDA margins toward 34 to 35% by year-end 2026 as integration synergies from NuVasive and Nevro are realized, which should support EPS growth well ahead of revenue growth. Using a discounted cash flow analysis with a perpetual growth rate of 3.0% and a WACC of 9.5%, I arrive at an implied intrinsic value of $108 to $115 per share. A comparable company analysis applying peer EV/Revenue multiples of 3.5x to 5.0x to FY2026 forward revenue of $3.2 billion yields an implied equity range of $95 to $125 per share. Combining both approaches, I set a price target of $112.00, representing approximately 19% upside. This aligns with the analyst consensus of $110.33 and reflects the benefits of synergy realization and robotics platform expansion.
52 WEEK HIGH
$101.40
52 WEEK LOW
$51.79
12-MONTH PRICE
52 WEEK RANGE
TARGET $112.00
NOW $93.80
GLOBUS MEDICAL, INC · NYSE: GMED · PAGE 2
DIVERSE OPPORTUNITIES
RECENT NEWS
Globus provides a wide range of musculoskeletal solutions across the full spine (cervical to lumbar), orthopedic trauma, hip and knee arthroplasty, and spinal cord stimulation through the Nevro franchise. Its ExcelsiusGPS robotic platform has been used in over 94,000 procedures globally as of the end of 2024, with roughly 500 systems installed at hospital and surgery center sites. Each robotic installation creates a long-term revenue anchor, as surgeons and facilities become integrated into the Globus ecosystem of implants, instruments, and software. The robotics and enabling technologies segment posted its best quarterly revenue performance in Q4 2025, confirming continued commercial momentum. Globus is also underpenetrated internationally, with international revenue at roughly 18% of total sales in 2025, well below the 30 to 40% international mix seen at larger peers. This creates meaningful runway for geographic expansion, particularly across Europe and Asia-Pacific, where adoption of minimally invasive spine surgery is growing. Clients include major health systems, academic medical centers, and ambulatory surgery centers across the US, with a growing international distribution network. This diversification across procedures, products, and geographies reduces reliance on any single revenue stream and positions Globus to grow in multiple directions simultaneously.
Q4 2025 EPS of $1.28 beat consensus of $1.06 by 21%; revenue up 25.7% year over year
GMED 5 YEAR STOCK CHART
Source: Yahoo Finance
RISK POTENTIAL INTEGRATION RISK Globus completed two large acquisitions in quick succession and is integrating both at the same time. Sales force consolidation, product rationalization, and distributor transitions all carry execution risk. Revenue dissynergies are a realistic near-term concern, particularly as the combined commercial organization adjusts to covering a much broader product set. Management has targeted $170 million in cost synergies, but the pace of realization could vary. The Nevro spinal cord stimulation business was under competitive pressure from Abbott and Medtronic at the time of acquisition, and stabilizing that franchise adds another layer of integration complexity.
FY2026 guidance set at $4.40-$4.50 EPS and $3.2B revenue, above prior consensus of $4.07 Zacks upgraded to Strong Buy in April 2026; Barclays maintains Overweight at $123 price target Next earnings call: May 7, 2026 Nevro acquisition integration on track; $170M cost synergy target reaffirmed COMPETITOR STATISTICS from Q4 2025
GLOBUS MEDICAL, INC · NYSE: GMED · PAGE 3
COMPETITIVE LANDSCAPE The spine and musculoskeletal device market is intensely competitive. Medtronic holds roughly 32% global spine market share and leads in robotic spine surgery with its Mazor platform. Johnson and Johnson's DePuy Synthes and Stryker both command significant hospital relationships and commercial scale. In robotics, Stryker's Mako system and Zimmer Biomet's ROSA platform are expanding beyond joint replacement into spine, which could dilute Globus's first-mover advantage over time. Alphatec is also gaining share rapidly in lateral and deformity procedures, growing revenue 25% in 2025 and guiding to $890 million in 2026.
MITIGANTS ROBOTICS INSTALLED BASE AND SURGEON LOYALTY Once a hospital or surgery center installs ExcelsiusGPS and surgeons are trained on the platform, switching costs are substantial. The robotic system creates a durable pull-through revenue stream for Globus implants and instruments that competitors cannot easily displace. With over 500 installations and 94,000 procedures logged, the installed base is large enough to provide meaningful recurring revenue, and it continues to grow. New applications in hips, knees, and expanded spine indications are in development, which should extend the platform's commercial lifecycle and attract new facility adoption over the coming years. Globus also manufactures most implants in-house, giving the company direct control over quality, customization, and cost. This vertical integration supports gross margins that pure-play distributors cannot match. As NuVasive and Nevro synergies come through in 2026 and 2027, EBITDA margins are expected to recover toward the historical 34 to 35% range. That margin expansion, layered on top of 8 to 9% revenue growth, creates a meaningful earnings growth story that supports a higher valuation over time. The stock's recent pullback from its 52-week high of $101.40 to current levels near $93.80 offers investors a reasonable re-entry point into a fundamentally improving business.
INDUSTRIALS
Priced for Risk It Does Not Carry
COMPANY
Arjun Virk | April 19, 2026 INVESTMENT THESIS Leidos Holdings (NYSE: LDOS) positions itself as the largest pure-play technology and services contractor to the US government, with 87% of its 2025 revenue streams from government customers across four distinct sectors: Intelligence & Digital, Health, Homeland and Defense. 2025 was Leidos’s best year on record. 2025 revenues reached $17.17 billion, up 3%, and operating income totaled to $2.11 billion with an EBIT margin at 12.3% and EBITDA margin of 14.1%. Those margins place them as the best among comparable companies including CACI at 11.85, Booz Allen at 10.6%, and SAIC at 9.7%. Despite the difference Leidos is priced at $159.04 trading at a 1.37x EV/revenue multiple, which is above SAIC at 0.91x and Booz Allen at 1.14x, but well below CACI at 1.78x. Furthermore, Leidos ended the year with $49 billion in backlog in contrast, with $9.7 billion of it funded, compared to their $17.2 billion of annual revenue. IWe rate Leidos a Buy with a $215.52 price target, implying 35.5% upside.
VALUATIONS SUGGESTS UPSIDE As of April 19, 2026, Leidos trades at $159.04 per share. A discounted Cash Flow Analysis was used to value the company, incorporating a weighted average cost of capital (WACC) of 7.98%, a terminal growth rate of 2.5%, and an exit multiple of 10.0x EBITDA, with the two terminal methods weighted equally. FCF assumptions were determined using guidance announced during Leidos’s Q4 earnings report, which calls for revenue for fiscal 2026 to be between $17.5-$17.9 billion and an adjusted EBITDA margin around 13%, lower than the 2025 margin of 14.1%. Additionally, revenue growth steadily rises at roughly 4% annually, sitting below the 5.8% that Leidos has performed the last four years. Lastly, as reported in Q4 earnings, CapEx levels are low at around 0.9% of sales in contrast to D&A running at 1.6% of sales, which allows UFCF to rise from $1.5 billion to $2.01 billion. Using these assumptions, we forecast an implied share price of $215.52, implying a 35.5% upside relative to the current stock price.
Leidos Holdings, Inc NYSE: LDOS
BUY
UPSIDE +35.51%
CURRENT PRICE
$159.04
PRICE TARGET
$215.52
COMPANY MARKET CAP BETA
$20.10B 0.85
LTM EPS
$11.14
EV/REVENUE
1.33X
EV/EBITDA
9.9X
52 WEEK HIGH
$205.77
52 WEEK LOW
$123.62
12-MONTH PRICE
MARGIN, NOT GROWTH, CARRIES OUR VALUATION To achieve the targeted upside Leidos does not need to increase its growth rate. Instead, my target requires the firm to increase its level of profitability. Among their main product groups, Intelligence & Digital compounds at 3.0%, Health compounds at a 2.0% to 2.5%, and both the Homeland and Defense businesses from 6.5% to 5.0% since industries like air-defence are starting to mature. That deceleration in growth is what pulls the blended rate down to 4%, which is well below the firm's average of 5.8% over the past four years.
52 WEEK RANGE
NOW $159.04
TARGET $215.52
LEIDOS HOLDINGS, INC · NYSE: LDOS · PAGE 2
The solution to increase rates is creating more margin. With their program mix shifting to higher margin digital work, and EBITDA margin expanding 120 basis points in 2025, it is reasonable to estimate around a 20 basis point of EBIT expansion. However, when EBIT margins have already increased from 4.0% in 2023 to 12.3% in 2025, it becomes more challenging to find more ways to cut back. Thus, Leidos’s base case assumes advancements in execution and product mix rather than market expansion.
RECENT NEWS
TWO MARKETS EXPANDING FASTER THAN ASSUMPTIONS
COMPETITOR STATISTICS from Q4 2025
My model assumes that Homeland and Defense products decelerate from 6.5% to 5.0%, and excludes their small contributions from the recently completed ENTRUST acquisition. This could be seen as a conservative projection, as Leidos sources almost 87% of its revenues from the U.S. Government, which gives it unique exposure to defense spending across subindustries like intelligence, air and missile defense, and homeland security. The ENTRUST acquisition adds roughly 3,100 engineers and almost doubles Leidos’s energy infrastructure business within the United States. Since guidance was not updated for the acquisition, we excluded any small ENTRUST contribution from our predictions.
FY2025 revenue of $17.17B, up 3%, at a 12.3% EBIT margin Backlog of $49.0B at January 2, 2026, of which $9.7B is funded. Closed the $2.4B ENTRUST acquisition on March, 2026
EV/Rev: 1.14x Revenue: $11.3B
EV/Rev: 1.78x Revenue: $9.5B
THE CASE AGAINST OUR TARGET An argument for a conservative case, argues a structural decline in operations and a deterioration in terminal valuation assumptions. Holding EBIT margins flat at 11.3% and slowing revenue to 1.6% a year, using a 8.5x exit multiple and 1.75% terminal growth produces a price target of $151.66, 4.6% below the current price. This is seen as an essential floor for Leidos’s performance, where nothing improves, and with that we only see a 4.6% decline in price. All this is against the 35% upside in a scenario where growth is still slower than the status quo. There are two structural risks that could result in a decline; the first is federal concentration. With 87% of revenue being derived from the U.S. government, this leaves Leidos open to risk with uncertainty in appropriations timing and government shutdown which can move revenue between quarters. This wasn’t accounted for in the model, as it is seen as a problem with timing rather than demand, but that risk can make a year or quarter in isolation look worse than the reality. The second risk is the terminal value weight at 72% of enterprise value. In practice, this is typical for a forecast this long, but it means that the exit multiple and growth rates are very impactful.
EV/Rev: 0.91x Revenue: $7.62B PROJECTED FUNDING FOR DEPARTMENT OF DEFENSE
PROJECTED FREE CASH FLOW AND MARGIN
The assumption that holds the most weight, however, is the margins. Leidos’s operating margin has ranged from 4.0% in 2023 to 12.3% in 2025, representing a huge margin for error between our price target and a price below the current price. So, the essential piece is that Leidos continues to find efficiencies in both their execution and their product mix.
Source: Congressional Budget Office
Sources: Leidos Investor Relations | SEC EDGAR | S&P Capital IQ
INDUSTRIALS
Connecting Future Cooling Through Copper
COMPANY
Rohan Kotwal | April 17, 2026 INVESTMENT THESIS Mueller Industries (NYSE: MLI) is a global piping systems, climate product, and industrial metal manufacturer that creates critical components necessary for water distribution, household appliances, and radar systems. Their products are critical in supplying components for AI data center cooling through designing copper tubes, fittings, and HVACR products. As a result of the boom in data center construction, the demand for copper is skyrocketing while there is a global copper shortage, driving up selling prices and boosting margins. Additionally, Mueller Industries’ recent acquisition of Bison Metal Technologies allows the company to increase its domestic production and strengthens its position as the leading US copper tubing and fitting producer. Mueller’s strong growth outlook is also driven by its flexibility to generate free cash flow and industry-leading returns on equity. Considering the AI data center boom, along with increased commercial construction and tariff production, Mueller technologies is poised for heavy domestic growth.
Mueller Industries NYSE: MLI
BUY
UPSIDE +21.61%
CURRENT PRICE
$122.13
PRICE TARGET
$148.52
COMPANY
$13.55B
MARKET CAP BETA
1.08
VALUATIONS SHOWS MEANINGFUL UPSIDE
LTM EPS
$6.86
As of April 17th, 2026, Mueller Industries is trading at $122.13 per share. My valuation used a Discounted Cash Flow Analysis using an 8.4% WACC and a 3% terminal growth rate, and FCF assumptions from the Q4 2025 earnings report in February. The model projects the sharp increase in copper prices in 2026, followed by the normalization of the market as prices normalize and benefits gained from acquisitions begin to decelerate. Staying consistent with projected revenue targets, this valuation observes that it will nearly reach its $6B revenue goal by 2030. Given this growth model, I predicted an implied price of $148.52, which implies an upside of roughly 22%.
EV/REVENUE
2.91X
EV/EBITDA
11.82X
52 WEEK HIGH
$139.28
52 WEEK LOW
$67.91
12-MONTH PRICE
NEW ACQUISITIONS ARE KEY DRIVERS FOR PRODUCTION Mueller closed the acquisition of Bison Metals Technologies LLC on March 30, 2026, paying roughly $138–142 million in cash for the Oklahoma-based copper tube manufacturer. The addition of Bison expands Mueller's domestic tube manufacturing capacity, broadens its industrial tube manufacturing capabilities, and enhances its ability to produce tubes utilized as feedstock for certain value-added products. This allows Mueller more control over the supply chain and addresses the issue of production in a tariff and copperscarce environment. Owning more of that upstream tube capacity domestically reduces exposure to import duties on foreign-sourced feedstock and shortens lead times.
52 WEEK RANGE
TARGET $148.52
NOW $122.13
MUELLER INDUSTRIES · NYSE: MLI · PAGE 2
EXPANDING DATA CENTER AND CONSTRUCTION DEMAND FOR COPPER SOLUTIONS Copper is a foundational input for data center electrical infrastructure and liquid/HVACR cooling systems. AI data center construction is increasing copper demand because higher rack power density requires more electrical infrastructure. On the other hand, defense spending and electrification demand continue to offset weaker industrial activity elsewhere. Industry surveys. On the supply side, industry specialists report AI-related data center construction creating the biggest uptick in US copper consumption in 2025. With increased demand, many banks forecast a 2026 copper deficit. Morgan Stanley forecasts a 600,000-ton refined copper deficit in 2026, the largest in more than 20 years, and the International Copper Study Group revised their projection to a 150,000-tonne deficit in 2026. The elevated selling price of copper and growing backlog are strong growth drivers for the stock, as increasing copper input costs raise the dollar value of net sales and nominal margins.
RECENT NEWS
FY2025 revenue of $17.17B, up 3%, at a 12.3% EBIT margin Backlog of $49.0B at January 2, 2026, of which $9.7B is funded. Closed the $2.4B ENTRUST acquisition on March, 2026 COMPETITOR STATISTICS from Q4 2025
EV/Rev: 4.1x Revenue: $2.44B
RISK POTENTIAL VOLATILITY OF COPPER PRICES Copper is Mueller's single largest input cost and its primary revenue driver, so price volatility can create downside risk. Since Mueller prices its finished tube, fittings, and line set products on a cost-plus basis, rising copper prices flow through to net sales dollar-for-dollar, which is part of why full-year 2025 EBITDA margin expanded to 24.6% from 21.7% in 2024. The same mechanism that lifts net sales can create downside risk when prices move erratically within a quarter. A sharp reversal in copper price, like a tariff overhang or a China demand slowdown, would compress both segment revenue and the elevated margins currently priced into estimates for 2026.
EV/Rev: 3.4x Revenue: $1.70B
EV/Rev: 1.4x Revenue: $1.49B
COPPER PRICE PERFORMANCE 2025
EXPOSURE TO CONSTRUCTION AND INTEREST RATE SENSITIVITY A large portion of Mueller's demand base runs through residential and commercial construction. Copper tube and fittings for plumbing, and HVACR components tied to new home building and remodeling activity. This segment is more cyclical and rate-sensitive, and it represents a risk that could offset some of the AI/electrification tailwind if it weakens further. Elevated mortgage rates through 2025 and into 2026 kept builder sentiment restrained, and new housing construction constrained. This directly limits volume growth in Mueller's plumbing and refrigeration related product lines.
MUELLER INDUSTRIES 5 YR STOCK CHART
Source: Bloomberg, Macrotrends.net Sources: Mueller Industries Investor Relations | Simply Wall Street | S&P Capital IQ | Business Wire | US Global Investors | Industrial Info
SECTION 04
Energy
SECTOR LEAD
Thomas Lee
04 CORNELL EQUITY RESEARCH
ENERGY · SECTOR OUTLOOK
Volatile Times Thomas Lee, Sector Lead | April 19, 2026 WHERE THINGS STAND The energy sector enters spring 2026 in one of its most volatile stretches in decades, defined by two colliding forces: a Middle East supply shock and an unrelenting surge in electricity demand from artificial intelligence infrastructure, and together, these are pushing the sector toward higher prices, faster domestic buildout, and a scramble to secure firm, reliable power.
THE MIDDLE EAST SHOCK AND OIL/GAS MARKETS Since U.S. and Israeli military operations against Iran began in late February 2026, the conflict has severely disrupted shipping through the Strait of Hormuz, a chokepoint for roughly a quarter of the world's seaborne crude and about a fifth of global LNG. Saudi Arabia, Iraq, Kuwait, the UAE, Qatar, and Bahrain have collectively shut in several million barrels per day of production as export routes clog, and attacks have damaged regional refining and LNG infrastructure, including Saudi Arabia's Ras Tanura refinery and part of Qatar's flagship LNG facility. Brent crude, which started the year in the $60s, spiked as high as the mid-$90s to low-$100s by mid-March, marking one of the largest monthly oil price increases on record, before easing somewhat after a temporary ceasefire announcement in early April. Uncertainty remains high pending the outcome of U.S.-Iran negotiations. The EIA has sharply revised its 2026 Brent forecast upward (from roughly $58 to around $79/barrel average), while some analysts warn of $120–$200 scenarios if the conflict persists. U.S. producers are benefiting: domestic crude output is now expected to average 13.6–13.8 million barrels per day in 2026– 2027, and U.S. Gulf Coast grades and LNG exports are picking up share as buyers seek alternatives to Middle East supply. Natural gas prices have stayed comparatively calm (Henry Hub near $3.10/MMBtu), insulated by strong domestic production and mild weather, underscoring the U.S.'s relative energy security advantage versus Asian and European importers more exposed to Hormuz.
SECTOR REPORT · ENERGY · PAGE 2
THE AI POWER DEMAND BOOM Independent of the Middle East crisis, the sector is being reshaped by data centers. U.S. electricity demand is rising after roughly 15 years of flat consumption, driven by AI training and inference workloads that can require 50–100 kW per server rack versus 5–10 kW historically. Estimates vary, but forecasts point to a structural power shortfall: some analysts cite a 9+ gigawatt U.S. shortfall in 2026 widening toward 45+ GW by 2028. Grid interconnection queues now average five-plus years in many markets, pushing hyperscalers (Microsoft, Amazon, Google, Meta) to bypass utilities entirely: signing direct power purchase agreements with nuclear plants, restarting retired reactors (e.g., Three Mile Island), and backing small modular reactor development, alongside continued rapid growth in gas-fired generation and renewables (solar generation was up roughly 21% year-over-year in the first half of the year). The Trump administration, through Energy Secretary Chris Wright and the "Ratepayer Protection Pledge," is emphasizing modernizing permitting and grid rules to keep the U.S. ahead in AI while limiting the cost passed to ordinary electricity customers, a tension that's already visible in sharply rising residential bills in data-center-heavy regions like Virginia.
RENEWABLES, COAL, AND THE BROADER MIX Renewables continue to expand (solar, wind, and hydropower all posted solid year-over-year growth), supported by preserved tax credit timelines and hyperscaler procurement, but they're growing alongside fossil generation rather than replacing it in the near term, given AI's need for firm, 24/7 baseload power. Coal continues its long-term decline in the domestic generation mix even as U.S. coal exports have jumped on higher global demand. Deal activity across the sector, including M&A, infrastructure investment, and long-duration power contracts, has accelerated in response to both the Hormuz-driven volatility and the AI buildout.
FORWARD OUTLOOK Two questions will define the sector through the rest of 2026: whether the Iran conflict de-escalates and Hormuz shipping normalizes (the base case assumption behind most current forecasts), and how quickly new generation (gas, nuclear restarts, and renewables) can be brought online to meet AI-driven demand without further straining consumer electricity prices. The U.S. is positioned more favorably than energy-import-dependent regions on both fronts, given its production growth, LNG export capacity, and role as the epicenter of AI infrastructure investment, but affordability and grid capacity remain the key domestic vulnerabilities to watch.
ENERGY
Unlocking Power
COMPANY
Thomas Lee | April 19, 2026 LNG INFRASTRUCTURE TRANSITION Excelerate is transitioning from a pure FSRU charter model to a fully integrated LNG infrastructure platform, allowing it to capture greater value per project and embed more deeply into customer energy systems. Integrated terminals layer multiple revenue streams — development, operations, regasification, and in some cases supply and power — onto a single relationship, increasing margins and creating high switching costs once assets are physically integrated into local infrastructure. Excelerate’s ownership of the FSRU fleet, its long-standing relationships with sovereign and utility clients, and in-house engineering and operational capabilities uniquely position it to execute this strategy at scale.
CONTRACTUAL GROWTH As of December 22nd, 2025, Eaton Corporation is trading at $320.10 per share. A discounted Cash Flow Analysis was used to value the company, incorporating a weighted average cost of capital (WACC) of 9.01%, a terminal growth rate of 5%, and an exit multiple of 20x EBITDA. FCF assumptions were deter- mined using management projections primarily announced during the firm’s November 6th, Q3 earnings report, with a large order backlog growth rate (18% growth YOY) leading to elevated revenue growth in Q4 2025, 2026, and possibly early 2027, while eventually steadying to 2025 forecasts of 8.5-9.5%, in the years following. Also, as reported in Q3 Earnings, CapEx is likely to be inflated in 2026 and to return to 2025 levels (the firm’s estimate is ~$1.2 Billion) in the years following. Using these assumptions, we determined a 2029 valuation of $458.60, implying a 43.27% upside relative to the current stock price.
DOWNSTREAM EXPANSION Excelerate’s downstream expansion in Jamaica is strategically important less for its immediate financial contribution and more because it validates the company’s ability to operate across the full LNG value chain, from import and regasification to terminaling and power generation. This integrated LNG-topower model addresses a common challenge in emerging and energyconstrained markets: the need for reliable, affordable fuel without the time, capital, or complexity required for large onshore infrastructure. Jamaica serves as a proof of concept that Excelerate can extend beyond floating regasification and manage the operational and regulatory complexity of downstream energy systems. The structural conditions that made Jamaica attractive — limited pipeline gas, high power costs, constrained capital, and a desire for fuel diversification — are shared across many regions, creating a large and underpenetrated opportunity for replication.
Excelerate Energy Inc. NYSE: EE
BUY
UPSIDE
+17.1%
CURRENT PRICE
$34.85
PRICE TARGET
$40.80
COMPANY
$3.7B
MARKET CAP
1.1
BETA LTM EPS
$1.23
EV/REV
3.2X
EV/EBITDA
9.3X
52 WEEK HIGH
$43.02
52 WEEK LOW
$21.46
12-MONTH PRICE
52 WEEK RANGE
TARGET $40.80
NOW $34.85
EXCELERATE ENERGY · NYSE: EE · PAGE 2
EXCELERATE ENERGY INC. 5 YEAR STOCK CHART
RECENT NEWS
Acadia delivered: FSRU delivered from Hyundai Heavy Industrials; final payment made Iraq Delay: Middle East conflict pushed Iraq terminal startup to 2027 Q1 Earnings Scheduled: Announced April 7 for an April 30 report/call
Source: Yahoo Finance
COMPETITOR STATISTICS from Q1 2024
RISK POTENTIAL CUSTOMER CONCENTRATION Excelerate's revenue base is heavily concentrated among a small number of sovereign and state-affiliated customers. As of the most recent annual disclosures, Excelerate's largest customer accounted for roughly a third of net revenues, with a second customer contributing another sizable share, together representing a majority of the top line. Because many of these are government-linked LNG importers in emerging markets, a delay, renegotiation, or cessation of any single contract (particularly with a top-two customer) could materially impact revenue and cash flow, and the company has limited ability to quickly replace that volume given the long lead times required to redeploy FSRU assets to new markets.
EV/Rev: 3.8x Revenue: $20.4B
EV/Rev: 0.9x Revenue: $25.2B
GEOPOLITICAL DISRUPTION TO THE IRAQ TERMINAL A meaningful piece of Excelerate's growth story is tied to its integrated Iraq LNG import terminal, which has now been pushed back to 2027 due to the ongoing conflict in the Middle East. This delay postpones the associated earnings ramp and adds uncertainty around timing, cost, and whether further disruption could push the project out even further. While management has emphasized that operations and contract fulfillment in the region haven't been materially impaired so far, continued regional instability remains a real risk to both the Iraq buildout and broader Middle East-linked business, and it forced Excelerate to redeploy its newbuild Acadia FSRU to Jordan on an interim charter rather than its originally intended use.
EV/Rev: 0.9x Revenue: $25.2B
CAPITAL-INTENSIVE GROWTH AND BALANCE SHEET STRAIN Excelerate's growth plan depends on continued heavy capital spending, including the Acadia newbuild, an FSRU conversion (letter of intent signed with Seatrium, final contracts pending), and vessel dry-docking and redeployment across its fleet. This capital intensity, combined with higher interest expense on its 2030 Notes, has weighed on net income even as adjusted EBITDA has grown. If growth projects like Iraq continue to slip or interim charters like the Jordan deal don't fully offset the delay, Excelerate could face pressure on leverage and returns while still carrying the fixed costs of a large, aging-into-service vessel fleet. Sources: Excelerate Energy Inc. Investor Relations| Yahoo Finance | S&P Capital IQ | The Wall Street Journal | Finviz
ENERGY
Dawn Of The Next Era
COMPANY
Emily Hitchcock | April 19, 2026 EXECUTIVE SUMMARY NextEra Energy is one of the highest-quality growth utility companies among U.S. large-cap utilities because it combines a fast-growing Florida segment, Florida Power and Light Company (FPL), and the world’s largest generator of renewable energy from wind and solar, NextEra Energy Resources (NEER). NextEra has a utility in Florida but also has one of the largest development businesses, making it one of the largest renewable energy developers in the U.S. As required by credit agencies, the balance between the unregulated and regulated sides is crucial, especially as demand from data centers skyrockets. FPL, which serves 12 million people through more than 6 million customer accounts, has approximately 35 GW of net generating capacity and 91,000 miles of transmission and distribution lines. NEER is one of the largest wholesale generators of electric power in the U.S., with 37,505 MW of total net generating capacity as of December, 31, 2025, with 37,145 MW across 44 states and 360 MW of net generating capacity in 4 Canadian provinces. NextEra Energy Capital Holdings (NEECH) provides funding to NEER and other subsidies. The split between the regulated and unregulated earnings is favorable and has been followed by stable credit ratings. My conclusion is Hold/Neutral with a 12-month target price of $88/per share, versus a current share price of $91.98 as of April 17, 2026, which implies a downside of about 4%. The target is based on a blended framework: 30% DCF ($76.5/share), 30% EV/EBITDA ($84/share), and 40% P/E ($99/share). The market is already capitalizing a large amount of value from FPL’s regulatory visibility, ER’s 29.8 W backlog, and long-dated load-growth optionality. Most of the platform is contracted, but not all of the earnings stream is insulated from market-power volatility. The contact profile of the regulated fleet is strong (renewables and storage), yet as NEE enters into energy derivatives and unrealized gains and losses shown in revenue, models and market assumptions make a risky entry point that I remain wary of.
NextEra Energy NYSE: NEE
HOLD CURRENT PRICE
$91.98
PRICE TARGET
$88.00
COMPANY MARKET CAP
$191.81B
BETA
0.73
LTM EPS
$3.94
P/E RATIO
21.5X
EV/EBITDA
14.9X
52 WEEK HIGH
$98.75
52 WEEK LOW
$67.20
12-MONTH PRICE
FINANCIAL ANALYSIS Due to the reported GAAP volatility in revenue and net income, I normalized EBIT and EBITDA by excluding gains on the disposal of assets from operating income. I did this because the company’s competitive segment includes asset sales, derivative markets, and tax-credit effects. What I have observed is growing earning power but a remaining negative free cash flow due to capex having historically outpaced internal cash generation.
52 WEEK RANGE
TARGET $91.98
NOW $88.00
NEXTERA ENERGY · NYSE: NEE · PAGE 2
In 2025, operating cash flow was $12.485 billion, but gross capex and investments were still at $24.606 billion, reflecting spending now to build contracted and regulated assets and earn on them later. The said data raises questions about whether valuation has already priced in the future earning power.
RECENT NEWS
NEE generates consistently high margins. In 2025, fuel and purchased power expense was $4.944 billion, operations and maintenance expense was $5.523 billion, D&A was $4.610 billion and other taxes were $3.979 billion, leaving operating income at $8.828 billion. The total assets and liabilities at the end of the fiscal year were $212.7 billion and $117.9 billion; cash and cash equivalents at $2.812 billion and net debt at about $92.8 billion. Operating cash flow has averaged $10 to $12 billion per year from 2021 to 2025, which is strong. Though capital expenditures have been larger at around $8 billion annually, most likely due to investment in solar, storage, and transmission. Free cash flow has been shown to be negative, though that tends to be an industry standard for utilities.
NEE has four nuclear plants in operation, two in Florida and one each in New Hampshire and Wisconsin. There will be a fourth one come 2029, though.
Key Recent Performance Stats: In the official Q4 2025 earnings, management reported that the full-year 2025 adjusted EPS was $3.71, up 8% from 2024 and higher than prior ranges. In the March 2026 Investor Presentation, the 2026 adjusted EPS guidance was set at $3.92 to $4.02, targeting the top end while still maintaining an 8% adjusted EPS CAGR through 2035. Trading multiples amongst the comps set that I charted in Excel. NEE premium compared to peers: EV/EBITDA (+42%), P/E (+30%) Peer average ex-NEE: EV/EBITDA (13.2x), P/E (21.48x)
Per an agreement with Alphabet, NextEra will be resurrecting Iowa's Duane Arnold Energy Center to provide power to data centers in the area for the next 25 years.
NextEra’s national fleet of wind and solar farms generates more renewable electricity than any other company in the country. COMPETITOR STATISTICS from Q4 2025
EV/EBITDA: 11.17x Revenue: $32.72B
EV/EBITDA: 13.00x Revenue: $17.45B
INDUSTRY AND COMPETITIVE LANDSCAPE Regulated utilities like FPL earn a return on capital invested in their rate base, and earnings growth is thus a function of regulatory approval and Florida law. Merchant renewable developers like NEER compete in competitive wholesale markets and rely on long-term power purchase agreements to secure predictable cash flows. FPL competes with other investor-owned utilities in Florida, such as Duke Energy Florida, while NEER competes with renewable developers such as Constellation Energy and Vistra, which have higher merchant exposure. My core peer set is: Duke Energy, Southern Company, American Electric Power, Xcel Energy, and Public Service Enterprise Group. I use these names because they are the cleanest U.S. large-cap utility benchmarks for regulated earnings, capex programs, and utility-style valuation.
EV/EBITDA: 14.36x Revenue: $24.79B
Historical Revenue and Normalized EBITDA that I charted in Excel. Uneven revenue growth Upward EBITDA trend
NEXTERA ENERGY · NYSE: NEE · PAGE 3
COMPANY OVERVIEW The economics of FPL and NEER differ meaningfully. FPL is driven by customer growth, base-rate visibility, solar addition, transmission and distribution investment, and regulatory capital recovery. As of December 31, 2025, of Customer Accounts, commercial represented 11% while residential represented 89%. In terms of Operating Revenue, from 2023 to 2025, residential held a Consistent 57% share, with Commercial next at approximately 33%, and Wholesale and Other making just about 10% combined. FPL is a rate-regulated utility in Florida. FPL merged with Gulf Power in January 2021, and by January 2022, it became a unified ratemaking entity with a single set of rates and tariffs. FPL aims to maintain low customer bills and high reliability, with a typical residential bill for 1,000 kWh, which is well below national averages. NEER develops and operates wind, solar, and battery storage projects across North America. In Q1 2025, NEER added 3.2 GW of new renewables and storage to its backlog, bringing it to 28 GW. That quarter's adjusted net income would be $908 million, up from $828 million in Q1 2024. In the March 2026 Investor Presentation, management showed roughly 80 GW in operation across the platform, including about 43.4 GW of renewables and storage, and stated that more than 95% of the renewables and storage portfolio is contracted. Additional disclosed contract terms include about 13 years for wind, 12 years for solar, 17 years for storage, 36 years for nuclear, and 18 years for gas pipelines. Such contract tenure is a leading driver for the company earning a premium multiple compared to a pure merchant generator. FPL remains the anchor asset, with the March 2026 deck showing $68 billion of capital employed in 2024, which is up from $29.3 billion in 2014, representing about a 9% CAGR. The non-fuel O&M of $11.10/MWh was also highlighted, about 71% below the national average in the deck. With substantially better reliability combined with growth, it is almost unusually powerful. Regarding the business structure, the most important regulatory update is the new FPL framework that runs from January 2026 through December 2029. Within the 2026 Management Presentation, it included an authorized ROE midpoint of 10.95%, a top of 11.95%, and a 59.6% equity ratio, alongside solar base-rate adjustments and a rate-stabilizing mechanism. The split between the regulated and unregulated earnings is favorable, but not clearly disclosed line-by-line. In 2025, FPL contributed $5.012 billion of segment net income attributable to NEE, while NE contributed $2.975 billion, before $1.152 billion of Corporate and Other losses. Thus, the regulated utility is the dominant earnings base. The standalone annual NEET net income was not disclosed in the 10-K, though the Q4 2025 earnings slide suggests NEET was only a small EPS adjusted contributor. The tax-credit structure functions in how the company converts pre-tax figures into after-tax earnings and cash flow. Thus, the modeled tax rate used in this report is below the statutory framework. Evidence for this is in the 2025 consolidated income tax line: an $802 million benefit, and the ER segment showed a $1.14 billion tax benefit. Fuel cost risk is mitigated at FPL because fuel and purchased power costs are largely recovered through regulatory clauses. In 2025, FPL fuel, purchased power, and interchange expense fell to $3.878 billion from $4.188 billion in 2024. Fuel often affects cash timing and customer bills more than franchise value, as in the accounting notes, it was made clear that the rate regulation and cost mechanisms shape how said items flow through the financials.
VALUATION The fragility of a standard DCF was a concern of mine due to the heavy investments made by NEE. Thus, I kept explicit near-term growth capex high and then slowly normalized toward a steadier level, including the replacement and growth factors, by the terminal year. The numbers for the 2026 base case include: revenue ($29.1B), EBITDA($15.5B, 53.5% EBITDA margin), EBIT($8.4B), tax rate (7%, thus NOPAT of $7.8B), capex($24.4B); all of which gives an estimated -$9.5B free cash flow. Despite the negative near-term free cash flow, the terminal years carry earning power from assets already under construction or in backlog. For the discount rate, I used a bottom-up utility-oriented WACC rather than a historical point regression beta. Following my modeled calculations, produces a WACC of 5.76%. Though I will include that the equity risk premium(4.23%) and the risk-free rate (4.18%) come from the January 2026 implied ERP dataset. Beta is informed from my comps analysis(0.50).
NEXTERA ENERGY · NYSE: NEE · PAGE 4
For the base case, I used a 2.5% terminal growth rate, and using the projected 2035 free cash flow of $14B and the WACC value, the terminal value is about $440.7B. Discounted back ten years, the present value is approximately $251.8Bn, and the present value of the explicit project free cash flow is about $12.2B. Both of which imply an enterprise value of about $264B. After subtracting a net debt of $92.8B and noncontrolling interests at $11.9B, the equity value is about $159.3B or $76.5/share. Additional assumptions for the base case: 2026-2031 revenue CAGR(5.7%), 2031-2035 revenue CAGR(4%), 2035 EBITDA margin (56%), 2034 capex/reveue(21%), and WACC (5.76%). Thus, rather than just growth, converting growth into cash returns without the build cycle remaining elevated permanently is worrisome. In all, I used three valuation anchors: 1.P/E: I apply 24.8x to my 2026 adjusted EPS estimate of $4.00, for $99/share. That multiple is still a premium to the peer average, but below the current market multiple. 2.EV/EBITDA: I apply 18.0x to my 2026 EBITDA estimate of $15.5B, which implies about $84/share after subtracting net debt and NCI. 3.DCF: Base-case FCFF DCF yields $76.5/share. The blended P/E (40%), EV/EBITDA (30%), and DCF (30%), make up a blended target price of $88. Potential catalysts include the FPL rate framework now in place through 2029, and management is targeting the top end of 2026 EPS guidance. Energy Resources has a backlog of roughly 29.8 GW and development expectations of 76.6–107.6 GW through 2032; the March 2026 materials also point to more than 20 GW of large-load discussions at FPL, with around 9 GW in a more advanced stage, and a regulated/invested transmission capital opportunity that could reach roughly $18–$22 billion by 2032. If any convert quicker than my bear thesis, then earnings could outgrow the base case. Though, in conclusion, if consolidated capex stays very high for longer than expected, then the stock can still underperform even if the company continues to report acceptable EPS growth. Sources: NextEra Energy 2025 Annual Report, SEC filing version of the 10-K through SEC EDGAR, 2025 Form 10-K and prior 10-K statements, the March 2026 investor presentation, the official Q1-Q4 2025 earnings script, Q1-Q4 2025 earnings report, Q1-Q4 2025 Earnings Call, NextEra Energy Investor Day 2024-2025, U.S. Energy Information Administration (EIA), Federal Energy Regulatory Commission (FERC), 10-K’s for: Duke Energy, Dominion Energy, Southern Company, American Electric Power, Xcel Energy, Brookfield Renewable, and Clearway Energy. Yahoo Finance - NEE, Macrotrends, Koyfin
SECTION 05
05
Materials
SECTOR LEAD
Zaryab Kanjiani
CORNELL EQUITY RESEARCH
MATERIALS · SECTOR OUTLOOK
1Q 2026 Recap Zaryab Kanjiani, Sector Lead | April 19, 2026 INDUSTRY OVERVIEW Materials have been one of the better places to be in 2026. XLB is up around 13% year to date, which is well ahead of the S&P 500. That said, the sector isn't really moving as a unit. Gold and copper miners are carrying most of the weight here, and if you take those out, the sector gets a lot less exciting. Chemicals and packaging are still stagnant and don’t seem to be changing soon.
METALS AND MINING Starting with gold, it’s sitting at $4,831 an ounce right now, which is up roughly 47% from a year ago. The reasons for this are due to central banks buying gold consistently for years, the dollar weakening, and the U.S. monetary policies' credibility deteriorating. With inflation staying above 3% and the White House trying to pressure the Fed, confidence in the institution isn’t exactly at a high. None of this reverses quickly, which is why most outlooks on gold are still constructive. J.P. Morgan has an outlook on gold between $4,750 to $5,500 per ounce by year's end, and the SPDR gold team sees $4,000 as the floor by year's end. Copper has been messier. It hit a record above $12,000 per metric ton on the LME and briefly crossed $6.11 per pound on Comex. Then it pulled back when the Trump administration announced it was exempting refined copper from the 50% tariff. The price dropped sharply on that news. The Department of Commerce has floated extending duties to refined copper as early as 2027, and markets know are pricing this in. Any acceleration there could probably trigger another round of inventory drawdowns similar to what was seen this year.
SPOT GOLD PRICE IN USD PER OZ. SOURCE
LME COPPER OFFICIAL PRICES GRAPH
Source: LSEG
Source: LME
CHEMICALS Specialty chemicals and industrial gases are still in a rough patch. Demand has been soft and there is too much capacity in the market from the build-out that happened in 2021 and 2022. Linde is worth separating from the rest of the companies in the industry. Linde, world's largest industrial gas supplier, put up $34 billion in sales for 2025 with 29.5% operating margins and 24.2% return on capital. They returned $7.4 billion to shareholders. Their revenue growth was positive across every geography, Americas up 8%, APAC up 3% and EMEA up 6%. The reason this is worth separating is
SECTOR REPORT · MATERIALS · PAGE 2
because Linde is over 13% of XLB. Its performance obscures what is happening in the rest of the sector. Chemicals is still an attractive industry for the long-term as most thesis’ around the industry are directly tied to semiconductors. Chemicals are also roughly 14% of the bill for electronic devices, and with the semiconductor industry expected to grow around 8.5% in 2026, the demand should eventually pull utilization higher for chemical producers.
CONSTRUCTION MATERIALS
GLOBAL SEMICONDUCTOR MARKET
Construction materials look weak at the broad sector level. Q2 earnings are expected to be down about 17% year over year. The biggest players in the industry, like Martin Marietta and Vulcan Materials, although, are both expected to report double-digit EPS growth for the quarter. The sector-level weakness comes from smaller producers with more commodity exposure and less pricing power. The big aggregates companies have been disciplined on pricing and minimized their exposure.
Source: WSTS
The next 12 to 18 months could be pretty good for construction material companies because lower interest rates are helpin restart construction projects, and the government is still spending heavily on infrastructure like roads and bridges. The main risk is that energy prices could rise, especially because of the Iran conflict. Since making and transporting cement and asphalt uses a lot of energy, higher energy costs could make these companies more expensive to run and hurt their profits, even if they are selling more.
AI INFRASTRUCTURE IN MATERIALS AI spending is creating a lot more demand for basic materials than people realize. The biggest tech companies are planning to spend more than $600 billion in 2026, and a large part of that money is going toward building data centers. Those data centers need copper for wiring, aluminum for cooling systems, specialty gases for chip production, and concrete and aggregates for the actual buildings. So when copper prices rise, it is not just because of general economic trends in places like China. Some of that demand is coming directly from data centers that are being built right now. Companies like Freeport and BHP benefit the most because they directly produce copper and other materials that data centers need. But the impact goes beyond mining companies. Businesses that supply industrial gases to semiconductor factories or chemicals used to make circuit boards can also benefit from the AI spending boom. This may not be obvious in a company’s quarterly earnings, but AI is creating a new source of long-term demand that was much smaller five years ago.
KEY RISKS For gold, the biggest risk is interest rates. Gold tends to do better when interest rates are lower, so if inflation falls faster than expected and the Fed keeps rates higher than investors expect, gold prices could fall. Some gold investors may be underestimating that possibility. One estimate puts about a 20% chance on gold falling back into the $4,000 to $4,750 range, which would be a meaningful decline from current levels. For copper, the biggest issue is supply. Building a new copper mine can take 7 to 10 years, so companies cannot quickly increase production when demand rises. That means most new supply in the short term has to come from mines that already exist. The biggest demand risk would be tech companies slowing down their data center spending, but right now they are still signaling that they plan to spend heavily. A more immediate risk is government tariff policy, which can cause copper prices to move sharply in either direction. Chemical companies have a simpler problem. If overall industrial demand stays weak and the semiconductor industry takes longer to recover, their profits could stay under pressure, but if demand improves, their stocks could recover quickly. Sources: State Street, Yahoo Finance. J.P. Morgan, Linde, Deloitte, Reuters, S&P Global
MATERIALS
Speculation for the Rare Earth Prize
COMPANY
Justin Li | April 19, 2026 INVESTMENT THESIS MP Materials owns Mountain Pass, the only rare earth mine and processing site of scale in North America, and is the sole listed vehicle for American rare earth independence. The July 2025 Department of War partnership gave the company a $110 per kilogram NdPr price floor through 2035, a guaranteed magnet offtake, and a federal shareholder holding roughly 15% on an asconverted basis. The business underneath those terms does not yet work. FY2025 revenue of $224.4M produced $11.4M of adjusted EBITDA, of which roughly $68.9M came from price protection income and Section 45X credits, implying the operating business lost about $57M before subsidy. Free cash flow was negative $303.9M. At $60.99 the market assigns roughly $8.1B of enterprise value to a magnetics segment that has never sold a finished magnet to a third party and whose larger facility carries a contractually capped return.
VALUATION MP has negative earnings, negative free cash flow, and adjusted EBITDA that is almost entirely government transfer. We use a sum of the parts anchored to the SRK Consulting technical report filed as Exhibit 96.1 to the FY2025 10K, which models the mine and separations plant over a 28 year reserve life and returns a $5.775B after tax NPV at 6%. This yields a base case of $34.00, or 44.3% downside, versus a bull case of $44.00 and a bear case of $25.00, all within a 1-year time horizon.
THE GOVERNMENT UNDERWRITE ALREADY PRICED IN The price floor covers NdPr stockpiled or sold internally, not only sold externally, and MP elects the designation quarterly, so it protects production rather than sales. MP owes the government 30% of prices above $110 only after Northlake reaches full capacity, which cannot occur before 2029. For four years the company held an unhedged long position in NdPr with a free put attached. MP's own risk disclosure states the Department of War must secure additional appropriations to meet its obligations and that no other branch of government has committed to support the arrangement.
MP Materials NYSE: MP
SELL DOWNSIDE -27.86% CURRENT PRICE
$60.99
PRICE TARGET
$44.00
COMPANY
$10.86B
MARKET CAP LTM BETA
2.00
LTM EPS
$0.50
EV/REVENUE
57.8X
EV/EBITDA
NM
52 WEEK HIGH
$100.25
52 WEEK LOW
$44.43
12-MONTH PRICE
$8 BILLION MAGNETICS PREMIUM OUT OF REACH FOR NOW Due to Northlake's capped economics, growth upside is limited. The government buys output at production cost plus $140M of guaranteed annual EBITDA escalating at 2%, and on commercial sales takes the first $30M above that threshold and half of everything beyond. Discounted over
52 WEEK RANGE
TARGET $44.00
NOW $60.99
MP MATERIALS · NYSE: MP · PAGE 2
ten years, that stream is worth roughly $0.85B against more than $1.25B of committed capex. On generous assumptions a plant that size supports a few hundred million of annual EBITDA, not $8B of enterprise value. FY2025 Magnetics revenue of $66.9M came entirely from precursor metal sold to one automotive customer, all recognized from prior-period prepayments, and MP expects no further precursor sales to that customer.
MP 5 YEAR STOCK CHART
RECENT NEWS
MP's expected Q1 FY26 earnings call is early May 2026 MP reported FY2025 on February 26, 2026: revenue $224.4M, net loss $85.9M, adjusted EBITDA $11.4M MP selected a 120 acre site in Northlake, Texas for the 10X magnet facility, its second domestic magnet plant MP signed an NdPr offtake agreement for February 2026 MP settled convertible notes at maturity on April 1, paying $67.5M in cash and issuing 337,741 shares
Source: Yahoo Finance
COMPETITOR STATISTICS from Q1 FY2026
RISK POTENTIAL HEAVY RARE EARTH OPTIONALITY IS UNMODELED The reserve statement excludes dysprosium, terbium, europium, gadolinium and yttrium entirely, and the SRK valuation assigns them no value. MP is commissioning terbium and dysprosium separation during 2026, has committed to build samarium capacity funded by a $150M government loan, and produces a mixed heavy concentrate containing more than 5% dysprosium and terbium, above typical market specification. Those two elements face the tightest expected supply balance of any rare earth over the coming decade. A further 6.8 million short tons of inferred resource grading 5.44% sits inside the current pit and is presently mined as waste. If MP books heavy rare earth volumes into reserves or signs commercial contracts at scale, our asset value is too low.
EV/Rev: 174.0x Revenue: $13.2M
EV/Rev: 5.2x Revenue: $458.4M
GEOPOLITICAL ESCALATION AND POLICY SUPPORT MP's share price has consistently responded more to policy than to results. A renewed Chinese export restriction, a breakdown in trade negotiations, or a further tranche of federal critical minerals funding would likely drive shares higher irrespective of operating performance. An investor short this name is effectively short a policy outcome rather than short a business, and the timing of that outcome is not forecastable. The corollary is that durable improvement in U.S. and China relations represents a meaningful downside to the scarcity premium in the current price.
EV/Rev: Revenue: $403.8M
MP MATERIALS · NYSE: MP · PAGE 3
MAGNET CONTRACT DISCLOSURE Our thesis rests substantially on the absence of disclosed magnet economics. MP has never published a magnet selling price, a contract value for the Apple agreement, or third party magnet revenue of any kind. If the company discloses Independence pricing materially above our assumptions, announces additional uncapped magnet capacity beyond the current 10,000 metric ton plan, or converts current commercial discussions into named long-term contracts, the magnetics premium we describe as unsupported would become at least partially supported and our target would rise. Sources: Bloomberg | Company Reports | Evercore ISI | Google Cloud | Guggenheim Securities | Investing.com | JPMorgan | Reuters | TD Cowen | Unit 42 | Yahoo Finance
06
SECTION 06
Consumer
SECTOR LEAD
Jarret Zundel
CORNELL EQUITY RESEARCH
CONSUMER · SECTOR OUTLOOK
1Q 2026 Recap Jarret Zundel, Sector Lead | April 19, 2026 THE CONSUMER UNDER PRESSURE The first half of 2026 opened well. Bank of America card data showed year-over-year spending growth of 2.6% in January, the strongest pace in nearly two years, accelerating to 3.2% in February on the back of tax refunds and solid wage growth at the top of the income distribution. Refund-driven spending on electronics, travel, and clothing gave every income group a temporary lift. But the picture has since complicated considerably. The war in the Middle East has pushed fuel costs sharply higher. Grocery bills, already up roughly 30% since 2019, keep climbing. A volatile stock market is eroding the wealth effect that has kept higher-income spending elevated, and economists at J.P. Morgan have noted that the feedback loop from equity wealth to consumer spending is stronger today than it was a decade ago, meaning a sustained drawdown would hit harder than historical models predict. The University of Michigan's Survey of Consumers fell to its lowest level on record in April, with respondents citing both high prices and falling asset values. Consumer spending powers about two thirds of US economic output and is not broken, but it is bending.
US CONSUMER CARD SPENDING GROWTH, YEAR-OVER-YEAR
CONSUMER SENTIMENT: PESSIMISTIC, MIXED, OR OPTIMISTIC?
Source: Bank of America Institute
Source: McKinsey & Company
THE K-SHAPE DEEPENS, NARROWS TEMPORARILY, THEN DEEPENS AGAIN
SPENDING GROWTH GAP WIDENS BY INCOME GROUP
After-tax wage growth for higher-income households ran at 4.2% year-overyear in February. Lower-income households saw just 0.6%, the widest gap since Bank of America began tracking this data in 2015. February was also the first month since March 2022 in which lower-income household spending outpaced wage growth, which sounds like good news but is actually a stress signal. The apparent narrowing of the income divergence that month was almost entirely a tax refund timing effect, not a structural improvement. Middle-income households are quietly entering the story too: the spending growth gap between high- and middle-income households hit its widest point in nearly five years in January 2026. Retailers and brands. serving anyone below the top income tier are operating in a harder environment than the early 2026 aggregate numbers suggest.
Source: Bank of America Institute
SECTOR REPORT · CONSUMER · PAGE 2
PEOPLE ARE CUTTING BACK ON THINGS, NOT EXPERIENCES Net spend intent was negative across every discretionary goods category in Q1, consistent with the usual post-holiday slowdown, but home improvement and gardening supplies rose eleven percentage points versus Q4 2025, and domestic flights, hotel stays, and short-term rentals all gained ground. Consumers are pulling back on goods while protecting experiences and investments in the home. Deloitte's ConsumerSignals data shows global food frugality at a three-year low in December, with buying only essentials and reducing waste remaining the most common grocery strategies. Yet 76% of US respondents still made at least one splurge purchase that month, up from 69% the prior year. Consumers have not stopped spending on things that feel worth it. They have just raised the bar considerably, and mid-tier products and experiences without a compelling value story are quietly losing share.
AI IS CHANGING WHERE CONSUMERS DISCOVER PRODUCTS Sixty-eight percent of US respondents used at least one AI tool in the prior three months per McKinsey ConsumerWise, and the real number is likely higher since many consumers interact with AI-powered features without recognizing them as such. Adoption skews heavily by generation: 85% of Gen Z and millennials report using AI tools versus 41% of baby boomers. Among those using AI for shopping, 62% use it to compare options across brands, prices, and reviews, and 55% use it to learn about a product category before buying. The most commercially important finding is what AI has done to information hierarchies: 44% of AI-assisted shoppers now say AI search is their most preferred source of product information, ahead of traditional search engines at 31% and retailer and brand sites at just 9%. Affiliate content currently accounts for 50% of citations in AI-generated search summaries. Brands that want to show up in front of shoppers increasingly need a presence across third-party content ecosystems, not just their own channels.
BALANCE SHEETS ARE HOLDING, BUT THE MARGIN IS THIN Inflation-adjusted deposit balances remain above 2019 levels across income groups, and the share of households paying off their full credit card balance each month has increased versus 2019, suggesting recent spending has mostly been funded by income rather than debt. Bank of America 401(k) data showed average participant balances up significantly over the prior two years through Q4 2025, though the first-quarter equity drawdown will weigh on that figure. The warning signs are at the edges: minimum-only credit card payments have been rising for two years straight, and for roughly one in four lower-income households, rent now exceeds 50% of annual income, up sharply from 20% in 2019. Not a crisis, but very little room for error.
OUTLOOK Tax refunds masked underlying weakness for a few months, and the early 2026 data looked genuinely encouraging. But the structural picture is more complicated. Wage divergence keeps widening, energy costs are rising, the personal savings rate is at its lowest since 2008, and consumer confidence just hit a record low. Vanguard has trimmed its full-year GDP forecast to 2.3%. Heading into H2, the winners will be companies with clear value propositions for middle- and lowerincome consumers, a strong presence in AI-mediated discovery and affiliate content, and the margin discipline to weather softer volumes. Mid-tier players without a clear lane in value or premium are the most exposed.
CONSUMER
Outback May Never Get Back
COMPANY
Kashmir Tai | July 24, 2026 INVESTMENT THESIS The U.S. casual dining market is a mature and low-growth, with sustained pressure on traffic and restaurant-level margins. Especially after the pandemic for almost six years, we still do not see a robust recover from this industry. Bloomin’ Brands is one of the big names chain restaurant that suffered in this case. Even with a new management team and multiple business turnover strategies, BLMN struggles to be competitive among its peers, such as Texas Roadhouse or Cheese Cake Factories. Consequently, this equity research report recommends a SELL for BLMN due to its limited traffic growth, concerning company structure, and current industry favor of healthier life style, and my reasons go as follow.
INDUSTRY OVERVIEW As mentioned above, casual-dining industry has slowly recovered from the pandemic, but it is constrained by value recalibration and external cost headwinds. The “K-economy” is pushing lower-income diners to cut down their visit to casual-dining restaurants, and turning more to grocery or fast foods. In a survey conducted by Goldman Sach’s Investment Research (GIR), they pointed out that 30K annual income population has decreased almost 50% of their overall dining out occasions. This leads to less volume (or in a more professional term, traffic) for casual-dining industry, where the majority of their customers are middle to lower-income households. Aside from the disappointed consumer behavior, there are two other headwinds that targets BLMN hard. First, the inflation and tariff-related cost pressure. To better illustrate, from 2016 to 2026, beef as a major commodity for Outback has increased 82% (unit price). Second, with the GLP-1 adoption and raising health consciousness, consumers are preferring to eat less and healthy. This can be another hit for Outback specifically, as Outback targets heavy meal with high-calories dishes like Blooming Onions.
Bloomin’ Brands NASDAQ: BLMN
SELL DOWNSIDE -5.47% CURRENT PRICE
$7.68
PRICE TARGET
$7.26
COMPANY
$838.2M
MARKET CAP BETA 5Y
1.22
LTM EPS
$0.32
TOTAL REVENUE
$3.98B
EV/EBITDA
8.51X
52 WEEK HIGH
$150.99
52 WEEK LOW
$58.05
12-MONTH PRICE
BUSINESS OVERVIEW BLMN is a Tampa, FL-headquartered casual-dining operator with roughly 1,460 restaurants across 12 countries and 46 U.S. states. BLMN completed the sale of majority ownership of its Brazil operations on December 30, 2024, shifting international exposure further toward a capital-light franchise model; however, 98.2% of revenue in the forward model is U.S.-derived. BLMN has four concepts: Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse & Wine Bar. Outback Steakhouse is by far the largest and most important driver of the business: it comprises the majority of BLMN's total units (558 company-owned domestic locations plus 543 franchised units) and contributes approximately 57% of consolidated revenue.
52 WEEK RANGE
TARGET $7.26
NOW $7.68
BLOOMIN’ BRANDS · NASDAQ: BLMN · PAGE 2
VALUATION: LBO MODELING
RECENT NEWS
From a private equity investor’s perspective, I employed LBO as my primary valuation method. For my modeling, I set the entry metrics as below: - Premium to share price: 39% - Entry EV: $2651.5mm (with $752.6mm debt and $1050.3mm long-term leases) - Minimum Cash to B/S: $100mm - Transaction Expenses: $53mm - Exit date: 12/31/2031
Debt Reduction: BLMN has aggressively prioritized paying down its debt. Outstanding debt fell to $702.8 million from $787.4 million at the end of 2025, successfully lowering its net debt-to-adjusted EBITDA leverage ratio to 2.0x.
I also created a revenue build model, where I set the major drivers as traffic growth and check growth. For the four concepts, I breakdown and projected each year’s openings and closures, to get to the average units. Then, I calculated Comp Sales Growth (%) = Traffic Growth (%) + Average Check Growth (%) + (Traffic Growth (%) * Average Check Growth (%)). Lastly, to get to the final company sales (for each concept), I used Comp Sales Growth (%) * AUV (Average Unit Volume). For franchise sales, I employed 4.6% royalty rates for U.S local and 3.5% royalty rates for international branches. To test my revenue build model’s accuracy, I compared the real total revenue (concepts + franchise) in FY2025 [$3884.23mm] with my predicted FY2025 [$3871.30mm] – the variance as of % of actual is only 0.33%, indicating a rather exact modeling build. Operating driver’s forecast go as follow: - EBITDAR Margin (as of % revenue): 7.3% ~ 8.1% - D&A (as of % revenue): 4.6% ~ 4.8% - Capex (as of % revenue): 4.0% ~ 4.5% - Change in NWC (as of revenue): 2.0% I eventually get to EoP (end of period) cash for 2031E as $200.8mm, and net debt of $1053.3mm (with a 3% interest growth for long-term leases). With a base case of 5.5x EBITDAR (same as entry multiple), 2031E implied TEV is 3018mm; gross cash flow is $1899.5mm; Gross ROI is 1.95x, and Gross IRR is 12.8%. Nevertheless, to make sense of what price target my LBO modeling is targeting, we shall work backward. A hypothetical and successful PE investment is 2.5x ROI with 25% IRR over 5 years, which means that MOIC is 3.05x. Exit Equity Value as of 2031E is 1899.00mm, and so Entry Equity Value is $622mm. With 85.62mm of FDSO (fully diluted shares outstanding), the implied share price (as of 06/17/2026) would be $7.26, which is ~6% downside of the market share price. Since LBO is usually the most conservative valuation method and to give a more comprehensive view, I also did a quick comp with selected peers: JACK, PZZA, SHAK, WEN. What is observed is that BLMN’s stock price is still significantly lower than its competitors (with a 59.1% downside from the average of peers’ share prices, $18.96).
COMPETITOR STATISTICS from Q2 2026
Net Income: $121.9M EV/EBITDA: ~16.5x
Net Income: $131.1M EV/EBITDA: 10.0x
Net Income: $68.4M EV/EBITDA: ~12.7x
Net Income: $404.9M EV/EBITDA: 14.0x
BLOOMIN’ BRANDS · NASDAQ: BLMN · PAGE 3
LIMITED TRAFFIC GROWTH A very simple business calculation for a private equity investor is unit price * volume. What really struck BLMN is its limited traffic growth. It has been negative every year from 2021–2025 (ranging from –1.2% to –6.3%), which indicates that, excluding the pandemic disruption, BLMN lacks organic, consistent traffic to support its business. To prove, Outback has closed 21 underperforming restaurants in FY2025 alone and is planning further lease non-renewals, confirming that management is prioritizing portfolio optimization over growth. Thus, for my modeling, consolidated revenue CAGR is forecast at just ~1.2% (2026E–2031E), only modestly above the historical ~(1.0%)–0.4% trend, and remains constrained by a mature unit footprint with limited room for AUV expansion.
COST AND EXPENSES In November 2025, BLMN proposed a turnaround strategy that mainly (and ONLY) focuses on Outback Steakhouse. BLMN is committed with $75 million from 2026 to 2028, including $50 million in 2026 that is said to be focused on food quality. However, the commodity inflation and labor pressure can threaten restaurant-level recovery, even with the turnaround strategy subsidy. In the LBO model with the GIR projection of inflation of 1.3% to 3.5% over the next five year and ~3% annual labor cost growth, a bull case could only reach to a result of 2.01x ROI and 13.5% ROI. This signifies how BLMN has trouble to cut the cost which is already in thin margin.
BLMN PUBLIC MULTIPLE PERFORMANCE OVERTIME BLMN trades at a persistent EBITDAR multiple discount vs top performers, indicating market undervaluation
UPSIDE RISK & DOWNSIDE BLMN is actively working on its turnover strategy: Q1 2026 results showed total revenue up ~1% year-over-year to $1.06B, restaurant-level margin improving to 14.0%, diluted EPS up to $0.64 from $0.50 a year earlier, and positive comparable sales at Carrabba's and Bonefish Grill. However, this is still very early to say that BLMN has a promising performance in the future because the turnaround strategy has only been executed for not even a year (started Nov 6, 2025). I also ran an upside scenario with 100% turnaround accomplishment and a 6% new unit growth, but it only delivers a 2.19x ROI and a 15.3% IRR, alluding that this is not an attractive equity investment. Another upside is the new CEO, Mike Spanos, is expected to bring extensive executive experience with 25 years at PepsiCo; and as a former CEO of Six Flags. Nevertheless, Spanos lacks a direct, specialized track record in restaurant-level operations; unless the management team really translate its turnaround investment, which is “deliver a remarkable dine-in experience”, it is very hard to cut the (fixed) cost and keeping customers engaged with genuine differentiated menu. Sources: BLMN Company filings and investor materials; S&P Global Market Intelligence; Goldman Sachs Global Investment Research; CapIQ; PitchBook; FactSet; IBISWorld; U.S. Bureau of Labor Statistics; U.S. Department of Agriculture Footnote: I am using EBITDAR rather than EBITDA in BLMN stock report primarily because operating lease is a significant liability, and so in order to provide an apple to apple case, EBITDAR is a measurable comp metric that helps to compare restaurant companies with different leases structures.
CONSUMER
Rhode to Recovery
COMPANY
Amy Zhang | April 28, 2026 EXECUTIVE SUMMARY e.l.f. Beauty, Inc. (NYSE: ELF) is a leading affordable, clean, vegan, and cruelty-free cosmetics and skincare company founded in 2004 and headquartered in Oakland, California. The company operates a portfolio of brands including e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People, Keys Soulcare, and its newest addition, rhode. Products are sold through major national and international retailers as well as directly through e-commerce channels. My BUY recommendation is supported by three core theses: the rhode acquisition as a prestige market bridge, untapped international growth runway, and a battle-tested Gen Z marketing engine that continues to gain market share at the expense of legacy competitors. The stock's 71% decline from its all-time high, combined with resilient fundamentals and a raised FY2026 outlook, presents a compelling risk-adjusted entry point at current prices. As of April 28, 2026, e.l.f. Beauty trades at $62.70 per share with a market capitalization of approximately $3.7 billion. As of March 31st 2026, the Debt to Equity Ratio is 0.72. My price target of $88.00 is derived from a forward PE analysis applied to FY2026 estimated diluted EPS of approximately $3.50– $3.54. Applying a conservative 25x forward PE multiple — appropriate for a high-growth consumer brand with 28 consecutive quarters of categoryleading growth — yields a 12-month price target of $88, representing approximately 40% upside from current levels. This sits below the broader analyst consensus range of $96–$116, reflecting near-term integration uncertainty around the rhode acquisition. The stock's current forward PE of 17.73x is particularly attractive relative to its 10-year average PE of 65.6x, suggesting significant mean-reversion potential as the market re-rates the business.
elf Beauty Inc NYSE: ELF
BUY
UPSIDE +40.35%
CURRENT PRICE
$62.70
PRICE TARGET
$88.00
COMPANY MARKET CAP
$3.7B
BETA
2.39
LTM EPS
$1.77
P/E RATIO
37.45
EV/EBITDA
28.3X
52 WEEK HIGH
$150.99
52 WEEK LOW
$58.05
12-MONTH PRICE
THE RHODE ACQUISITION AS A PRESTIGE BRIDGE e.l.f. has long dominated the mass-market cosmetics space through its value proposition, but the $1 billion acquisition of Hailey Bieber's rhode brand — completed in August 2025 — marks a watershed strategic shift into the aspirational/prestige skincare segment. Critically, rhode carries a 75% gross margin, exceeding e.l.f.'s own 71%, making the deal immediately marginaccretive rather than dilutive. The dual-brand model allows e.l.f. to serve everyday consumers seeking affordability while simultaneously capturing premium spend from aspirational buyers — a structure that builds a powerful competitive moat against single-tier peers like Revlon and Coty. rhode's record-breaking Sephora launches in North America and the UK further validate the brand's ability to thrive in prestige retail environments, a channel historically out of e.l.f.'s reach.
52 WEEK RANGE
NOW $62.70
TARGET $88.00
E.L.F. BEAUTY, INC · NYSE: ELF · PAGE 2
INTERNATIONAL EXPANSION AS AN UNTAPPED GROWTH ENGINE While e.l.f. has established dominant positions in the U.S. mass-market beauty space, its international presence remains nascent — representing a significant whitespace opportunity. The company is actively expanding into Poland, Germany, and the Gulf Cooperation Council countries in Spring 2026, while rhode's successful UK Sephora debut signals strong global brand resonance. As U.S. market penetration matures, international will increasingly become the primary driver of incremental top-line growth. Management's consistent international commentary across recent earnings calls, combined with the cross-border appeal of the rhode brand's socialmedia-native identity, positions e.l.f. to meaningfully scale its global revenue mix over the next 3–5 years — a lever that is not yet fully reflected in current market pricing.
E.L.F. BEAUTY REVENUE AND MARGIN TRENDS (FY2022-FY2025)
RECENT NEWS
Acquired Hailey Bieber’s rhode brand for $1B in Aug 2025, adding a prestige skincare link with 75% gross margins Raised FY2026 net sales growth outlook to 22-23% YoY following strong Q3 results 28 consecutive quarters of categoryleading growth and 190 bps U.S. market share gain in FY2025 International expansion into Poland, Germany, and Gulf countries planned for Spring 2026 Stock down ~71% from all-time high of $218(Jun 2024), presenting potential value entry point COMPETITOR STATISTICS from Q4 2026
Revenue: ~$35B
Source: e.l.f. Beauty SEC Filings (Form 8-K FY2022, FY2023, FY2024, FY2025)
Revenue: ~$1.9B
RHODE INTEGRATION RISK The $1 billion acquisition significantly increased e.l.f.'s long-term debt load to approximately $816.7 million as of December 2025. While the deal is strategically compelling, brand integration carries execution risk — rhode could lose its cult identity within a larger corporate structure, earnout performance criteria could create internal tension, and higher interest costs may weigh on near-term net income. Investors should monitor gross margin trajectory and rhode's standalone revenue contribution in upcoming quarterly filings.
Revenue: ~$5.6B
MACRO VOLATILITY & HIGH BETA With a Beta of 2.39, ELF stock is highly sensitive to broad market movements. As a high-growth consumer discretionary name, e.l.f. may face outsized drawdowns during risk-off environments or recessionary periods, even if its underlying business fundamentals remain intact. The stock's steep decline from $218 to ~$63 illustrates this dynamic clearly, and investors should be prepared for continued volatility in the near term.
Sources: e.l.f. Beauty Investor Relations (Q1-Q4 FY2025, Q1-Q3 FY2026 Press Releases)| Seeking Alpha | Yahoo Finance | Capital IQ | Robinhood
CONSUMER
A Premium Wine Company Positioned for Growth
COMPANY
Kelly Yu | April 19, 2026 Treasury Wine Estates
INVESTMENT THESIS Treasury Wine Estates (TWE) is a global premium wine company with a portfolio of leading brands including Penfolds, 19 Crimes, and Wolf Blass, operating across key markets such as Australia, the United States, and Asia. Following years of headwinds, including China’s tariffs on Australian wine and softer global demand, the company has shifted toward higher-margin luxury offerings, positioning itself to benefit from the ongoing premiumization trend in the wine industry. The recent removal of China tariffs provides a key catalyst for growth, particularly in high-margin Asian markets, while strong brand equity supports pricing power and margin expansion. Although nearterm performance may be impacted by inventory normalization and macroeconomic uncertainty, TWE’s focus on premium wines, geographic diversification, and disciplined cost management supports long-term earnings growth. Overall, TWE is undervalued relative to its long-term potential, with premiumization and Asia-driven demand expected to drive sustained revenue growth and margin expansion.
VALUATION/FINANCIAL MODELING As of 2026, Treasury Wine Estates is trading at approximately $3.97 per share. I conducted a discounted cash flow (DCF) analysis using a WACC of 8.5% and a terminal growth rate of 2.5%, assuming modest revenue growth and margin expansion driven by premiumization and a shift toward highermargin luxury wines. Revenue has remained relatively stable ($1.6–2.0B), with FY2024 earnings impacted by one-time write-downs, while underlying performance remains more stable and operating cash flow is strong ($288M). Under these assumptions, the perpetuity growth method implies a valuation of $5.30 per share, while the EBITDA exit multiple method yields a valuation of $5.50-$ 5.80 per share. Together, these results indicate that TWE is trading at a meaningful discount to intrinsic value, with upside driven by premiumization, margin expansion, and renewed growth in Asia following the removal of China tariffs.
ASX: TWE
BUY
UPSIDE +33.50%
CURRENT PRICE
$3.97
PRICE TARGET
$5.30
COMPANY MARKET CAP BETA
$2.33B 0.89
LTM EPS
-$0.35
P/E RATIO
-8.23X
EV/EBITDA
8.62X
52 WEEK HIGH
$6.60
52 WEEK LOW
$2.40
12-MONTH PRICE
PREMIUMIZATION IN THE WINE INDUSTRY The global wine industry is shifting toward premium and luxury products, with consumers prioritizing quality over volume. While overall demand remains soft, higher-end segments have proven more resilient due to stronger pricing power and margins. Treasury Wine Estates is well-positioned to benefit from this trend through its growing focus on luxury brands such as Penfolds, supporting margin expansion despite volume pressures.
52 WEEK RANGE
NOW $3.97
TARGET $5.30
TREASURY WINE ESTATES · ASX: TWE · PAGE 2
CHINA REOPENING
RECENT NEWS
China has historically been a key high-margin market for Treasury Wine Estates, particularly for its Penfolds brand. The removal of tariffs on Australian wine provides a major catalyst, enabling renewed access to this market. As demand in Asia recovers, TWE is positioned to benefit from improved pricing power and high-margin growth.
Net sales ~2% (recent half); softer global demand, inventory normalization
CHINA DEMAND AND GEOPOLITICAL EXPOSURE Treasury Wine Estates has significant exposure to China, particularly through its high-margin Penfolds brand, which has historically been a key driver of earnings. While the recent removal of tariffs presents a meaningful growth opportunity, demand in China remains highly sensitive to geopolitical relations, regulatory changes, and broader macroeconomic conditions. Any deterioration in trade relations, shifts in government policy, or weakening consumer sentiment could disrupt distribution and reduce demand for imported luxury wines. Given the importance of China to TWE’s premium portfolio, volatility in this market could materially impact revenue growth, margins, and overall earnings.
AGRICULTURAL AND SUPPLY CHAIN RISK TWE’s operations are highly dependent on agricultural conditions, including grape harvest quality, weather variability, and long-term climate trends. Adverse conditions such as droughts, extreme temperatures, or poor harvest yields can reduce supply, increase input costs, and negatively affect product quality. In addition, wine production involves long aging cycles, limiting the company‘s ability to quickly respond to changes in demand. This inflexibility increases the risk of supply-demand imbalances and can lead to higher inventory costs or missed sales opportunities. Together, these factors introduce volatility into both margins and long-term production planning.
EBIT margin ~80 bps YoY; premium mix shift, cost discipline China tariffs removed; Asia demand recovery, high-margin growth driver COMPETITOR STATISTICS from Q4 2026
EV/EBIDTA: 11.5X Revenue: $400M
EV/EBIDTA: 13X Revenue: $9.140M
EV/EBIDTA: 14X Revenue: $1,050M
TREASURY WINE ESTATES 5 YEAR STOCK CHART
CONSUMER DEMAND AND PREMIUMIZATION RISK TWE’s strategy is heavily reliant on premiumization and higher-priced wines. In a weaker macroeconomic environment, consumers may trade down to lower-priced alternatives, pressuring volumes and margins. While premium segments are more resilient, prolonged softness in discretionary spending could limit pricing power and growth.
Source: S&P Capital IQ
CONSUMER
Discounted Prices are Discounted More
COMPANY
Joshua Espinosa | April 19, 2026 Dollar General
INVESTMENT THESIS Dollar General (DG) operates 20,893 small stores across 47 U.S. states, making it the largest small-box discount retailer in America as 80% of Americans live within 5 miles of a store. After a devastating period from 2022 to 2024 of shrinkage, inventory surplus, and margin shrinkage, DG’s stock collapsed from $260 in Sep ‘22 to $65 in Jan ‘25. The return of CEO Todd Vasos in November 2023 marked a turning point with his “Back to Basics” strategy that delivered measurable results: Q4 in store sales grew 4.3%, operating margins expanded 270bps to 5.6%, and FCF surged to $2.3B in 12 months. Despite a 103% rally over the past 52 weeks, DG trades below my DCF value of $161 per share. Sticky inflation, lower-income trade-down, and unmatched rural density provide upside strength. I suggest a strong BUY and $161.00 price target, with 32% shareholder upside.
VALUATION / FINANCIAL MODELING As of April 19, 2026, Dollar General is trading at $126.68 per share. To value the company, I conducted a discounted cash flow analysis using a weighted average cost of capital (WACC) of 8.5% and a terminal growth rate of 2.5%. My free cash flow assumptions are grounded in management’s 2026 guidance of $44.3–$44.5B in revenue and EPS of $7.10–-$7.35, with gradual FCF expansion as shrink normalization and the “Back to Basics” program take hold. Under these assumptions, the perpetuity growth method produces an equity value of approximately $161 per share, while a sensitivity analysis across WACC (7.5%–9.5%) and terminal growth (2.0%–3.0%) yields a fair value range of $128–$228 per share (large range!). Together, these results imply Dollar General is trading at a 35% discount to intrinsic value, signaling upside potential if the company continues to execute on its operational turnaround from 2022.
NYSE: DG
BUY
UPSIDE +27.09%
CURRENT PRICE
$126.68
PRICE TARGET
$161.00
COMPANY
$26.60B
MARKET CAP BETA
0.23
EPS (2025)
$5.11
P/E RATIO
23.7X
EV/EBITDA
9.64X
52 WEEK HIGH
$158.23
52 WEEK LOW
$70.01
12-MONTH PRICE
DOLLAR GENERAL IN THE FACE OF TARIFF Tariffs present a real but manageable risk for Dollar General. Approximately 25–30% of DG’s merchandise is sourced from China and Southeast Asia, concentrated in discretionary categories. CEO Todd Vasos emphasized several structural offsets on the 2025 Q4 call: (1) DG’s consumables-heavy mix (80% of sales) is sourced mainly domestically; (2) the company actively shifts vendor sourcing across countries to minimize exposure; (3) DG’s value positioning benefits in a tariff-driven inflationary environment as consumers trade down. DG’s Q4 results showed 105bps of gross margin expansion
52 WEEK RANGE
TARGET $161.00
NOW $126.68
DOLLAR GENERAL · NYSE: DG · PAGE 2
despite tariff headwinds. 2026 guidance of $44.3–$44.5B revenue and EPS $7.10–$7.35 already incorporates management’s tariff assumptions, making guidance conservative by design.
RECENT NEWS
LEADERSHIP & STRATEGY
Gross margin expanded 105 bps in Q4, driven by improved shrink controls and product mix
Dollar General, under returning CEO Todd Vasos (back since November 2023), is executing a disciplined “Back to Basics” playbook, which entails: (1) simplifying store layouts and reducing storage complexity; (2) aggressive shrink reduction through improved loss prevention — now inflecting positively; (3) expanding the DG Media Network, a high-margin in-store ad platform similar to Walmart Connect; (4) scaling same-day delivery (80bps Q4 comp contribution, 80%+ delivered under one hour); and (5) rolling out 450 new stores + 2,000 remodels in 2026. Vasos led DG through its best growth decade (2015–2022) and was personally recruited back by the board to bring Dollar General back to its previous glory.
DOLLAR TREE GENERAL 5 YEAR STOCK CHART
Q4 net sales increased 5.9% to $10.91B, beating predictions of $10.78B
DG shares are up 103% over the past 52 weeks; Q4 EPS $1.93 beat predictions by 17.6%, driven by Sales +4.3% strongest comp in years COMPETITOR STATISTICS from Q4 2026
EV/EBITDA: 8.5x Revenue: $30.6B
EV/EBITDA: 14.0x Revenue: $21B
Source: Yahoo Finance
EV/EBITDA: 18.0x Revenue: $713B
RISK POTENTIAL TARIFFS AND SUPPLY CHAIN EXPOSURE Dollar General sources approximately 25–30% of merchandise from China and Southeast Asia, primarily in discretionary categories. While DG’s consumables-heavy mix provides meaningful insulation, any sharp tariff escalation on non-food goods could pressure gross margins, like the war with Iran that tanked DG over $30. DG’s price-sensitive customer base limits cost pass-through ability, though its value positioning may actually attract incremental trade-down traffic from full-price retailers.
MARGIN PRESSURE FROM E-COMMERCE AND DISCOUNT COMPETITORS DG’s 2026 guidance incorporates a ~$0.13 EPS drag from the expiration of the Work Opportunity Tax Credit (WOTC) and a higher effective tax rate of ~25%. Additionally, continued investment in store labor, technology, and remodels creates near-term SG&A deleverage risk even as gross margins recover. If revenue growth comes in below the low end of guidance, fixed cost absorption could amplify margin compression more than expected. Sources: Wall Street Journal| Capital IQ | Pitchbook | Yahoo Finance| Morningstar | investors.dollargeneral.com | Seeking Alpha |Stock Analysis | MacroTrends | Benzinga | Alpha Spread
CONSUMER
An EV Uncertainty Pivot
COMPANY
Jacob Rodriguez | May 9, 2026 INVESTMENT THESIS Ford Motor Company is a leading American automaker in the design, manufacture, and sale of vehicles, parts, and services globally. In response to recent mounting pressure from affordable Chinese electric vehicles capturing market share across Europe and Mexico, Ford has redirected its EV strategy toward its Universal EV (UEV) Platform: a cost-focused architecture targeting price-sensitive consumers with competitively priced trucks and SUVs. Simultaneously, Ford is leveraging existing EV manufacturing infrastructure to enter the Battery Energy Storage System (BESS) market, gaining direct exposure to surging AI-driven energy demand. However, there exist meaningful risks, including a softening of U.S. trade protections accelerating Chinese OEM domestic entrance and Ford's BESS ambitions facing stiff competition from entrenched players like Tesla. Nevertheless, given the growth prospects the company currently has, I believe Ford’s is contemporarily undervalued.
VALUATION/FINANCIAL MODELING As of May 9th, 2026, Ford Motor Company is trading at $12.18 per share. I believe this stock is undervalued given Ford’s current competitive positioning and estimate a target price of $13.47, implying a notable upside of 10.6%. To determine this price, I conducted a discounted cash flow analysis using a weighted average cost of capital (WACC) of 7.29% and a terminal growth rate of 3.5%. My Gordon Growth Model yielded an implied share price of $12.93, while my Exit Multiple Model produced an implied share price of $14.00. My current target price was produced by applying equal weight to both models.
THE UNIVERSAL EV PLATFORM PIVOT: After scrapping its First-generation Model E series cars, including the Mustang Mach-Es and F-150 Lightnings, Ford has shifted its focus from maximizing product profitability to prioritizing consumer affordability. Ford and other major OEMs including General Motors and Stellantis have long relied on the hallmark SUV’s and pickup trucks that deliver larger profits per sale compared to their smaller counterparts. As a result, OEMs have offered fewer entry-level models to American consumers and average car prices in the US have steadily approached $50,000. However, as the global automobile markets have been flooded by Chinese autos, such as the $20,000 all-electric Geely EX2 compact and the $32,000 hybrid BYD Song Pro SUV, US manufacturers have been increasingly pressured to find ways to develop affordable alternatives for increasingly price-sensitive consumers
Ford Motor Company NYSE: F
BUY
UPSIDE +10.59%
CURRENT PRICE
$12.18
PRICE TARGET
$13.47
COMPANY
$49.09B
MARKET CAP
0.9
BETA LTM EPS
$1.50
EV/REVENUE
1.03X
EV/EBITDA
13.60X
52 WEEK HIGH
$14.80
52 WEEK LOW
$9.88
12-MONTH PRICE
52 WEEK RANGE
TARGET $13.47
NOW $12.18
FORD MOTOR COMPANY · NYSE: F · PAGE 2
The Universal EV (UEV) platform is Ford’s answer, focusing on lower cost alternatives to its staple best-sellers. Key developments include the $30,000 midsize four-door electric pickup truck with a range 50 miles higher than currently available EV pickups. This shift represents a necessary change in Ford’s competitive strategy for the company as it both better aligns with consumers’ demands and prepares Ford for the possible entrance of Chinese OEMs in the US. As the company absorbs the losses from its Gen 1 Model E series and ramps production of UEV series trucks and SUVs, sales of new offerings are likely to approach F-150 levels, fueled by the dual demand tailwinds of the growing cohort of price-sensitive and environmentally conscious consumers.
RECENT NEWS
Q1 2026 strong EPS beat, ~$0.66 vs $0.19 expected Raised 2026 profit outlook based on $1.3B tariff refund from U.S. Supreme Court Ruling Recall of over 180,000 vehicles due to loose seat-frame bolt, adding to ~13 million vehicles recalled in 2026 YTD COMPETITOR STATISTICS from Q1 2026
BESS MARKET ENTRANCE AND FACTORY REPURPOSING As electrification grows as an increasingly prominent trend in both the automotive sector and homeowner lifestyle alongside continuously growing hyperscaler capex growth fueling new levels of energy demand, one of the inputs that has seen surging demand has been Battery Energy Storage Systems (BESS). BESS systems are large-scale battery systems that are used primarily by two groups: utilities, who store excess grid electricity to smooth transitions and accommodate the varying demand profile increasingly driven by data center customers, and residential customers, who use the batteries to store excess solar power for later use or sell to the grid. The entrance into this new market by Ford provides the company with two beneficial results: exposure to the AI trade and the fast-growing battery market in addition to the trend towards residential energy self-sufficiency among middle- to upper-class consumers seeking to hedge against future energy shocks and volatility. Additionally, it’s important to note that Ford currently has a license to produce CATL-based technology, which is widely deployed in BESS systems globally, allowing the company to produce the batteries domestically and avoid current 50% battery import tariffs and escalating Prohibited Foreign Entity restrictions that disqualify Chinesecontent storage projects from critical IRA tax credits. Finally, further supporting this shift toward BESS production is the compatibility that production of these battery systems have with current facilities that were purposed for the original Gen 1 Model E production cycle, with minimal capex needed to incorporate BESS production into the production line.
RISK POTENTIAL POLICY-BASED PROTECTION FALTERING While Ford’s shift into the lower-priced UEV automobile line is a positive move for the company to expand its product offerings and align itself with changing consumer priorities, the threat from Chinese OEMs still looms at Ford’s doorstep. The company has already lost significant market share in the European market, where companies like BYD and Geely have rapidly cannibalized demand from consumers over the past few years. While Ford has made heavy investments and restructuring efforts to try to counteract this trend, including a $4.8B facility build-out plan and a planned 4,000
EV/EBITDA: 87.21X NTM EBITDA: $16,508M
EV/EBITDA: 7.42X NTM EBITDA: $23,558M
EV/EBITDA: 3.13X NTM EBITDA: $13,530M
EV/EBITDA: 6.41X NTM EBITDA: $47,416M
FORD MOTOR COMPANY · NYSE: F · PAGE 3
European-based job cuts by 2027, Chinese brands have captured roughly 6% of EU automobile sales while Made-in-China vehicles have reached nearly 10% market share in the EU and over 20% in the UK. Furthermore, many of the Chinese OEMs leading this change are developing their own domestic manufacturing operations to avoid significant tariff exposure. Those same companies have seen even greater success in Mexico, where China-made cars accounted for nearly 1 in 5 cars sold in 2025. As these companies gain a continuously stronger foothold in these two critical markets for Ford, the threat of Chinese OEM entry into the US is becoming increasingly real. While there exist strong blockades against this currently, ranging from near 100% tariffs on Chinese EVs to bans on Chinese-developed software connected vehicles and a strong push in Congress for legislation banning Chinese cars exists, all of these barriers could be quickly lowered if trade negotiations between President Trump and President Xi Jinping required the US to give up their protectionist policies. While it may be unlikely, there exists strong precedent for reversals in Chinese-targeted policy by the US, seen in the US’s reversal of its initially enormous tariffs against China once faced with cut-offs of rare earth supply and US soybean purchases by China. With the upcoming summit with President Xi approaching and President Trump previously stating he would be open to Chinese OEMs entering the US provided that they build vehicles domestically, the future of almost every major US-centered OEM faces a key threat as companies race to try to develop their own low-cost alternatives before Chinese companies flood the markets with the affordable vehicles consumers are demanding.
BESS MARKET CONCENTRATION AND SUPPLIER DEPENDENCY Ford’s entrance into the BESS market, while providing it with direct exposure to the surging AI picks-and-shovels trade that has led to enormous success stories in inputs like memory and semiconductors, is faced with multiple headwinds that may limit the company’s ability to become a truly competitive player in the market. The market itself, while growing, is already filled with notable emerging players and long-time incumbents including GM and Tesla, who are continuously building up their production capacity to produce batteries for energy storage. Tesla specifically has a strong relationship base and production scale advantage over Ford with multiple years of experience in the space through providing its Megapack batteries to utilities and Powerwall batteries to residential customers. In addition to this strong competition from incumbents, Ford is severely limited by the fact that around one-third of its UEV platform inputs are sourced from Chinese suppliers, which creates significant tariff exposure and geopolitical risk for Ford compared to Tesla’s vertically integrated model and dominantly domestically sourced products. The combination of unsecure input-supply networks and fierce competition from incumbents is likely to limit the effectiveness of Ford’s penetration efforts into this new business segment and its ability to gain lasting exposure to the AI picks-and-shovels trade.
FORD 5 YEAR STOCK CHART
Source: S&P Capital IQ
CHINESE-BRAND AND CHINESEMADE VEHICLE SHARE OF EU AND UK AUTO MARKET
Source: Rhodium Group
CONSUMER
Don’t Toot Boot It’s Moot
COMPANY
Andy Cho | September, 2026 BOOT IS A GREAT COMPANY BOOT is a unique specialty retail asset that deserves to trade at a premium multiple vs. peers. The company historically served counter-cyclical bluecollar/workwear and western lifestyle end markets, but recent growth has been increasingly driven by western fashion trends. Work boots/apparel have lagged at flat to mid-single-digits growth, while fashion-led categories like women’s denim have grown mid-teens. The moat is scale plus category focus. BOOT is large enough to out-execute mom-and-pops on assortment, pricing, and supply chain, while feeling more authentic than retailers adding western fashion. Market fragmentation also gives BOOT leverage with suppliers. Combined with higher-margin private labeling (+1,000 bps higher margin), BOOT enjoyed ~740 bps merchandise margin expansion over the last 7 years. BOOT also has a favorable pricing setup: suppliers raise prices in August, but BOOT waits until October/January, allowing it to see market reaction before deciding how much to pass through while preserving value and taking share.
Boot Barn Holdings Inc NYSE: BOOT
HOLD CURRENT PRICE
$143.62
PRICE TARGET
$144.90
COMPANY MARKET CAP
$4.79B
FY26 REVENUE
$2.25B
FY26 EPS
$7.35
BULL/BEAR DEBATE The key question is whether BOOT has the same setup as last year: conservative guidance around headwinds (tariffs FY 26; Iran war FY 27) and Q1 27 QTD comps tracking ahead (like Q1 26). In FY 26, BOOT beat-andraised, upticking by 21.7%. Can that happen again? Bulls: Management is being conservative again 1.Hot demand: a) 2 yr May 2026 comp stack at 16.6%; b) QTD at 5% vs 2 – 4% FY guide. To hit 4+% comps, stack needs an average growth of 10.1%+ for rest of the year while QTD Q1 27 stack is tracking ahead of Q1 26 stack. 2.Comps tailwinds: a) work boot turnaround; b) 59 FY25 stores entering second comp year (+500 bps chain average), and EB price hikes were not fully reflected in Q4 26 print. 3.18M IEFA refund or any changes to tariffs are excluded in guidance 4.Sourcing opportunities (highlighted Q1 2026) of 100 – 200 bps with benefits starting in late FY 27 is not priced in. Bears: It’s not the same setup 1.Management explicitly stated top-line guidance has no haircut, unlike last year. 2.QTD comps vs FY guidance spread compressed from 6% in 2026 to 1% in 2027. 3.Management guided that FY 27 comps will be driven by ticket (2% - 3%) 4.Margin pressured by new stores opening that are larger and plus two new flagship builds leverage hurdle increased 1.5% to 2% for SG&A and 7% to 10% for BOC.
ENTERPRISE VALUE
$5.42B
DILUTED SHARES
30.72M
52 WEEK HIGH
$210.25
52 WEEK LOW
$133.18
12-MONTH PRICE
52 WEEK RANGE
NOW $143.62
TARGET $144.90
BOOT BARN HOLDING INC · NYSE: BOOT · PAGE 2
Currently, bulls and bears are balanced. Assuming a 19x forward P/E multiple, the street pricing $8.46 EPS, the midpoint management guidance.
MANAGEMENT GUIDANCE FY27
INVESTMENT THESIS Source of funds. Short 1% of book. Stock trades up on earnings raises, not the beat. Upside is limited due to tough comps and limited haircut on guidance. Transcripts imply FY27 comps are mostly pricing, which the market has not fully recognized. Numbers can meet guide, but price-led comps likely signal the end of the fashion-led volume cycle. Multiple compression drives ~8% downside over six months.
OPPORTUNITY: REASON BEHIND RECENT DOWNTICK
The stock has sold off slightly as management guided ticket-driven comp growth for 27.
VARIANT VIEW: MULTIPLE COMPRESSION
The stock continues to trade at a 19x P/E multiple despite pricing a fashion headwind. While FY 27 numbers will meet expectations, the multiple will compress, driving downside. Management continues to argue that FY26 comp growth was driven by durable TAM expansion rather than a fashion trend. The FY27 guidance contradicts this claim. Guidance is increasingly pricing-led, product concentration is moving toward the top 3–4% of SKUs, and store designs increasingly resemble fashion retailers like American Eagle. In the coming earnings cycle, the market will recognize that the FY26 growth was driven by a cycle. With price-driven comps marking an end of that cycle, BOOT should derate back toward its pre-fashion-boom FY23–FY24 multiple of ~14x P/E by FY28. FY27 price-taking creates a headwind to FY28, as the outsized tariff-driven hikes lap by Q4 2027. Further price-taking is also constrained because management is hesitant to raise prices on the ~1/3 of exclusive brand products sitting at psychologically important price points, such as $199.99. Without this pricing, FY28 comps would likely need to be transaction-driven and could normalize to the 1–2% range.
KEY METRICS/CATALYSTS Stock trades on:
1. June stack y/y growth; 2. Earnings prints; 3. Credit card data; 4. Website engagement data.
BOOT BARN HOLDING INC · NYSE: BOOT · PAGE 3
MANAGEMENT VIEW AND QUESTIONS Based on analyst Q&A, management appears well regarded by the Street. Limited management risk. Q1: QTD Q1 27 is running +5% on roughly +3% ticket and +1% transactions for May 2026. Now that you're through May and June. Is the 0%–1% transaction / 2%–4% ticket full-year split the right way to think about FY 27 comps? Q2: How is work boots business doing? Can you split performance between third-party brands and private label / “exclusive brands”? Are we still tracking a 200–300 bps decline in private label penetration, and how should we think about the gross margin trade-off? Q3: Are the two new store formats something you expect to open more broadly? From an efficiency perspective, what happens to store productivity? Should investors expect a drag from different sizes, or is the new format designed to preserve/improve productivity?
RISK 1. Western fashion trend risk. The short could get its head handed to it if western fashion continues to trend on Instagram/TikTok. Since most consumers do not already own western boots, a fashion-driven adoption cycle could keep comp momentum elevated longer than expected. A decent comp is Chili’s Triple Dipper. BOOT is working towards social virality, given the company is sponsoring a record number of events and has been more active in performance marketing on TikTok and Meta. 2. E-commerce / brand spinout risk. BOOT has spun out several ecommerce brands to have their own websites like Cody James. If these brands gain traction individually, they could drive incremental traffic back to Boot Barn and support the broader customer acquisition story. Blue-collar demand boom from AI Datacenters. Data center constru3. ction and broader industrial activity could create incremental demand for work boots, supporting comps even if western fashion fades.
MITIGANTS 1. No real mitigant. If it happens, it happens. Best mitigant would be to build a social-media monitoring bot using Claude / vibe coding to scrape BOOT-related product mentions and sentiment, then use that as an early signal to unwind the short 2. E-commerce data is not confirming the bull case yet. Current Q1 FY27 QTD e-commerce appears to be tracking well below management’s 14% full-year guidance, closer to ~5%, which is comforting for the short. Management claimed that’s like an indicator for demand. People go online first then come to store. 3. Workwear risk appears limited for now. Management explicitly said in Q3 FY26 that they did not see a meaningful change in the blue-collar workforce, which limits the risk that work boot demand is suddenly inflecting.
Sources: Company IR
2026-2027
Incoming Executive Board The selected incoming team behind the future of Cornell Equity Research; be excited for what is yet to come!
Co-President
Co-President
Lindsey Price
Konrad Hartung
Executive Vice President
Vice President of Education
Vice President of Publishing
lhp48@cornell.edu qt56@cornell.edu
kfh37@cornell.edu qt56@cornell.edu
Kashmir Tai
Karen Zheng
Cecilia Liu
qt56@cornell.edu
kz374@cornell.edu
sl3458@cornell.edu
Vice President of Recruitment
Vice President of Public Relations
Vice President of Research
Vice President of Prof. Development
Vice President of Prof. Development
Jacob Rodriguez
Howie Wang
Dylan Wong
Vivaan Shah
Justin Kaplowitz
jer355@cornell.edu
hw792@cornell.edu
ddw82@cornell.edu
vss33@cornell.edu
jjk355@cornell.edu
2026-2027
Taking over in the fall Vice President of Finance
Vice President of Internal Affairs
WEB
TJ Malone
Amy Zhang
@cornellequityresearch
cornellequityresearch.com
tom27@cornell.edu
yz3344@cornell.edu