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1 Small-Cap Research February 25, 2015 Jason Napodano, CFA scr.zacks.com 10 S. Riverside Plaza, Chicago, IL Cipher Pharmaceuticals Inc. (CPHR-NASDAQ) CPHR: Solid Execution In 2014, Another Strong Year Expected In 2015 Current Recommendation Buy Prior Recommendation Date of Last Change 01/03/2012 Current Price (02/25/15) $13.08 Target Price $16.00 UPDATE Cipher executed well in Revenues grew by 20% and cash flow on an operating basis grew by 264% to $27.3 million. With the stock now listed on the NASDAQ, we believe more investors will continue to look at the story as a long-term emerging player in the Canadian specialty pharmaceutical industry. For 2015, we model $0.80 in EPS. The stock is currently trading at 16x our projected 2015 estimate. We believe fair-value is 20x our estimate, similar to the specialty pharma industry average. As such, our target is $16 per share on the shares. SUMMARY DATA 52-Week High $ Week Low $12.59 One-Year Return (%) Beta Average Daily Volume (sh) 4,497 Shares Outstanding (mil) 26 Market Capitalization ($mil) $326 Short Interest Ratio (days) 5.96 Institutional Ownership (%) 24 Insider Ownership (%) 15 Annual Cash Dividend $0.00 Dividend Yield (%) Yr. Historical Growth Rates Sales (%) 106 Earnings Per Share (%) 128 Dividend (%) P/E using TTM EPS P/E using 2015 Estimate 16.1 P/E using 2016 Estimate 14.5 Risk Level Type of Stock Industry ZACKS ESTIMATES Average, Small-Value Med-Biomed/Gene Revenue (millions of CAD) Q1 Q2 Q3 Q4 Year (Mar) (Jun) (Sep) (Dec) (Dec) A 8.7 A 7.2 A 8.5 A 32.3 A E 8.9 E 8.3 E 9.0 E 34.7 E E E Earnings per Share (EPS is operating earnings) Q1 Q2 Q3 Q4 Year (Mar) (Jun) (Sep) (Dec) (Dec) 2014 $0.15 A $0.18 A $0.34 A $0.14 A $0.82 A 2015 $0.20 E $0.22 E $0.19 E $0.20 E $0.80 E 2016 $0.89 E 2017 $0.66 E Copyright 2015, Zacks Investment Research. All Rights Reserved.

2 WHAT S NEW Another Solid Quarter For Cipher On February 25, 2014, Cipher Pharmaceuticals (CPHR) reported financial results for the fourth quarter and full year ended December 31, Total revenues in the quarter were $8.5 million, down 33% from the fourth quarter 2013; however, we note the fourth quarter 2013 included a one-time $5.3 million sales-related milestone payment recorded as revenue on Absorica from U.S. commercial partner, Ranbaxy. Backing out this one-time milestone payment, revenues from continuing operations at Cipheractually increased 18% year-over-year. For the full year 2014, revenues totaled $32.3 million, up 20% from 2013 levels. This 20% growth included the aforementioned $5.3 million milestone payment in the fourth quarter of Backing out this milestone payment, revenues were up 49% in Revenues in the fourth quarter were driven by $5.9 million in royalties of Absorica (CIP-isotretinoin) from U.S. commercial partner Ranbaxy, along with $1.5 million in revenues associated with Lipofen (CIP-fenofibrate) and $0.4 million from ConZip/Durela (CIP-tramadol). Cipher also recorded $0.7 million in product sales relating to sales of Epuris (CIP-isotretinoin) in Canada. We discuss in greater detail below each key revenue driver for the company. For the full year, Absorica revenue totaled $22.5 million, up 6% from 2013 levels. Absorica revenues included both royalties on product sales, amortization of licensing fees, and milestone payments. Based purely on product royalties, 2014 levels were up 46% over Operating expenses in the quarter were in-line with expectations. The company has been able to keep overhead and R&D costs low even while the top-line dramatically increases. The company has been expanding its commercial operations in Canada and executing on its business plan well over the past year. For example, Cipher hired 6 full-time representatives and 1 part-time representative in 2013 to promote Epirus in Canada. We expect further expansion of this staff to the mid-teens level (guidance is 16) in Net income in the fourth quarter totaled $3.6 million, or $0.14 per share. Net income included $1.1 million of taxes recorded in the fourth quarter. As of December 31, 2014, the company still has a deferred tax balance of $6.9 million and $6.0 million in unrecognized deferred income tax assets. Cipher has approximately $12.9 million in noncapital loss carry forward as of year-end For the full year 2014, net income totaled $20.7 million, or $0.82 per share. Cipher generated $27.3 million in cash from operating activities in This was a substantial increase from the $7.5 million of cash flow generation from operating activities in The cash position as of December 31, 2014 was $52.6 million. Product Updates Absorica Total net Absorica revenues in the fourth quarter 2014 were $5.9 million, comprised of $0.6 million in amortization of upfront licensing fee and $5.3 million in royalties on U.S. sales at Ranbaxy. We note that Cipher receives a midteens royalty (we believe ~15%) on U.S. sales of Absorica at Ranbaxy, but then shares that royalty with manufacturing partner Galephar 50/50. Cipher collects a mark-up on transfer to Ranbaxy (we believe ~1.5%). Thus, we believe Absorica sales in the fourth quarter equated to roughly $58 million. This was an impressive snap-back from the third quarter when sales looked to only be around $47 million. We note Absorica use is primarily in teenagers who often take a holiday from the drug during the summer months. Full year 2014 Absorica revenues were $22.5 million, up 6% from 2013 levels. Only as noted above, 2013 included a one-time $5.3 million sales-related milestone payment in the fourth quarter Backing out this milestone payment, Absorica revenues were up 42%. Backing out the amortization of licensing fees, Absorica royalties were up 46%. Ranbaxy has 50 sales representatives promoting Absorica to roughly 3,500 prescribing dermatologists in the U.S. Cipher reported that Absorica held roughly ~20% prescription market share at the end of December Besides the strong market share gains, the total isotretinoin market continues to grow. Prescriptions grew by 4% in The total isotretinoin market in the U.S. is approximately $630 million. This includes the branded generic drugs. We note that Absorica costs around $800 per month compared to Mylan s Amnesteem and Teva s Claravis that cost around $500 per month. Zacks Investment Research Page 2 scr.zacks.com

3 We see Absorica as a differentiated product, promoted by a highly motivated and focused sales force, into a nicely growing market. The trend should continue into Based on existing trends, we estimate the total isotretinoin market in the U.S. is around 1.1 million prescriptions per year. When equated into Absorica (branded) price, this is roughly $1.0 billion in total sales. Ranbaxy s ~20% market share as of December 2014 equates to a ~$240 million annualized run rate. We are expecting gross sales at Ranbaxy will increase by 10-12% in As such, we expect Cipher s total Absorica revenues for 2015 to be $23.7 million. The only key risk for investors to be aware of is potential generic alternatives to Absorica. In September 2013, Ranbaxy received a Paragraph IV Certification Notice of filing from Watson Labs of an Abbreviated New Drug Application (ANDA) to the FDA for a generic version of Absorica. Ranbaxy and Cipher intend to vigorously defend Absorica's intellectual property rights and pursue all available legal and regulatory pathways in defense of the product. The Markman (pre-trial) hearing is scheduled for early April We remind investors that Absorica is currently protected by two issued patents listed in the FDA's Orange Book that expire in September A third patent was issued by the U.S. Patent and Trademark Office in February 2015 and should be listed in the FDA s Orange Book soon. Hatch-Waxman exclusivity on Absorica protects the product until April This would be the earliest a potential generic could come to market in the U.S. Over the summer of 2014, Cipher was successful in expanding the CIP-isotretinoin licenses outside the U.S. with two recent agreements: In June 2014, Cipher announced it had entered into a definitive distribution and supply agreement with Laboratorios Andr maco S.A. under which Cipher has granted Andr maco the exclusive right to market, sell and distribute CIP-isotretinoin in Chile. Andr maco already sells a generic isotretinoin product in Chile called Lisacne, along with other dermatology products Fucidin and Daivonex. The company will replace Lisacne with Cipher s formulation and call it Lisacne-CIP, once approved. We estimate the generic isotretinoin market in Chile is around $10 million in size and expect Lisacne-CIP will be on the market by the middle of In July 2014, Cipher entered into a definitive distribution and supply agreement with Ranbaxy under which Cipher has granted Ranbaxy the exclusive right to market, sell, and distribute CIP-isotretinoin capsules in Brazil. This agreement extends the current relationship with Ranbaxy, which markets and distributes CIPisotretinoin as Absorica in the U.S. Ranbaxy plans to promote the product through a brand dermatology division in Brazil. We estimate the size of the Brazilian isotretinoin market at around $50 million. Cipher's CIPisotretinoin formulation is expected to be a flagship product in Ranbaxy's dermatology franchise in Brazil, once approved. Cipher believes Ranbaxy will be in position to launch CIP-isotretinoin in Brazil in the first half of Under the terms of the agreement with Ranbaxy, Cipher will receive an upfront payment and is eligible for additional pre-commercial milestone payments. Ranbaxy is responsible for all regulatory related activities. We are hoping to see these agreements start contributing revenues in the next few quarters. Zacks Investment Research Page 3 scr.zacks.com

4 Epuris Sales of Epuris totaled $0.719 million in the fourth quarter 2014, up from the $0.512 million reported in the third quarter Epuris sales for the full year 2014 totaled $2.069 million. Prescription market share at the end of the year was 15.5% and the trajectory is strong (see graph below). The overall Canadian isotretinoin market was $16.4 million in total sales in 2014, but similar to the U.S., Epuris sells at a premium to the branded generics. Epuris gross margin has steadily improved throughout the year. It was 70.1% in the second quarter, 73.6% in the third quarter, and 75.1% in the fourth quarter. We remind investors that Cipher launched Epuris on its own in June The company hired 6 full time reps and 1 part-time rep to promote the product. Cipher also hired Joan Chypyha as Vice President of Marketing and Sales in early Ms. Chypyha heads up the company s commercial operations in Canada, and manages the recently created in-house sales force contracted for the Epuris launch. We note that Ms. Chypyha seems uniquely qualified for this role, having spent more than 25 years in the pharmaceutical industry with an emphasis on marketing, sales and business development in the dermatology area. We note her previous role was for 16 years with Hoffman-La Roche, escalating to Business Unit Director for the Dermatology franchise where she was responsible for the management of a specialty sales force that promoted Accutane, among other brands. Several private insurers have already picked up coverage of Epuris and Cipher has submitted dossiers to each province in Canada for public reimbursement. We note that Saskatchewan, Ontario, Manitoba, and Nova Scotia are all online. Applications are pending in Quebec, British Columbia, and Alberta. Provincial insurance accounts for 16% of the isotretinoin market. Private insurance, for which Cipher management believes it has around 70% coverage, accounts for the remaining prescriptions, but private coverage often follows provincial lead in key markets like Quebec. Lipofen Net Lipofen revenue in the fourth quarter 2014 was $1.5 million, surprisingly above our forecast for $1.0 million thanks to continued solid growth of the authorized generic product. As a reminder, in the second quarter 2014 net Lipofen revenues totaled $1.9 million thanks to inventory stocking at wholesalers. Lipofen had an excellent 2014 thanks to the authorized generic. The $5.6 million in total revenues was up 65% from 2013 levels. As noted, in the second quarter Cipher and manufacturing partner Galephar decided to launch an authorized generic formulation of Lipofen ahead of the patent expiration in January The authorized generic, priced at around 80% of branded Lipofen, now has around 45% market share as of December 2014, up from 15% market share at June 30, Going forward, we expect the authorized generic to dominate the market by the end of Cipher gets slightly better economics on the authorized generic vs. the branded Lipofen product, so we are raising our expectations for total Lipofen + authorized generic revenues in We now model $4.9 million. Zacks Investment Research Page 4 scr.zacks.com

5 ConZip / Durela Net revenues from ConZip / Durela in the fourth quarter 2014 totaled only $0.4 million. This was a decline from the $0.8 million in the third quarter and a disappointing snap-back from what looked like progress in both the U.S. and Canada earlier in the year. However, we note that thanks to U.S. DEA Scheduling changes for tramadol (from Schedule III to IV), commercial partners increased product reserves in the fourth quarter. Actual end user sales were likely significantly higher than the $0.4 million in revenue to Cipher would seem to suggest. Nevertheless, the contribution from ConZip/Durela remains small. We think the potential is there to increase revenues from both products in 2015, thanks to a renewed effort by Vertical Pharmaceuticals Inc. in the U.S. and solid growth of Durela in the fourth quarter in Canada (+18%), but we still only model $3.0 million in total contribution for all of This is 43% growth over the $2.1 million reported in One area we may see some new growth from the CIP-tramadol-ER franchise is in Latin America. In late April 2013, Cipher entered into an exclusive distribution and supply agreement with Tecnofarma International Ltd. for the right to market and distribute CIP-tramadol-ER in 18 Latin American countries, including Brazil and Mexico. Under the terms of the agreement, Cipher received an upfront payment and is eligible for additional milestones based upon regulatory approval in Brazil and Mexico. Cipher will supply product to Tecnofarma at a fixed-transfer price. Cipher and Tecnofarma are working towards regulatory filings in these 18 countries. Management tells us that some of the small countries, ones that work out of the U.S. FDA or Canadian regulatory authority, may see some approvals in 2015 from larger countries like Brazil. We do not model meaningful revenues from CIP-tramadol-ER outside the U.S. or Canada, so if Tecnofarma can begin to generate revenues and start paying royalties to Cipher in 2014 and 2015, it would represent upside to our model. The Pipeline Beteflam Patch... On February 12, 2015, Cipher announced that Health Canada has accepted for review the new drug submission (NDS) for Beteflam Patch (previously referred to as Betesil Patch). The actual application was filed on December 15, As a reminder, Cipher licensed the Canadian rights to the Beteflam Patch in 2012 from Swiss-based Institut Biochimique SA ("IBSA"). IBSA owns the U.S. rights to the product. Acceptance for review by Health Canada resulted in a CDN$150,000 milestone payment from Cipher to IBSA. Beteflam Patch is a novel, patent-protected, self-adhesive medicated plaster containing 0.1% betamethasone valerate, for the treatment of inflammatory skin conditions such as chronic plaque psoriasis (CPP). The efficacy and safety of the product has been established in two successful Phase 3 trials and one successful Phase 4 trial conducted by IBSA. IBSA recently published positive results from a large non-inferiority study, which compared the product to Dovobet (betamethasone plus calcipotriol), a commonly prescribed combination product containing a corticosteroid and a vitamin D analogue. Topical corticosteroids remain the primary treatment for steroid-responsive inflammatory skin diseases, including mild to moderate CPP. Occlusion with plastic film dressings is a widely accepted procedure to enhance their efficacy, especially in the treatment of psoriasis. The Beteflam Patch is applied once-daily to the affected region and may be cut to fit the particular size and shape of the psoriatic lesion thereby reducing potential contact of the steroid with healthy areas of skin. The occlusive format of the Beteflam Patch is designed to provide a consistent distribution, delivery and absorption of the active ingredient and enhances the potency of the corticosteroid. The patch also helps to moisturize the skin, which accelerates healing and provides a protective barrier that reduces local trauma to the lesion due to scratching and prevents transfer of fluids from the lesion onto clothing. Beteflam patch will be the first topical betamethasone patch on the market in Canada once approved. If approved in late 2015, we think the Beteflam Patch is an excellent complement dermatology product for Cipher s contract sales force to co-promote along with Epuris. We think Cipher can achieve breakeven Canadian operations based on the launch of Epuris alone by the end of This would be sales in the area of $3 million. Adding one or two more dermatology products to the portfolio, like Beteflam Patch, will help improve the overall efficiency and profitability of Cipher s Canadian operations. We think Beteflam Patch has potential peak sales in the $25 million range. The prescriber overall with Epuris looks fantastic, likely over 70%. We expect a decision from Health Canada in the fourth quarter Zacks Investment Research Page 5 scr.zacks.com

6 Ozenoxacin... In January 2015, Cipher licensed the Canadian rights to ozenoxacin, a topical antibiotic for the treatment of adult and pediatric impetigo, from privately-held Ferrer of Spain. Ferrer obtained exclusive worldwide rights (except China, Japan, Korea and Taiwan) to ozenoxacin from Toyama. Ferrer licensed the U.S. rights to Medimetriks in Under the terms of the agreement, Ferrer will receive an upfront payment and is eligible for development milestones and revenues from product sales in Canada. Ferrer will manufacture ozenoxacin and deliver the finished product to Cipher. The product is being formulated as a 1% topical cream, and is the subject of a number of granted and pending patent applications. Ozenoxacin is a next-generation non-fluorinated quinolone being developed to combat resistance of certain bacteria to earlier-generation quinolone and fluoroquinolone antibiotics such as moxifloxacin, ciprofloxacin, and levofloxacin. Quinolones and fluoroquinolone are generally broad-spectrum antibiotics active against both gram-negative and gram-positive infections. Ozenoxacin is designed to be used twice daily for five days compared to three-times daily application for 7 to 10 days like most competitors. The drug also shows no light sensitivity, unlike other currently available quinolone products. This would be a big advantage for the drug, especially in this topical formulation for an indication such as impetigo. Pre-clinical and clinical data on the use of ozenoxacin demonstrates excellent antibacterial activity against methicillin-resistant Staphylococcus aureus (MRSA) strains and clinical isolates of organisms with emerging resistance to quinolones and other topical antibiotics. Impetigo is a very common and highly contagious bacterial skin infection. Although it can affect anyone, it is most often found in preschool-aged children. The condition usually manifests itself as blisters or sores on the face, neck, hands, and trunk. Scratching may spread the lesions to other parts of the body and the infection is transmitted between individuals by direct contact with lesions, with nasal carriers or sharing of towels, etc. There are two types of impetigo: bullous, which causes large, painless, fluid-filled blisters and non-bullous (70%), which is more contagious and causes sores that quickly rupture to leave a yellow-brown crust. Both the bullous and non-bullous forms of impetigo are primarily caused by Staphylococcus aureus, with Streptococcus pyogenes also commonly involved in the non-bullous form. In June 2013, Ferrer successfully completed a Phase 3 clinical trial of ozenoxacin in adult and pediatric patients aged two years and older with impetigo. The study demonstrated the superiority of ozenoxacin 1% cream versus a placebo, applied topically twice daily for five days, on both the clinical and bacteriological endpoints by end of therapy visit (day 6-7). Ozenoxacin 1% cream demonstrated a superior bacteriological cure compared to placebo as early as visit two (day 3-4). The trial also demonstrated that ozenoxacin 1% cream was safe and very well tolerated in the adult and pediatric population, which confirms the results of an absorption, tolerance and safety study in juveniles aged two months and above announced previously. The trial, conducted at 27 centers in the U.S., South Africa, Germany, Romania and Ukraine, involved 465 adult and pediatric patients aged two years and older with a clinical diagnosis of bullous or non-bullous impetigo. Ferrer commenced a second Phase 3 trial with ozenoxacin in June The multicenter, randomized, doubleblinded, clinical study is comparing ozenoxacin 1% cream versus placebo in 412 adult and pediatric patients aged two months and older with a clinical diagnosis of non-bullous or bullous impetigo. The trial is being conducted at 36 centers in the U.S., South Africa, Germany, Spain, Romania, Russia and Puerto Rico. Ferrer anticipates that this second Phase 3 study will be completed by the end of March We expect data in May or June We believe it will take Cipher several months to prepare and file the NDS to Health Canada likely to take place in the fourth quarter Once approved, we believe ozenoxacin has peak sales potential in the $10 million range. We expect that Cipher will need to expand its current dermatology-focused sales force to include pediatrics and infectious disease doctors to truly take full advantage of the ozenoxacin market opportunity, but we suspect the initial prescriber overlap to Epuris and Beteflam Patch is close to 50%. Preclinical Oncology In January 2015, Cipher acquired the assets of Melanovus Oncology Inc., a Pennsylvania-based life sciences company for $0.5 million. The assets include seven pre-clinical compounds for the treatment of melanoma and other cancers licenses from the Penn State Research Foundation. The compounds originate from work done by Dr. Gavin Robertson, professor of pharmacology, pathology, dermatology and surgery at Penn State University, and director of the Penn State Hershey Melanoma Center. The lead product candidate, Nanolipolee-007, is a liposomal formulation of a plant-derived compound that is a first-in-class cholesterol-transport inhibitor which has demonstrated anti-proliferative activity against certain melanoma cell lines (including B-raf resistant strains) in vitro as well as in early in vivo mouse studies. Zacks Investment Research Page 6 scr.zacks.com

7 Cipher will pursue pre-clinical studies with the goal of filing an IND with the U.S. FDA and Health Canada, among other health authorities in 2016 or The plan for the development of the remaining compounds in the portfolio has not yet been established. Valuation & Recommendation Cipher executed well in Revenues grew by 20% and cash flow on an operating basis grew by 264% to $27.3 million. With the stock now listed on the NASDAQ, we believe more investors will continue to look at the story as a long-term emerging player in the Canadian specialty pharmaceutical industry. The market capitalization is roughly $335 million. Based on our projected 2015 revenues of $34.6 million, things look expensive at 9.7x sales. The specialty pharmaceutical industry average is more around 5.5x projected forward twelve-month sales. We believe Cipher s low cost structure and strong cash flow generating business model contribute to the high relative valuation. Keep in mind, Cipher generated $27.6 million in operating cash flow off $32.3 million in revenues. We know no other company in the industry that generates cash at 85% of revenues! Nevertheless, as the story shifts focus to Cipher s Canadian dermatology efforts, we believe there is meaningfully more upside left in the shares. The in-licensing of ozenoxacin looks like a nice fit for the model and the opportunity to leverage the existing sales force with a new product as early as next year with Beteflam Patch should keep profit margins well above industry average. For 2015, we project net income at $20.5 million. We note that this will be a flat from 2014 even though we expect an uptick in revenues. The main reason is that we expect operating expenses to increase in We expect slightly more sales and marketing spend as Cipher increases the size of their Canadian sales force from 7 to 16 representatives and we expect slightly more R&D expense as the company conducts preclinical work on nanolipolee-007. We also suspect that filing the NDS on ozenoxacin in 2015 will contribute to some added costs later in the year. However, spending on increasing the sales force and on bringing new drugs to market to things we think will payoff in the future. For 2015, we model $0.80 in EPS. The stock is currently trading at 16x our projected 2015 estimate. We believe fair-value is 20x our estimate, similar to the specialty pharma industry average. As such, our target is $16 per share on the shares. Cipher Pharmaceuticals Inc. Income Statement Zacks Investment Research Page 7 scr.zacks.com

8 HISTORICAL ZACKS RECOMMENDATIONS Initiation of Coverage = $0.64 / share Zacks Investment Research Page 8 scr.zacks.com

9 DISCLOSURES The following disclosures relate to relationships between Zacks Small-Cap Research ( Zacks SCR ), a division of Zacks Investment Research ( ZIR ), and the issuers covered by the Zacks SCR Analysts in the Small-Cap Universe. ANALYST DISCLOSURES I, Jason Napodano, CFA, CFA, hereby certify that the view expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report. I believe the information used for the creation of this report has been obtained from sources I considered to be reliable, but I can neither guarantee nor represent the completeness or accuracy of the information herewith. Such information and the opinions expressed are subject to change without notice. INVESMENT BANKING, REFERRALS, AND FEES FOR SERVICE Zacks SCR does not provide nor has received compensation for investment banking services on the securities covered in this report. Zacks SCR does not expect to receive compensation for investment banking services on the Small-Cap Universe. Zacks SCR may seek to provide referrals for a fee to investment banks. Zacks & Co., a separate legal entity from ZIR, is, among others, one of these investment banks. Referrals may include securities and issuers noted in this report. Zacks & Co. may have paid referral fees to Zacks SCR related to some of the securities and issuers noted in this report. From time to time, Zacks SCR pays investment banks, including Zacks & Co., a referral fee for research coverage. Zacks SCR has received compensation for non-investment banking services on the Small-Cap Universe, and expects to receive additional compensation for non-investment banking services on the Small-Cap Universe, paid by issuers of securities covered by Zacks SCR Analysts. Non-investment banking services include investor relations services and software, financial database analysis, advertising services, brokerage services, advisory services, equity research, investment management, non-deal road shows, and attendance fees for conferences sponsored or co-sponsored by Zacks SCR. The fees for these services vary on a per client basis and are subject to the number of services contracted. Fees typically range between ten thousand and fifty thousand USD per annum. POLICY DISCLOSURES Zacks SCR Analysts are restricted from holding or trading securities placed on the ZIR, SCR, or Zacks & Co. restricted list, which may include issuers in the Small-Cap Universe. ZIR and Zacks SCR do not make a market in any security nor do they act as dealers in securities. Each Zacks SCR Analyst has full discretion on the rating and price target based on his or her own due diligence. Analysts are paid in part based on the overall profitability of Zacks SCR. Such profitability is derived from a variety of sources and includes payments received from issuers of securities covered by Zacks SCR for services described above. No part of analyst compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in any report or article. ADDITIONAL INFORMATION Additional information is available upon request. Zacks SCR reports are based on data obtained from sources we believe to be reliable, but are not guaranteed as to be accurate nor do we purport to be complete. Because of individual objectives, this report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed by Zacks SCR Analysts are subject to change without notice. Reports are not to be construed as an offer or solicitation of an offer to buy or sell the securities herein mentioned. ZACKS RATING & RECOMMENDATION ZIR uses the following rating system for the 1126 companies whose securities it covers, including securities covered by Zacks SCR: Buy/Outperform: The analyst expects that the subject company will outperform the broader U.S. equity market over the next one to two quarters. Hold/Neutral: The analyst expects that the company will perform in line with the broader U.S. equity market over the next one to two quarters. Sell/Underperform: The analyst expects the company will underperform the broader U.S. Equity market over the next one to two quarters. The current distribution is as follows: Buy/Outperform- 15.3%, Hold/Neutral- 75.8%, Sell/Underperform business day immediately prior to this publication. 8.1%. Data is as of midnight on the Zacks Investment Research Page 9 scr.zacks.com