Analyst's Notes. Argus Recommendations

Transcription

1 Report created Oct 30, 2017 Page 1 OF 6 Intel supplies the computing industry with the chips, boards, systems and software that are the primary components of computer architecture. Intel has also expanded through acquisitions, although these businesses are now being reviewed and in some cases sold to other semiconductor firms. Intel has the largest market share in the semiconductor industry, with approximately $55.4 billion in 2015 sales. Analyst's Notes Analysis by Jim Kelleher, CFA, October 27, 2017 ARGUS RATING: BUY Broad-based margin expansion; raising target to $50 Intel jumped 7% following a strong beat and guide quarter from the CPU giant. During 3Q17, Data Center Group (DCG) profits grew year-over-year for the first time in 2017, while Client Compute Group (CCG) profits were up a sharp 8%. Beyond computing, revenue from growth businesses - including includes non-volatile memory, IoT, and programmable solutions and representing 15% of revenue - grew 333% when excluding the divested McAfee from all comparisons. Intel is ramping high-value-add products in both CCG and DCG, and ASP trends show that it is succeeding in the cadence of its rollouts. INVESTMENT THESIS BUY-rated Intel Corp. (NGS: INTC) shares jumped 7% following a strong beat and guide quarter from the CPU giant. In addition to as-expected growth in the client compute group (PCs), Intel benefited from stronger growth in data center and a strong contribution from its memory partnership with Micron. The company also raised its full-year revenue forecast. For 3Q17, Intel reported 2% annual revenue growth (6% adjusted for the McAfee disposition) to $16.2 billion, above its midpoint guidance of $15.7 billion and above the $15.73 billion consensus call. Reflecting better price and mix along with reduced losses from growth platforms, total non-gaap opening margin widened 180 basis points annually and 620 basis points sequentially. Non-GAAP EPS for 3Q17 rose 26% to $1.01 per diluted share and topped the Street view by $0.21. During 3Q17, Data Center Group (DCG) profits grew year-over-year for the first time in 2017, while Client Compute Group (CCG) profits were up a sharp 8%. Core revenue (CCC & DCG) grew 2% annually. On 8/21/17, Intel launched the first set of products within its new eighth generation (8th Gen) Intel core processors. The new devices are meant to upgrade computers to handle rapidly advancing technologies such as VR and AR and accommodate 4K ultra-high-definition media content. Data Pricing reflects previous trading week's closing price. 200-Day Moving Average Price ($) Rating EPS ($) Target Price: $ Week High: $ Week Low: $37.10 Closed at $40.43 on 10/20 Quarterly Annual ( Estimate) 3.30 ( Estimate) Revenue ($ in Bil.) Quarterly Annual ( Estimate) 66.9 ( Estimate) FY ends Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Dec BUY HOLD SELL Argus Recommendations Twelve Month Rating SELL HOLD BUY Five Year Rating SELL HOLD BUY Rating Weight Under Over Weight Weight Argus assigns a 12-month BUY, HOLD, or SELL rating to each stock under coverage. BUY-rated stocks are expected to outperform the market (the benchmark S&P 500 Index) on a risk-adjusted basis over the next year. HOLD-rated stocks are expected to perform in line with the market. SELL-rated stocks are expected to underperform the market on a risk-adjusted basis. The distribution of ratings across Argus' entire company universe is: 50% Buy, 45% Hold, 6% Sell. Key Statistics Key Statistics pricing data reflects previous trading day's closing price. Other applicable data are trailing 12-months unless otherwise specified Overview Price $44.40 Target Price $ Week Price Range $33.23 to $45.00 Shares Outstanding 4.68 Billion Dividend $1.09 Overview Technology Rating OVER WEIGHT Total % of S&P 500 Cap % Financial Strength Financial Strength Rating HIGH Debt/Capital Ratio 27.4% Return on Equity 18.8% Net Margin 22.3% Payout Ratio 0.34 Current Ratio 1.75 Revenue $62.08 Billion After-Tax Income $13.85 Billion Valuation Current FY P/E Prior FY P/E Price/Sales 3.35 Price/Book 2.89 Book Value/Share $15.34 Capitalization $ Billion Forecasted Growth 1 Year EPS Growth Forecast 19.49% 5 Year EPS Growth Forecast 10.00% 1 Year Dividend Growth Forecast 7.69% Risk Beta 1.23 Institutional Ownership 68.04%

2 Report created Oct 30, 2017 Page 2 OF 6 Beyond computing, growth businesses - including non-volatile memory, IoT, and programmable solutions (15% of revenue) - grew 3%. Backing out McAfee from all comparisons, however, non-compute revenue would have been up 33%. All businesses in this category are in a positive trend. The (expensive) addition of Mobileye will not contribute much revenue, but it positions Intel as a major player in autonomous vehicles and related areas. Intel is ramping high-value-add products in both CCG and DCG, and ASP trends show that it is succeeding in the cadence of its rollouts. Good margin and revenue trends across its compute & non-compute business year-to-date have again enabled Intel to raise its annual guidance. Despite the recent furious rally in the shares, which has broken the stock out of a multi-year range, INTC shares appear attractive at current levels. We are reiterating our BUY rating to a 12-month target price of $50 (raised from $45). RECENT DEVELOPMENTS INTC is up 20% year-to-date in 2017 after being down 4% as recently as late-august. INTC is still lagging the 32% peer-group gain and the 36% gain for the SOX index year-to-date. INTC rose just 5% in 2016, while the peer group of Argus-covered communications and computing semiconductor stocks soared 70%, mainly on strength in GPU companies NVidia and AMD. INTC shares declined 5% in 2015, lagging the 9% gain for the peer group. INTC rose 40% in 2014, compared to an 18% advance for the peer group and a 28% gain for the SOX. Intel rose 26% in 2013, declined 15% in 2012, and rose 15% in Before the recent break-out, INTC shares failed to rise on three significant events in the second half of the year. These included a strong 2Q17, completion of the MobileEye acquisition, and launch of the eighth generation of Core CPUs. The stock has been following the sector higher in October, however, and well-above-consensus 3Q17 profits provided an exclamation mark on the company's strengthening operations. For 3Q17, Intel generated revenue of $16.2 billion, which was up 2% year-over-year and 9% sequentially from 2Q17. Excluding the divested McAfee security business from all comparisons, sales would have been up 6%. Revenue was above the midpoint of management's guidance of $15.7 billion, plus or minus $500 million, and topped the $15.73 billion consensus estimate. Non-GAAP earnings totaled $1.01 per diluted share, which was up 26% year-over-year and up $0.29 on a sequential basis. Non-GAAP EPS for 3Q17 topped the $0.80 consensus forecast by $0.21. Client Compute Group (CCG) revenue of $8.86 billion (55% of total) for 3Q17 was flat with the prior year though up 8% from 2Q17. CCG encompasses mobile devices such as thin modems along with traditional x86 CPUs. Intel has established major customer relationships for this business, most notably with Apple iphone. Thus, while platform (CPU) revenue of $8.1 billion decreased 2% annually, Other/Modem revenue of $728 million Growth & Valuation Analysis GROWTH ANALYSIS ($ in Millions, except per share data) Revenue 53,341 52,708 55,870 55,355 59,387 COGS 20,190 21,187 20,261 20,676 23,196 Gross Profit 33,151 31,521 35,609 34,679 36,191 SG&A 8,057 8,088 8,136 7,930 8,397 R&D 10,148 10,611 11,537 12,128 12,740 Operating Income 14,638 12,291 15,347 14,002 12,874 Interest Expense Pretax Income 14,873 12,611 15,801 14,212 12,936 Income Taxes 3,868 2,991 4,097 2,792 2,620 Tax Rate (%) Net Income 11,005 9,620 11,704 11,420 10,316 Diluted Shares Outstanding 5,160 5,097 5,056 4,894 4,875 EPS Dividend GROWTH RATES (%) Revenue Operating Income Net Income EPS Dividend Sustainable Growth Rate VALUATION ANALYSIS Price: High $29.27 $26.04 $37.90 $37.49 $38.36 Price: Low $19.23 $20.10 $23.50 $24.87 $27.68 Price/Sales: High-Low P/E: High-Low Price/Cash Flow: High-Low Financial & Risk Analysis FINANCIAL STRENGTH Cash ($ in Millions) 2,561 15,308 5,560 Working Capital ($ in Millions) 11,719 22,674 15,206 Current Ratio LT Debt/Equity Ratio (%) Total Debt/Equity Ratio (%) RATIOS (%) Gross Profit Margin Operating Margin Net Margin Return On Assets Return On Equity RISK ANALYSIS Cash Cycle (days) Cash Flow/Cap Ex Oper. Income/Int. Exp. (ratio) Payout Ratio The data contained on this page of this report has been provided by Morningstar, Inc. ( 2017 Morningstar, Inc. All Rights Reserved). This data (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. This data is set forth herein for historical reference only and is not necessarily used in Argus analysis of the stock set forth on this page of this report or any other stock or other security. All earnings figures are in GAAP.

3 Report created Oct 30, 2017 Page 3 OF 6 accelerated 15% annually. New core processors from Intel are improving mix and ASP trends. And the modem business is not dragging nearly as heavily on profits as it was a year ago. CCG operating profit of $3.60 billion for 3Q17 grew 8% annually. Sharp operating growth reflects strong pricing realizations as the company's core i5 and 17 processors continue to benefit from strong demand. Although CCG volumes decreased 7% annually, this was offset by a 7% ASP gain, reflecting strong demand for premium Skylake CPUs. Further contributing to profit growth at CCG has been the run-off in costs associated with ramping 14 nm devices to volume. Through nine months, CCG sales of $25 billion are up 5%; year-to-date CCG profit of $6.1 billion is up 36%. Notebooks continue to drive the year-to-date improvement in CCG, reflecting nine-month growth of 5% in platform volumes and 4% in platform ASPs. Desktops, by contrast, have seen a 4% volume dip through nine months on flat ASPs. The Ryzen desktop CPUs from AMD may be playing a role, but the shift generally reflects a secular shift away from desktop and toward mobile PCs. On 8/21/17, Intel launched the first set of products within its new eighth generation (8th Gen) Intel core processors. The new devices are meant to upgrade computers to handle rapidly advancing technologies such as VR and AR and accommodate 4K ultra-high-definition media content. Although prior generations of Core have been limited to a single chip family, 8th Gen Core will span multiple families including Kaby Lake (built on 14 nm+ process), Coffee Lake (14 nm) and in the future, Cannon Lake (10 nm process). This suggests the 8th gen of Core CPUs will last for several years. The 8th Gen will even include some of Intel's first 10 nm products. 8th Gen core should be a positive for 2018, with modest potential contribution in late In 3Q17, DCG revenue of $4.78 billion (31% of total) grew 2% year-over-year, decelerating from 9% annual growth in 2Q17. DCG operating profit of $2.26 billion grew 6% annually; margin of 46.2% compressed from 46.7% a year earlier. DCG profit, which fell hard in 2Q17, bounced back by 36% on a sequential basis while expanding margin from 38.2% in 2Q17. DCG operating profit in 3Q17 broke a four-quarter string of negative annual comparisons. Intel is now getting past costs associated with the ramp of 14 nm Xeon 'Broadwell,' Intel's first 14 nm server architecture chip. Below-peak margins continue to reflect investments in AI and other next-generation adjacencies. The Data Center Group has been a key growth focus for Intel, even as this business works to navigate shifting IT allocations. While business with cloud and hyperscale customers continues to accelerate, server sales in legacy environments such as on-premises data centers are dropping off faster than anticipated. Cloud and service provider segments on a combined basis now represent about 60% of DCG revenue, as reliance on legacy enterprise data center continues to fall away rapidly. Compute revenue from CCG and DCG is now back to about Peer & Industry Analysis The graphics in this section are designed to allow investors to compare INTC versus its industry peers, the broader sector, and the market as a whole, as defined by the Argus Universe of Coverage. The scatterplot shows how INTC stacks up versus its peers on two key characteristics: long-term growth and value. In general, companies in the lower left-hand corner are more value-oriented, while those in the upper right-hand corner are more growth-oriented. The table builds on the scatterplot by displaying more financial information. The bar charts on the right take the analysis two steps further, by broadening the comparison groups into the sector level and the market as a whole. This tool is designed to help investors understand how INTC might fit into or modify a diversified portfolio. P/E Value TXN MCHP INTC 5-yr Growth Rate(%) NVDA AMAT AVGO ADI LRCX Growth 5-yr Net 1-yr EPS Cap Growth Current Margin Growth Argus Ticker Company ($ in Millions) Rate (%) FY P/E (%) (%) Rating INTC Intel Corp. 207, BUY NVDA NVIDIA Corp 121, BUY AVGO Broadcom Limited 103, BUY TXN Texas Instruments Inc 96, BUY AMAT Applied Materials Inc 60, BUY LRCX Lam Research Corp 33, BUY ADI Analog Devices Inc. 33, BUY MCHP Microchip Technology Inc 22, BUY Peer Average 84, P/E Price/Sales Price/Book PEG 5 Year Growth Debt/Capital

4 Report created Oct 30, 2017 Page 4 OF 6 85% of total revenue; this partly reflects growth in compute demand, although the bigger factor is the absence of Intel Security Group (McAfee) from total revenue. Compute revenue of $13.7 billion grew 2% in 3Q17. Fueled primarily by profit recovery at DCG, Compute operating income increased 8% annually in 3Q17. The best top-line growth at Intel continues to come from non-cpu assets including Internet of Things and non-volatile memory (the Micron JV). Intel Security Group was divested and is now doing business under its old name of McAfee. The growth businesses - including non-volatile memory, IoT, and programmable solutions (15% of revenue) - grew 3%. Backing out McAfee from all comparisons, however, non-compute revenue would have been up 33%. All businesses in this category are in a positive trend. Programmable solutions (the former Altera), which had struggled in recent quarters, delivered 10% growth. IoT revenue was up 23% annually, while NVM (non-volatile memory) jumped 37%. NVM remains unprofitable, but should continue to reduce its loss as volumes ramp. Though non-compute profit was down 16% annually, this category grew 55% excluding McAfee. Intel recently completed the acquisition of MobileEye, a leader in computer vision technologies for the autonomous vehicle market. The (expensive) addition of Mobileye will not contribute much revenue, but it positions Intel as a major player in autonomous vehicles and related areas. The move jump-starts Intel's autonomous vehicle presence at a time when GPU leader NVidia has already struck numerous autonomous driving partnerships with leading automotive OEMs. While MobileEye's top-line contribution will be nearly immaterial to Intel's massive revenue stream, the technology catch-up will be crucial as Intel seeks to expand its Internet of Things presence. Intel offered an above-consensus outlook for 4Q17, while also raising full-year guidance. Intel guided for revenue of $16.3 billion, +/- $500 million; non-gaap gross margin of 63%, +/- two points; core operating costs of $5.1 billion; and non-gaap EPS of $0.86, +/- five cents. Revenue at the guidance midpoint would be about flat annually, but up 3% excluding Intel Security Group from all comparisons. Both revenue and non-gaap EPS were above the pre-reporting consensus. Intel raised its full-year revenue guidance to $62.0 billion, +/- $500 million, from $61.3 billion, +/- $500 million. It also raised its non-gaap EPS guidance to $3.25 per diluted share, +/- five cents, from $3.00 per diluted share, +/- five cents. In April, Intel guided for revenue and EPS (at midpoint) of $60 billion and $2.90 per diluted share. Intel is ramping high-value-add products in both CCG and DCG, and ASP trends show that it is succeeding in the cadence o RECENT DEVELOPMENTS f its rollouts. Generally good margin and revenue trends across its compute & non-compute business year-to-date have again enabled Intel to raise its annual guidance. Given the superior growth in non-compute businesses, we see no reason Intel cannot continue growing its top-line while expanding margins and accelerating EPS growth. EARNINGS & GROWTH ANALYSIS For 3Q17, Intel generated revenue of $16.2 billion, which was up 2% year-over-year and 9% sequentially from 2Q17. Excluding the divested McAfee security business from all comparisons, sales would have been up 6%. Revenue was above the midpoint of management's guidance of $15.7 billion, plus or minus $500 million, and topped the $15.73 billion consensus estimate. The GAAP gross margin expanded on a sequential basis to 62.3% in 3Q17 from 61.6% in 2Q17 while narrowing from 63.3% a year earlier. The non-gaap operating margin broadened sequentially to 34.4% in 2Q17 from 28.3% in 2Q17 and from 32.6% a year earlier. Non-GAAP earnings totaled $1.01 per diluted share, which was up 26% year-over-year and up $0.29 on a sequential basis. Non-GAAP EPS for 3Q17 topped the $0.80 consensus forecast by $0.21. For all of 2016, Intel's total revenue of $60.21 billion grew 14% from $55.37 billion in Intel earned $2.72 per diluted share on a GAAP basis in 2016, up 14% from $2.39 in Intel offered an above-consensus outlook for 4Q17, while also raising full-year guidance. Intel guided for revenue of $16.3 billion, +/- $500 million; non-gaap gross margin of 63%, +/- two points; core operating costs of $5.1 billion; and non-gaap EPS of $0.86, +/- five cents. Revenue at the guidance midpoint would be about flat annually, but up 3% excluding Intel Security Group from all comparisons. Both revenue and non-gaap EPS were above the pre-reporting consensus. Intel raised its full-year revenue guidance to $62.0 billion, +/- $500 million, from $61.3 billion, +/- $500 million. It also raised its non-gaap EPS guidance to $3.25 per diluted share, +/- five cents, from $3.00 per diluted share, +/- five cents. In April, Intel guided for revenue and EPS (at midpoint) of $60 billion and $2.90 per diluted share. We have raised our 2017 non-gaap earnings forecast for Intel to $3.25 per diluted share, from $2.88. We have also increased our 2018 non-gaap earnings forecast is $3.30 per diluted share, from $2.96. Our GAAP forecasts are $2.92 per diluted share for 2017 and $3.08 for Our long-term EPS growth rate estimate is 10%. FINANCIAL STRENGTH & DIVIDEND Our financial strength rating for Intel is High. Intel's credit ratings are mainly A1 or A2, per Moody's. To pay for the $16.7 billion Altera acquisition, Intel issued $8 billion in debt in 3Q15. The company used cash and/or short-term paper for the balance. In an effort to accelerate the process of rebuilding cash following the acquisition, Intel has slowed (though not discontinued) share repurchases. Intel added $7.1 billion in debt in 2Q17 in anticipation of its planned $14.7 billion acquisition of MobileEye. The company also generated $2.1 billion from assets sales, primarily from the sale of Intel Security Group (now called McAfee). Intel's cash & equivalents and investments totaled $23.6 billion at 3Q17, down from $31.8 billion at midyear 2017 and from $24.1 billion at the end of 1Q17. Cash was $23.3 billion at the end of Cash was reduced from $31.3 billion at the end of 2015 by the Altera acquisition. Cash & equivalents and investments totaled $21.15 billion at the end of 2014 and $20.1 billion at the end of Total debt was $31.6 billion at 3Q17, cut slightly from $32.0 billion at midyear Debt was $25.75 billion at the end of 1Q17. Total debt was $24.3 billion at the end of 2016, $22.7 billion at the end of 2015, and $13.6 billion at the end of Cash flow from operations was approximately $21.8 billion in

5 Report created Oct 30, 2017 Page 5 OF , up from $19.0 billion in 2015 and $20.5 billion in With the Mobileye purchase, Intel has slowed the pace of buybacks. Intel spent $2.6 billion to repurchase stock in 2016 and a like amount in Share repurchases totaled $4.0 billion in 2014, $2.1 billion in 2013, and $5.5 billion in Over the past 10 years, Intel has spent $60 billion to repurchase stock. On 11/19/15, Intel announced an 8.3% hike in its quarterly dividend, to $0.26 per common share, or $1.04 annually. Our annual dividend forecasts are $1.12 for 2017 and $1.20 for MANAGEMENT & RISKS Longtime COO Brian Krzanich became CEO on 5/16/13. Former CFO and director of corporate strategy Stacy Smith has taken on a larger role overseeing sales, manufacturing, and operations. Intel has appointed Robert Swan as its new CFO. In November 2015, 'Murthy' Renduchintala came over from Qualcomm to run Intel's mobile chip division. According to CEO Krzanich, Mr. Renduchintala will conduct 'a complete review of products' as part of the restructuring program and report his findings directly to the CEO. In July 2015, Intel announced several leadership changes. Aicha Evans is now part of the management committee and is Communications and Devices Group General Manager. Josh Walden is General Manager of Intel's New Technology Group. Former Intel President Renee James left the company in January The restructuring program, while painful, reflects the reality of reduced global PC demand. This business throws off substantial cash, and Intel will be challenged to replace volumes and improve margins as it seeks to grow its focus businesses. The acquisition of Altera creates risks related to the premium price and Intel's spotty record in integrating past acquisitions. Although ALTR was expensive, the acquisition should 'future-proof' Intel's presence in the data center. Altera also looks like a better and more logical fit than McAfee. The same holds true for Mobileye. Although Mobileye is even more expensive than Altera, this leader in autonomous and assisted driving systems exposes Intel to a much larger TAM (total available market) opportunity. Intel faces the usual array of competitive risks, but is the clear leader in microprocessors with a roughly 80% share in PCs and 95% in the data center. Given this near hegemony, we see more stock-price risk than business risk for the company. In other words, the loss of a few points of market share would likely hit the stock much harder than it would impact the bottom line. Given the company's history of technology leadership, we do not expect any meaningful market share losses going forward. COMPANY DESCRIPTION Intel supplies the computing industry with the chips, boards, systems and software that are the primary components of computer architecture. Intel has also expanded through acquisitions, although these businesses are now being reviewed and in some cases sold to other semiconductor firms. Intel has the largest market share in the semiconductor industry, with approximately $55.4 billion in 2015 sales. VALUATION In the wake of the Altera and Mobileye acquisitions, the Street is valuing INTC on non-gaap results; we have adjusted our model accordingly. INTC shares are trading at 13.5-times our 2017 non-gaap EPS estimate and at 13.3-times our 2018 estimate. The two-year forward P/E of 13.4 is above the five-year average P/E of 12.0; but the two-year forward relative P/E of 0.72 is below the five-year average relative P/E of Our historical comparable valuation model renders a value for INTC in the high $30s to low $40s, in a rising trend. Peer group analysis shows INTC trading at substantial discounts to Argus semiconductor peers on a variety of measures. That includes trading at just 31% of the peer average on P/E; 50% on price/sales; 45% on price/book value; and at 95% of the group PEG ratio. Given Intel's exceptional cash-generating capabilities, our more forward-looking DFCF model indicates a fair value in the high $60s, in a fast-rising trend. We calculate a blended value in the low $60s, also in a rising trend. Appreciation to our 12-month target price of $50 (raised from $45), along with the 2.4% dividend yield, implies a risk-adjusted return above our projected return for the broad market. As such, our rating remains BUY. On October 27, BUY-rated INTC closed at $44.40, up $3.05.

6 METHODOLOGY & DISCLAIMERS Report created Oct 30, 2017 Page 6 OF 6 About Argus Argus Research, founded by Economist Harold Dorsey in 1934, has built a top-down, fundamental system that is used by Argus analysts. This six-point system includes Industry Analysis, Growth Analysis, Financial Strength Analysis, Management Assessment, Risk Analysis and Valuation Analysis. Utilizing forecasts from Argus Economist, the Industry Analysis identifies industries expected to perform well over the next one-to-two years. The Growth Analysis generates proprietary estimates for companies under coverage. In the Financial Strength Analysis, analysts study ratios to understand profitability, liquidity and capital structure. During the Management Assessment, analysts meet with and familiarize themselves with the processes of corporate management teams. Quantitative trends and qualitative threats are assessed under the Risk Analysis. And finally, Argus Valuation Analysis model integrates a historical ratio matrix, discounted cash flow modeling, and peer comparison. THE ARGUS RESEARCH RATING SYSTEM Argus uses three ratings for stocks: BUY, HOLD, and SELL. Stocks are rated relative to a benchmark, the S&P 500. A BUY-rated stock is expected to outperform the S&P 500 on a risk-adjusted basis over a 12-month period. To make this determination, Argus Analysts set target prices, use beta as the measure of risk, and compare expected risk-adjusted stock returns to the S&P 500 forecasts set by the Argus Strategist. A HOLD-rated stock is expected to perform in line with the S&P 500. A SELL-rated stock is expected to underperform the S&P 500. Argus Research Disclaimer Argus Research is an independent investment research provider and is not a member of the FINRA or the SIPC. Argus Research is not a registered broker dealer and does not have investment banking operations. The Argus trademark, service mark and logo are the intellectual property of Argus Group Inc. The information contained in this research report is produced and copyrighted by Argus, and any unauthorized use, duplication, redistribution or disclosure is prohibited by law and can result in prosecution. The content of this report may be derived from Argus research reports, notes, or analyses. The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but Argus makes no representation as to their timeliness, accuracy or completeness or for their fitness for any particular purpose. This report is not an offer to sell or a solicitation of an offer to buy any security. The information and material presented in this report are for general information only and do not specifically address individual investment objectives, financial situations or the particular needs of any specific person who may receive this report. Investing in any security or investment strategies discussed may not be suitable for you and it is recommended that you consult an independent investment advisor. Nothing in this report constitutes individual investment, legal or tax advice. Argus may issue or may have issued other reports that are inconsistent with or may reach different conclusions than those represented in this report, and all opinions are reflective of judgments made on the original date of publication. Argus is under no obligation to ensure that other reports are brought to the attention of any recipient of this report. Argus shall accept no liability for any loss arising from the use of this report, nor shall Argus treat all recipients of this report as customers simply by virtue of their receipt of this material. Investments involve risk and an investor may incur either profits or losses. Past performance should not be taken as an indication or guarantee of future performance. Argus has provided independent research since Argus officers, employees, agents and/or affiliates may have positions in stocks discussed in this report. No Argus officers, employees, agents and/or affiliates may serve as officers or directors of covered companies, or may own more than one percent of a covered company s stock. Morningstar Disclaimer 2017 Morningstar, Inc. All Rights Reserved. Certain financial information included in this report: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.