Market Maker Stock Picks January 31 2017

Market Maker Stock Picks – Institutional stock picks see what they recommend, buy and sell.

BANK AMERICA: • TEVA upgraded to buy from neutral and maintained its $42 price target saying risk/reward is more favorable. Last night, a lower court ruled against Teva invalidating all claims of patents for Copaxone 40mg/ml, paving the way for generics to enter if approved. • CBOE upgraded to buy from underperform and taking our PO to $85 from $74. We see multiple drivers to accelerating EPS at CBOE, including the BATS deal / level and timing of synergies, more active capital deployment ahead, rising volatility from historic lows, & U.S. corporate tax reform • NNN upgraded to buy from neutral • MSGN resumed buy and $27 tgt

BUCKINGHAM: • M downgraded to neutral from buy

BTIG: • Retail auto parts – Despite AMZN’s lower prices, we believe traditional retailers can defend market share in both channels. We also question how aggressive AMZN will be in auto parts as offering best-in-class service conflicts with its high inventory-turnover model. We maintain our Buy ratings on AZO and ORLY. We rate AAP shares Sell • TEVA – Based on Teva’s 2017 revenue guidance issued earlier this year, we estimate revenues could fall to ~$22.6B (from our current $23.8B estimate), with EPS dropping to $4.10 – $4.15 (from our estimate of $4.93) if multiple generics are approved and launched. We maintain our Neutral rating on TEVA shares, which were down ~9% in the after-market

CANACCORD: • CLR – is the largest leaseholder in the Williston Basin (WB) and a pioneer in the development of the STACK/SCOOP plays in Oklahoma, where it is also the largest and most active leaseholder with over 900k net reservoir acres and is achieving impressive results. While the stock has more than tripled from its Q1/16 low vs. a gain of only 71% for the S&P Oil & Gas E&P Index, we believe it has further upside, driven by exploiting its top-tier assets and further improvement in the balance sheet • IPGP – Machine tool trends bode well for continuing recovery; BUY, raise PT to $125 from $105 • DECK – We are buyers of DECK heading into FQ3 earnings on Thursday, February 2 AMC. We are projecting EPS of $4.28 (high end of $4.16-$4.28 guidance range) vs. consensus of $4.22. Our above-consensus estimate is based on net revenue growth of 1% (ahead of -2% to flat guidance) vs. consensus of -0.7%.

CANTOR: • ATHN – reiterate our Overweight rating and $135 PT. On February 2, ATHN is scheduled to report 4Q16 results. We expect the results to be solid and to reinforce our positive view on the shares. Athena has been steadily increasing the number of physicians on its network and we expect this positive trend to continue. Importantly, we also expect to see operating profit and margin expansion in 2017

CITIGROUP: • SHOO upgraded to buy from neutral based on a strong setup going into 2017, driven by a stronger fashion cycle & product momentum, clean inventories, and mgmt execution. As retailers become more reliant on at-once orders, we view SHOO’s faster-fashion, test & react model as an even bigger competitive advantage than it was in the past; and valuation • HMHC – Adding to Focus List for Three Reasons: 1) K-12 market rebound, 2) Market share improvement, and 3) McGraw’s K-12 forecast The Turnaround – We expect the K-12 market to rebound to $2.78B in 2017 and $2.87B in 2018 along with market share of ~40-41% • FIT downgraded to sell with a $5 tgt following this morning’s negative Q4’16 pre-announcement and 2017 guidance that was significantly below our and Street expectations

CLSA: • BWLD downgraded to sell from underperform and lowers price target to $141 from $146 as has grown “increasingly cautious” on comp trends in short and medium term

CREDIT SUISSE: • MPSX upgraded to neutral from underperform and raise tgt to $18 • NGD downgraded to underperform from neutral on NAV reduction, valuation & risk; Revising Estimates and Lowering Target Price to $3 (from $4.50) • VNOM – upgrade VNOM to Outperform from Neutral and raise our target price to $21 (from $20) on the back of recent mineral acquisitions, and see the stock as an underappreciated way to play a crude recovery at the low end of the cost curve, and getting paid 8% to do it. • WERN – experienced more seasonally normal freight demand (helped in part by its decision to shift trucks into Dedicated) and posted an EBIT beat. However, demand in January is lighter than normal, pricing gains have yet to materialize, and the used truck market is expected to remain weak – which may make it difficult to sustain momentum in 1H17 • Video games – maintain our Outperform ratings on ATVI and EA, and Neutral rating on TTWO and our price targets for ATVI, EA, and TTWO are now $48, $100 and $53 respectively as we have made significant changes to our estimates for each

DAVIDSON: • BOFI – Maintaining BUY rating and $34 price target. Our target represents 14.7x our calendar 2017 estimate of $2.31 and 14x F2018E EPS of $2.45. We continue to view BOFI as an attractive long-term investment with upside, given its strong balance sheet trends, high level of profitability, and the eventual resolution of litigation, which we expect to be a catalyst for a reduction in the company’s outsized short interest • XXIA downgraded to neutral from buy as being acquired by KEYS

DEUTSCHE BANK: • CRM – We spoke with three Salesforce services partners to gain insights into Salesforce’s 4QF17 (January 2017) quarter. As context, Salesforce is coming off a solid 3QF17 print (c/c billings growth of ~20%) and 4QF17 guidance that implies an acceleration to 25% c/c billings growth (we are modeling 27%). The company’s confident tone about overall demand and the large deal pipeline is such that the consensus is for at least a modest 4QF17 beat but a more subdued 1QF18 DR guide given seasonality. We didn’t hear anything to alter our generally bullish view and reaffirm our BUY rating • Auto retail – believe that most investors remain biased to the bull case though none dismissed the potential Amazon threat. Instead we believe bulls focused on the fact that both ORLY and AAP are relatively more protected by their commercial businesses with AMZN not yet seen as having the distribution capabilities to fill orders within 30 minutes to an hour – which is industry standard

EVERCORE: • Telco initiations: VZ init hold and $53 tgt, Sprint (S) hold and $8 tgt; TMUS init buy and $72 tgt saying it has the best organic growth prospects in the wireless industry and is best positioned to benefit from M&A

JANNEY: • AHP upgraded to buy from neutral • WYN init neutral

JEFFERIES: • LGF – reiterate our Buy, as we expect the Street to focus on LGF’s strong, more stable FCF generation; raise tgt to $30 • NGVC upgraded to buy from hold – are generally comfortable with our C4Q ests., but see little reason to go long into the quarter during such challenging grocery times. In our view, the numbers of greatest importance will be WFM’s & NGVC’s QTD comps and SFM’s 2017 guide

JMP SECURITIES: • OCRX downgraded to MP from OP as we await next steps for the hepatic encephalopathy program • AMZN – reiterate our Market Outperform rating and $950 price target on shares of Amazon.com ahead of 4Q16 earnings scheduled for Thursday, February 2nd, after the close. We expect 4Q16 results to be relatively in line to better than our and consensus projections as we believe Amazon expanded its lead of eCommerce this holiday season and we think 4Q16 investments set the stage for a strong 2017. • FB – reiterate our Market Outperform rating and $165 price target on top pick Facebook ahead of 4Q16 earnings scheduled for Wednesday, February 1, after market close. While we expect Facebook to report 4Q16 results that are above our/consensus expectations based on a strong 4Q16 advertising environment, we are most focused on 2017 plans around video and live video expansion, potential for increased disclosure on Instagram as ad revenue ramps

KEYBANC: • Hazardous Waste. Recent improvements in U.S. crude oil and industrial production support a more favorable macro backdrop for our Hazardous Waste coverage and increase the likelihood of upward estimate revisions. In particular, we view CLH in a more compelling light, with Street sentiment stubbornly lukewarm on the name. Upgrade CLH from Sector Weight to Overweight ($62PT) and increase our PT on Overweight-rated ECOL from $49 to $55 • TPX downgraded to sector weight from OW as we see residual risk around negative estimate revisions as well as growing competition from Steinhoff-Mattress Firm. While shares’ 28% slide in yesterday’s session (vs. less than 1% for the S&P 500), alongside multiple sell-side downgrades, appears to de-risk TPX to some degree, there remains substantial ongoing uncertainty such that we prefer being on the sidelines for now • Tire industry – We see increasing margin risk from rising raw materials into 1H17 and reduce our estimates on CTB. We would use any near-term weakness in CTB/GT shares around 1H17 margin concerns to add to positions around the notion that 2H17 margins should recover as tire manufacturers respond in a disciplined manner to cost inflation. While we expect in-line to slightly better results from CTB/GT during the 4Q earnings season, the threat of ~200 bps of sequential margin compression into 1H17 is likely to place a near-term cap on shares

LEERINK: • DRNA – assuming coverage of DRNA with a MP rating and a ~$4 price target in 12 months. DRNA ended 3Q16 with $57.5MM in cash. Investors in DRNA face significant financing risk, in our view, as we model ~12 months of funds currently. We expect DRNA to have ended 2016 with ~$45MM.

MACQUARIE: • MKTX upgraded to neutral from underperform and raised its price target to $178 from $148 to reflect benefits from the recent strategy change to shift for Eurobond trading to variable per trade mark-ups from fixed rate dealers’ fees and a slower deceleration for USHG TRACE trading

MKM PARTNERS: • AMC – We are raising our 4Q16 and 2017 estimates to incorporate Carmike and Odeon, which adds more than 5,100 screens and nearly doubling AMC’s footprint, but leaving out the recently announced Nordic deal until the transaction is completed in 2Q17 • PGR – We are raising our 2017 estimate to $2.00 from $1.90 with modestly higher assumptions for investment income and premium growth. We are also introducing our 2018 estimate of $2.30 holding our combined ratio at around the same level as we have for 2017 at a little over 94%. Accordingly, we maintain our Buy rating but raise our price target to $45 from $40

MIZUHO: • WBA/RAD – we believe the revised purchase price of $6.50-$7.00 is a positive for WBA given the recent weak operating trends at RAD. Post this event, we now believe RAD could be $0.40 accretive to WBA on a proforma annual basis, versus $0.25 previously which includes incremental share repurchases given the lower purchase price. There is no change to our WBA FY17 EPS of $5.00 as RAD was not included in our estimate. For RAD, we are cutting tgt to $6.75 • ENDP – updating our estimates based on Endo’s most recent commentary and lowering our PT to $15 from $25. However we think the company can divest assets, de-lever, and cut additional costs out of its P&L, and these initiatives are likely to rally the stock above current trading levels. We reiterate our Buy rating • SPWR – adjusting our financial outlook and revising our price target to $8 per share. The downturn in the industry and limited visibility into the future leads to our reductions. SPWR’s CEO believes the industry will recover in 2H17, but much of that may be in the hands of Congress as it contemplates tax reform • Retail – prefer to focus on names with strong “self-help” initiatives, brand equity, visibility on product innovations & pricing power as well as a balanced approach to stores & eCommerce (including Amazon.com) like CHS, LULU, PLCE or potential M&A targets like KATE.

MORGAN STANLEY: • CTSH downgraded to EW from UW & lower PT to $59 from $61 – CTSH recovered off its lows last fall but upside is becoming challenged with potential pushout of growth catalysts and increasing legislative risk limiting multiple expansion. We see elevated risk associated with tax reform, and headline risk from visa exposure may persist through most of 2017 • SPN – OW & Raise PT to $30 from $25 – SPN’s 3Q miss and weak 4Q expectations have caused SPN to underperform into the current “shale momentum” phase of the cycle. Meanwhile, SPN’s US shale-levered businesses should drive a 1H17 beat, despite GoM pressure on other parts of the business • SLCA – OW & Raise PT to $70 from $65 – HAL has announced that SandBox will be its preferred last mile logistics provider. HAL’s endorsement is a substantial vote of confidence from the top industry customer, and should allow SLCA to capture significant market share

NOMURA: • FB – With respect to expense growth, an analysis of Facebook job openings points to accelerating growth in available positions, indicating a pickup in hiring; we are expecting 4Q margins to modestly contract YoY, we model 4Q operating income modestly below the Street. Despite our expectation for accelerating opex growth in 2017E, we remain above the Street on FY17E OI and EPS. FY16E EPS at $4.13; FY17E EPS from $5.23 to $5.37 • AMZN – ahead of earnings – maintain our $950 target price given Amazon’s long-term dominant positioning in two powerful secular trends: cloud and e-commerce. FY16E EPS from $6.04 to $4.70; FY17E EPS from $10.15 to $8.20

OPPENHEIMER: • TSLA – believe consensus is that Model 3 first shipments will begin in 3Q17 and that the shares will rally into that event. And while we are largely in agreement with that sentiment, we believe the ambition of the platform is much broader with the company working on multiple fronts, including restructuring SolarCity, working with Panasonic on two factory ramps, leading the development and implementation of autonomous vehicles, and innovating how cars are manufactured

PACIFIC CREST: • ELLI – Mortgage industry data and big bank commentary suggest ELLI is poised for a 4Q16 revenue beat, but the company also stands to issue tepid guidance for 1Q17. We see ELLI as an “optically challenged” stock on increasing risk to consensus estimates, rising interest rate concerns, and eroding mortgage volumes. That said, we would use the bad news and any material stock weakness to build a core position before a 2018 rebound • TYL – Robust pipeline activity, but award timing may result in light backlog; street expectations for 2017 appear level-set.; risk/reward favorable, but wait until after report before adding to positions • IDTI – As the majority of IDTI’s lowered outlook was due to delay of Samsung GS8 production, our Overweight view of the stock remains unchanged. We continue to see key drivers in 2017 from (1) Purley ramp in data center, (2) wireless charging, and (3) advanced sensor adoption in industrial. We are buyers of IDTI. Our $30 price target

PIPER JAFFRAY: • FBNK upgraded to OW from neutral

RW BAIRD: • PAA and PAGP both upgraded to OP from neutral

STIFEL: • QTS upgraded to buy from hold

SUNTRUST: • AAN – TPX is not a large supplier to AAN’s core business, there may be opportunity for expanded relationship with favorable terms at some point; Emerging catalysts for AAN include closing unprofitable stores and improved cash flow dynamics

UBS: • RL – trimmed estimates citing new near-term headwinds, including worse than expected holiday sales and sluggish sales at its DTC stores; believes the recent pullback in the shares is due to anticipation of a negative revision to the Street’s 2018 revenue estimates, but sees upside to his estimates

WEDBUSH: • Consumer finance initiations: • NAVI init neutral and $16.50 price target – is the student loan servicing and legacy FFELP & private student loan business spun out of Sallie Mae in 2014. While two of the company’s three business lines appear to be in runoff, the company has been able to generate a significant amount of cash flows with which to pay down debt, buy back stock and pay dividends • SLM init Outperform and a $13 price target – is the largest private student loan originator in the country, accounting for over 50% of private originations. Over the last three years, growth in private student loan balances has been significant, loan quality stable, and adjusted EPS increased at an annualized rate of 20% • GPRO – Maintaining Our NEUTRAL Rating and $9 PT- We are unwilling to recommend GoPro shares due to uncertainty over Karma, HERO5 demand in 2017, and the long-term pipeline. • FIT – Maintaining our NEUTRAL rating, but lowering our PT to $6.50 from $8.50

WELLS FARGO: • VSAT upgraded to OP from MP and increase our valuation range to $94-$98 as we discount more of the growth we expect from Viasat-2 and the Viasat-3 opportunity • Food stocks – Maintain Market Weight; POST, BUFF, DF Are Top Picks. As investors seek to position portfolios towards more economically sensitive industries, we think that the period of multiple expansion for U.S. Food has generally ended. We prefer value names in 2017 and highlight POST and DF where execution has been strong and M&A may drive upside to Street forecasts. For BUFF, we think upside potential exists to Q4 numbers and FY17 consensus • ALDR – reit outperform following mgmt. call, believe opportunity for differentiated IV CFRP antibody has been under-estimated • Machinery – cranes checks, suggests demand appears to remain mixed with Q4 demand improvement in US while Europe was better than Q3, could be potential upside for TEX

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