Morning Round Up

Tuesday, 26th January 2021

Morning Round Up Key Upcoming Events Macro US Case-Schiller House prices (November) US Consumer confidence (January) • European markets closed down yesterday as did the Dow Jones, while the S&P500 and Nasdaq pared back early gains to close only marginally up as investors mulled a possible delay in the planned U.S. fiscal-relief package. • Asian-Pacific equities at one point slid the most in about two months this morning, with shares in South Korea and China underperforming. Market Moves Tencent Holdings led Hong Kong stocks lower. % Change Value Change % Change • In vaccine news, Moderna yesterday announced that its vaccine YTD induces the same response against the UK covid-19 variant as against the prevalent viral strain and that while the impact may be reduced in Dow Jones 30,960 -36.98 -0.12% 1.16% the South African variant, it still provides a good level of efficacy. S&P 3,855 13.89 0.36% 2.64% • AstraZeneca expects to deliver tens of millions fewer covid-19 vaccine doses than planned to the EU in the coming months, threatening the Nasdaq 13,636 92.93 0.69% 5.80% continent's plans to ramp up vaccinations. • Merck yesterday announced that it was ending its covid-19 vaccine trials as results from vaccine candidates showed that the immune Euro 600 405.13 -3.41 -0.83% 1.53% response was not as high as those already on the market. Nikkei 28,546 -276.11 -0.96% 4.02% • The 7-day average of new coronavirus cases and hospitalizations in the U.S. appears to have peaked, while U.K. new cases also have Hang Seng 29,416 -743.27 -2.46% 8.02% dropped substantially. That said, politicians in the U.K. and France are contemplating tighter restrictions amid the spread of coronavirus mutations. Brent Oil 55.61 -0.27 -0.48% 7.36% • On the US stimulus package, there are signs that President Biden's WTI Oil 52.5 -0.27 -0.51% 8.20% push for a sweeping coronavirus-relief bill is becoming more difficult as partisan lines seem to be hardening in the Senate over the Gold 1,851 -4.60 -0.25% -2.48% impeachment fate of his predecessor. • Republicans and some Democrats are expressing concerns over the €/$ 1.2113 0.00 -0.21% -0.84% size and cost of Mr. Biden's $1.9 trillion bill with some lawmakers discussing trying to pass a smaller, more targeted aid package. €/£ 0.8895 0.00 0.20% -0.47% • On global trade, President Biden has signed an executive order £/$ 1.3618 -0.01 -0.42% -0.38% imposing tougher rules on government procurement practices to increase purchases of products made in the U.S. Domestic-purchase Yield Change plans put other governments on alert, that their companies could be excluded from the U.S.'s huge government-procurement market. German 10 Year -0.56% -0.005% UK 10 Year 0.26% -0.046% Stocks US 10 Year 1.03% -0.002% • Core Portfolio stock Verizon releases its Q420 numbers today, but all eyes will be on forward guidance as 5G rolls out across the US (comment attached). Irish 10 Year -0.24% -0.005% • UDG Healthcare issued a solid Q121 update with FY21 guidance Spain 10 Year 0.07% -0.004% suggesting upgrades to numbers (comment attached). • Greencore’s Q121 trading statement illustrated the difficult working Italy 10 Year 0.68% 0.006% conditions the business is operating in with extended lockdowns likely Source: Bloomberg, CF Research January 2021 to impact full year forecasts (comment attached).

Debt Markets • Core bond yields remain anchored close to recent levels. • US 10-year yield -6bps to 1.03% with the German 10-year yield -4bps at -0.55%.

CANTOR FITZGERALD IRELAND LT D 1

Daily Note Tuesday, 26th January 2021

CFI Research Team Verizon Communications Inc Closing Price: $58.42 • Core Portfolio stock Verizon issues its Q420 numbers at noon (EST) today when it is expected to report a 3.4% increase in adj. EPS to $1.17 from a 3.9% increase in EBITDA to $11.57bn, despite a 1.0% dip in revenue to $34.42bn. • The market is expecting a lift in wireless services and equipment sales from Apple’s launch of the 5G-enabled iPhone 12 and subsequent high demand for that set. This may more than offset lower net additions, which have been impacted by covid-19-related restrictions. Equipment sales are expected to be down on reduced store traffic and weaker economic conditions. Growth in Verizon’s business segment may have been impacted by a recent rise in small-business failures in the US and weaker global enterprise sales. • It will, however, be the 2021 outlook that the market will be focussing on with the expectation of improved growth reflecting the availability of 5G nationwide in the US. While Verizon’s 5G network capacity has been limited by a lack of spectrum to date, Key Metrics 2020e 2021e 2022e management has been addressing this issue. This was not only evident in the September 2020 US auction wins, where it was the Revenue ($’Mn) 128161 132828 134904 clear winner placing $1.89bn in winning bids for 557 licences, but EPS ($) 4.83 5.00 5.15 also we presume in the FCC mid-band spectrum auction currently underway (5,684 licences on offer with further auctions planned out Price/ Earnings 12.08x 11.69x 11.34x to 2023). Our current model has Verizon spending over $10bn over the next three years on licences versus a previous 3-year average Div Yield 4.25% 4.33% 4.43% spend of $970m per annum. • The price has drifted down 7% over the last two months and is Total Return 1 Mth 3 Mth 1 Year currently down 4% over the last 12-month period. As such, the stock is trading at 11.5x FY21 P/E and 7.6x EV/EBITDA, a 15% VZ US 0.35% 2.14% 1.19% discount to its peers, ex-T-Mobile. As our unchanged price target of Source: All data & charts from Bloomberg & CFI $70.00 implies a 20% upside we retain our Buy recommendation, supported by a dividend yielding 4.4%

Greencore Group PLC Closing Price: £1.16 • In its Q121 update Greencore has reported a 15% decline in Group revenue to £312.7m with food-to-go down 22% to £188.5m and Other Convenience Food Categories down 2% to £124.1m. The business has been impacted by the restrictions and lockdowns in the UK during the period. Although not quantified, the company is reporting positive adjusted operating profit and Adjusted EBITDA for the quarter. Liquidity and balance sheet strength has been supported through revised debt financing agreements and a successful equity placing raising gross proceeds of £90m, protecting the business in the near term. • The latest lockdown has significantly impacting demand in food-to- go categories, though not as marked as the initial lockdown in March 2020. Currently, pro forma Group revenue is approximately 20% below prior year levels, with performance in food-to-go categories down approximately 35% on the prior year, while other convenience categories remain stable. The Group is looking to proactively manage costs and cash flow through the duration of the Key Metrics 2021e 2022e 2023e current lockdown. • The ongoing uncertainty regarding the duration and impact of covid Revenue (£’Mn) 1300.3 1372.4 1430.6 -19 on the Group’s trading environment, and in particular on EPS (£) 0.06 0.11 0.12 demand in its food to go categories, continues to make it difficult to predict FY21 performance. In this context, the Group’s financial Price/ Earnings 18.79x 10.78x 9.47x guidance remains suspended. • Given its business mix and the clear implications of any lockdown Div Yield 1.55% 3.52% 4.46% on such a business, Greencore’s share price has not recovered from the March 2020 market sell off and is down 53% over the past Total Return 1 Mth 3 Mth 1 Year 12 months. Unfortunately, this does not fully reflect the pandemic impact on the underlying business as the stock is trading at 18.8x GNC LN -0.68% 21.10% -53.66% FY21 P/E and 9.5x EV/EBITDA, a 24% premium to 10-year Source: All data & charts from Bloomberg & CFI average. The possibility of extended lockdowns in the UK and Ireland and its impact on the business could lead to downward pressure on the share price.

CANTOR FITZGERALD IRELAND LT D 2

Daily Note Tuesday, 26th January 2021

CFI Research Team UDG Healthcare PLC Closing Price: £7.80 • UDG Healthcare this morning issued a short Q121 trading update for Q121 to 31 December 2020 (year-end September) noting that its financial performance is in line with expectations. It has also announced a rebranding of its Ashfield businesses with Ashfield Communications & Advisory being rebranded as Ashfield Advisory & Health, while Ashfield Commercial & Clinical will now be called Ashfield Engage. There are no changes to financial disclosures or reporting structures. • In January, Ashfield acquired PHMR Ltd, a market access consultancy employing over 40 people in the UK and Ireland. The business specialises in healthcare technology assessment, pricing & reimbursement strategy. PHMR has been acquired for a total consideration of up to £32 million, comprising an initial consideration of £22 million, with an earn-out of up to £10 million payable over two years, based on the achievement of agreed profit targets. • The company is guiding operating profit to be between 11% and Key Metrics 2021e 2022e 2023e 13% up on FY20, with adj. EPS to be between 9% and 11% ahead. Coming into the update, the market was forecasting UDG to grow Revenue (£’Mn) 1354.3 1416.4 1491.0 earnings in FY21 by 7% from a 3% increase in operating profit and EPS (£) 0.51 0.56 0.60 7% lift in revenue. While guidance will include a contribution from the acquisition PHMR, which was announced today, we believe that Price/ Earnings 20.75x 19.1x 17.64x it will still drive an upgrade in forecasts. • UDG’s recovery from the March 2020 market sell-off has been slow Div Yield 1.73% 1.88% 2.02% but gradual. As such, the stock is down 1.5% over the past 12 months but up 68% from its March lows. The shares are currently Total Return 1 Mth 3 Mth 1 Year trading at 20.9x FY21 P/E and 12.5x EV/EBITDA, an average 11% premium to their long-term averages. That said, it is still well below UDG LN -0.68% 8.47% -2.53% the ratings the stock traded at between 2015 and early 2018. This Source: All data & charts from Bloomberg & CFI update implies an upgrade to forecasts, adding to the current share price momentum.

CANTOR FITZGERALD IRELAND LT D 3

Daily Note Tuesday, 26th January 2021

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Daily Note Tuesday, 26th January 2021

Regulatory Information Issuer Descriptions: (Source: Bloomberg)

Historical Recommendation:

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