EQUITY RESEARCH MORNING RESEARCH SUMMARY January 16, 2015

What's Inside Focus Items Estimates & PT Revisions Global Payments Inc. (GPN) Glenn Greene, CFA ↑ BJRI O BJ's Restaurants Inc. Raise PT Again Following Management Meetings C O ↓ Citigroup Inc. CG O ↓ Carlyle Group L.P. Verint Systems (VRNT) Shaul Eyal FIG O ↑ Fortress Investment Group Double-Digit Grower; KANA & Cyber Expand TAM ↑ GPN O Global Payments Inc. BlackBerry (BBRY) Andrew Uerkwitz HAIN P ↓ Hain Celestial Group, Inc. BBRY Management Meeting Takeaway INTC P ↓ Intel Corp. PODD O ↓ Insulet Corp. INTERNET Manish Hemrajani WWAV O ↓ WhiteWave Foods Company Expedia Buying Travelocity? Insulet Corp. (PODD) Steven Lichtman Updates Lower '14E New US Patient Adds; Lowering Price Target APO P Apollo Global Management BBRY P BlackBerry CONSUMER Rupesh Parikh, CFA BX P The Blackstone Group ICR Takeaways: Still A Favorable Demand Backdrop For Natural/ KKR O KKR & Co. Organic PCLN O The Priceline Group Inc. FINANCIAL INSTITUTIONS Chris Kotowski PLCE O The Childrens Place Printing Cash: Our 2015 Outlook SLB O Schlumberger Limited VRNT O Verint Systems Other Headlines Estimates/Ratings/Price Target Updates The Priceline Group Inc. (PCLN) Manish Hemrajani Annual Estimates Priceline Launches Last-Minute Booking App, Booking Now Current FY Next FY Ratings Price Targets COMMUNICATION AND CLOUD Timothy Horan, CFA Company Ticker Prev Curr Prev Curr Prev Curr Prev Curr Daily Datatimes, January 16, 2015

Intel Corp. (INTC) Rick Schafer BJ's BJRI 0.93 0.95 1.22 1.22 O O $56.00 $56.00 Restaurants Inc. Mobility Efforts Progressing, Though Profitability Remains Out on the Horizon Carlyle Group CG ------O O $38.00 $37.00 L.P. TECHNOLOGY Rick Schafer Citigroup Inc. C 5.51 5.34 6.02 5.87 O O $70.00 $67.00 Daily Chip Clips Fortress FIG 0.92 0.90 0.95 0.93 O O $12.00 $14.00 Investment Group The Childrens Place (PLCE) Anna Andreeva Global GPN 4.79 4.79 5.35 5.35 O O $90.00 $100.00 TGT Canada Stores Closing—Read Opportunity for PLCE/CRI Payments Inc. Hain Celestial HAIN 1.91 1.88 2.20 2.15 P P $60.00 $60.00 BJ's Restaurants Inc. (BJRI) Brian Bittner, CFA Group, Inc. Margin Upside In Early Stages; Reiterate Outperform Insulet Corp. PODD (0.17) (0.17) 0.21 0.07 O O $50.00 $39.00

Intel Corp. INTC 2.30 2.26 2.40 2.45 P P NA NA Oppenheimer & Co. Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. See "Important Disclosures and Certifications" section at the end of this report for important disclosures, including potential conflicts of interest. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report, where applicable.

Oppenheimer & Co Inc. 85 Broad Street, New York, NY 10004 Tel: 212-885-4646 Fax: 212-856-3989 Morning Summary - January 16, 2015

WhiteWave WWAV 0.99 0.99 1.18 1.15 O O $43.00 $40.00 Schlumberger Limited (SLB) James Schumm Foods Company Q4 Beats (After a Lot of Noise)

Citigroup Inc. (C) Chris Kotowski Soft Quarter, But Management Firm on 2015 Outlook

2 Morning Summary -January 16, 2015

Snap Commentaries - Equities Updates Glenn Greene, CFA TECHNOLOGY 312 360-5942 Global Payments Inc. (GPN - $84.70) Financial Technology & IT Services

Rating Market Cap Price Target / Prior Earnings Type 2014A 2015E 2016E

O $5,680.0M $100.00 / $90.00 EPS 4.12 4.79 5.35

Raise PT Again Following Management Meetings

After recently meeting with GPN, we remain optimistic regarding its growth/profitability prospects. We believe GPN has strong earnings visibility for the foreseeable future (likely through at least FY16). We would not preclude FY15 guidance proving conservative, despite perhaps 300bps of FX-related EPS growth headwinds. Operating margins (despite FX), with benefit from a much improved US business mix, stable Canada, and int'l expansion, appear on a steady expansion trajectory. Recently closed/announced M&A deals should provide incremental growth/margin benefits, and we wouldn't preclude add'l (albeit smaller) M&A near term. We also anticipate a somewhat accelerated pace of share repurchases near term. Macro factors aside, GPN is clicking on most cylinders. We raise our PT to $100 (from $90).

Shaul Eyal TECHNOLOGY 212-667-8411 Verint Systems (VRNT - $54.08) Communication Software

Rating Market Cap Price Target Earnings Type 2013A 2014E 2015E

O $3,283.4M $70.00 EPS 2.84 3.42 3.76

Double-Digit Grower; KANA & Cyber Expand TAM

On 1/15/15, we met with VRNT senior management. Verint offers advanced technologies, domain expertise and customer-centric services to capture structured and unstructured data, to process and analyze this data and to generate actionable insights across multiple domains. VRNT targets double-digit top-line growth and steady margin expansion (op margins currently in the low 20%s) and is expanding its total addressable market (TAM) by leveraging its core capabilities into new opportunities. VRNT is executing well, and demand is strong as customers seek product suites from an increasingly selective vendor roster. We reiterate our Outperform and $70 target (17x our FY16E EPS of $4.13).

3 Morning Summary -January 16, 2015

Andrew Uerkwitz TECHNOLOGY 212 667-5316 BlackBerry (BBRY - $10.11) Emerging Technologies and Services

Rating Market Cap Price Target Earnings Type 2014A 2015E 2016E

P $5,340.6M NA EPS (1.35) (0.18) (0.36)

BBRY Management Meeting Takeaway

We had the opportunity to meet with Blackberry CFO James Yersh. The hot topics were recent press speculation, pathway to software revenue, and opportunities for QNX. Management denied the speculation of a takeout bid by reiterating the press release yesterday (1/14). Mgmt said it has plenty of liquidity, is steadfast in its execution of the strategy, but spoke of the value of its assets (expertise in security and IP). We believe there is potential interest in Blackberry as a target but do not expect anything immediate. We came away more confident in the company's ability to execute its software strategy but remain cautious on the hardware segment. We leave our estimates unchanged, including below- consensus handset expectations.

INTERNET Manish Hemrajani 212 667-5407

Expedia Buying Travelocity?

Yesterday the FTC in a very terse statement posted on www.ftc.gov granted an Early Termination notice to Sabre and Expedia on their Hart Scott Rodino (HSR) filing with the acquired entity being Travelocity (see Appendix 1 of our full report, released today). Barring any press release from either company, we can only opine on the probability that Expedia is in the process of acquiring the entire Travelocity asset. Indeed, if that is the case we view this development as a positive for both SABR and EXPE. It helps SABR delever its balance sheet further and takes a non-core asset out of focus. EXPE gains further market share in the US (~58%) and four more quarters of inorganic boost to its revenue growth. We estimate the potential deal to be 6-8x estimated EBITDA of $40M for Travelocity. Maintain Outperform on EXPE ($92 target) and SABR ($22 target).

Steven Lichtman HEALTHCARE 212-667-8160 Insulet Corp. (PODD - $31.86) Medical Devices

Rating Market Cap Price Target / Prior Earnings Type 2014E 2015E / Prior

O $1,786.8M $39.00 / $50.00 EPS -- (0.17) 0.07 / 0.21

Lower '14E New US Patient Adds; Lowering Price Target

‎Comments by PODD this week on '14 results indicated that US diabetes growth, particularly new patient adds, was lower than Street estimates. New patient adds declined ~9% following a 30% increase in '13 on the next-gen Omnipod launch. We estimate '14 US OmniPod revs grew 16%. International was the offset and OUS revs doubled in '14. Early indications on FY15 imply mid-teens top-line guidance (vs. our previous 23-24%). There may be some new management conservatism embedded and there are potential accelerators including increased sales/ marketing investment and AMGN/Neulasta launch in '15 and a new handheld launch/CGM connectivity and Type 2 pump launch in '16. Near term, the story is in show-me stage as new management begins executing its plan.

4 Morning Summary -January 16, 2015

CONSUMER Rupesh Parikh, CFA 212 667-5263

ICR Takeaways: Still A Favorable Demand Backdrop For Natural/Organic

Earlier this week, we spent time and/or attended company events for FWM, HAIN, STKL, and UNFI at ICR. The focus of today's brief update is primarily on our food coverage universe. We walked away with a still positive outlook toward demand drivers for the natural/organic space. Increasing consumer awareness toward healthy eating, retailer interest in the category and product innovation are likely to sustain organic growth rates amongst the highest within the food space. With peakish valuations in some names, moderating announced M&A activity and growing FX headwinds, we believe investors need to be more selective than in recent years. In the food/grocery space, our top picks remain WFM, UNFI and KR. We still look favorably on WWAV, but expect FX and supply challenges in organic dairy to limit upside near term. We would be more constructive on HAIN and SFM shares on a pullback.

FINANCIAL INSTITUTIONS Chris Kotowski 212 667-6699

Printing Cash: Our 2015 Outlook

Referring to the private equity-based asset managers at their December investor day, Apollo CFO Martin Kelly noted, "These things print cash and you can ignore it only for so long. I think over time the market will recognize it." Despite the fact that the market did a pretty good job of ignoring it in 2014 (the group was down 10% on average vs the S&P gaining 9%), we agree with Mr. Kelly. Ultimately the market will reward cash returns and we think 4Q14 results will be another quarter's validation as all four of the large publicly traded private equity based asset managers look to have generated very significant cash carry during the quarter. We think the group is very compelling at just 8.8X our 2016 cash distributable earnings (DE) estimates.

Manish Hemrajani INTERNET 212 667-5407 The Priceline Group Inc. (PCLN - $998.25) Online Travel

Rating Market Cap Price Target Earnings Type 2013A 2014E 2015E

O $52,264.4M $1,300.00 EPS 41.77 52.50 58.43

Priceline Launches Last-Minute Booking App, Booking Now

Priceline yesterday launched the first truly global app for spontaneous bookings called "Booking Now." Supported by Booking.com's vast network of over 587,000 properties, the mobile app allows users to secure last minute reservations in "just two steps," according to the company. This rollout lends itself to the evolving trends in booking, consumer and accommodation behavior and the emergence of a new consumer segment, the "spontaneous booker." Using "Tinder-like" mechanics, users are able to search nearby lodging matches by swiping left or right, based on of their preferences. As the consumer landscape shifts toward an on-demand economy, we expect this new Priceline feature to accommodate its users on a more personalized level.

COMMUNICATION AND CLOUD Timothy Horan, CFA 212-667-8137

Daily Datatimes, January 16, 2015

■ T-Mobile Introduces Lower Priced Prepaid Plans ■ Regulatory Accountability Act Passes House, Goes to Senate Vote ■ GOOG Introduces Cloud Monitoring to Monitor Public/Hybrid Clouds

5 Morning Summary -January 16, 2015

■ Other Items of Interest

Rick Schafer TECHNOLOGY 720-554-1119 Intel Corp. (INTC - $36.19) Semiconductors & Components

Rating Market Cap Price Target Earnings Type 2014A / Prior 2015E / Prior 2016E / Prior

P $174,978.7M NA EPS 2.32 / 2.24 2.26 / 2.30 2.45 / 2.40

Mobility Efforts Progressing, Though Profitability Remains Out on the Horizon

INTC reported in-line 4Q14 sales of $14.7B, while EPS of $0.74 benefited from a lower tax rate to top consensus' $0.66E. Mgmt guided 1Q down 7% Q/Q to $13.7B, just shy of consensus' $13.8B(E). DCG continues as a bright spot while MCG remains a material drag for the foreseeable. GM of 65.4% was positive, but guided down to 62% for full year 2015 primarily on higher 14nm costs. INTC repurchased $4B in stock during the quarter, leaving ~60% of its $20B authorization in play. PC appears to be stabilizing, and mgmt believes inventory levels are healthy. The wait for MCG profitability appears likely to be protracted from here. Maintain Perform.

TECHNOLOGY Rick Schafer 720-554-1119

Daily Chip Clips

■ Intel Reports Record Full-Year Revenue of $55.9 Billion (Company Release) ■ Worldwide PC shipments grow 1% in 4Q14, says Gartner (Digitimes)

■ Samsung said to dump Qualcomm chip in Galaxy S6 (Digitimes)

Anna Andreeva CONSUMER 212-667-7945 The Childrens Place (PLCE - $62.73) Specialty Retailing

Rating Market Cap Price Target Earnings Type 2013A 2014E 2015E

O $1,329.7M $64.00 EPS 3.26 3.10 3.45

TGT Canada Stores Closing—Read Opportunity for PLCE/CRI

Yesterday morning, Target announced plans to discontinue its Canadian operations, after two years of being in the region. The company has 133 stores in Canada and said in its announcement that it couldn't reach profitability in this segment by its goal of 2021. This could present opportunities to gain market share for other retailers--in our space, most notably for kids' retailers PLCE and CRI, which both have big exposure to Canada (14% and 6% of retail sales, respectively) and compete with TGT in the US. In near term could see some pressure as TGT Canada liquidates, longer term opportunity.

6 Morning Summary -January 16, 2015

Brian Bittner, CFA CONSUMER 212-667-7127 BJ's Restaurants Inc. (BJRI - $47.04) Restaurants

Rating Market Cap Price Target Earnings Type 2013A 2014E / Prior 2015E

O $1,226.9M $56.00 EPS 0.85 0.95 / 0.93 1.22

Margin Upside In Early Stages; Reiterate Outperform

Fourth-quarter comps were pre-released at +1.2%, the best since 4Q12 (and above Street's +0.7%E). We believe the model remains in midst of major earnings revision cycle as EBIT margins climb back to 6%+. With stock up 42% since late Oct. (vs. S&P's +2%), shares could dip near-term as investors "sell the news," but our thesis remains intact and we'd suggest buying weakness, particularly ahead of the full 2/18 earnings. Reiterate $56 price target.

James Schumm ENERGY 212 667-7237 Schlumberger Limited (SLB - $76.63) Oilfield Services

Rating Market Cap Price Target Earnings Type 2014E 2015E

O $98,607.0M $110.00 EBITDA -- 13.71B 12.01B

Q4 Beats (After a Lot of Noise)

Quick Take: Nice EPS beat after removing the $1.8 billion of one-time items. However, the real focus is on the operational challenges that lie ahead and there was limited commentary in the press release. All ears will be on the company's conference call today, 1/16. Schlumberger reported adjusted 4Q14 EPS of $1.50 compared with our $1.47 estimate and the consensus of $1.45. The adjusted EPS removes $1.26 per share of losses from a WesternGeco impairment ($0.60), a currency devaluation in Venezuela ($0.36), a workforce reduction ($0.20) and an SPM impairment ($0.10). The majority of these one-time items were already communicated to investors.

Chris Kotowski FINANCIAL INSTITUTIONS 212 667-6699 Citigroup Inc. (C - $49.05) Commercial & Investment Banking

Rating Market Cap Price Target / Prior Earnings Type 2014A / Prior 2015E / Prior 2016E / Prior

O $148,596.4M $67.00 / $70.00 EPS 2.40 / 2.52 5.34 / 5.51 5.87 / 6.02

Soft Quarter, But Management Firm on 2015 Outlook

Citi's 4Q14 results were nothing to write home about, but management, which has heretofore been relatively conservative on guidance, offered guidance that put one pretty close to the 2015 consensus—low-to-mid single-digit revenue growth, mid-50s efficiency ratio and a 0.90% ROA. Normally we would be cautious about following management guidance in the absence of trends to point to in the current financials, but given that the normally circumspect CEO Corbat has been in the seat for two years now and will live or die by it this time next year, we are taking it. Thus, despite a significant miss in 4Q14, we are shaving our 2015 estimate by only ~3%. We continue to recommend the stock.

7 Morning Summary -January 16, 2015

Oppenheimer Marketing Events

February 11, 2015 – 5th Annual Oppenheimer Research Summit (London) March 5, 2015 -- 8th Annual Cloud Services 1-on-1 Conference (New York) May 10, 2015 -- 16th Annual Israeli Conference (Tel Aviv, Israel) May 12-13, 2015 – 10th Annual Industrial Growth Conference (New York) June 23-24, 2015 -- 15th Annual Global Consumer Conference (Boston) August 11-12, 2015 -- 18th Annual Technology, Internet & Communications Conference (Boston) December 8-9, 2015 -- 26th Annual Healthcare Conference (New York)

8 Morning Summary -January 16, 2015

Important Disclosures and Certifications Other companies mentioned in this report: 005930.KRX 005930.KS 2330.TAI AAPL AMD AMGN AMZN APO ATHL AXP AXTA BAH BJRI BKU BRX BX CACQ CG CHRS CIE COMM COR CQP CRI CTL CZR EPE EQIX EXPE FIG FIS FSL FWM GLPI GOOG GPN HAIN HCA HDS HLT INTC INTC INXN IT KKR KMI KOS KR LEAF LQ MIK MMYT MU NCLH NLSN NOR NSM NUM NVDA OWW PBF PCLN PEGI PENN PF PLCE PODD PRAH QCOM RAX RXN S SABR SEAS SFM SFM SNOW STAY STKL STM TAM TGT TMH TMUS TXN UNFI VRS WAIR WBA WFM WMT WWAV ZAYO

Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by Oppenheimer & Co. Inc.: Stock Prices as of January 16, 2015 Intel Corp. (INTC - NASDAQ, 36.19, PERFORM) QUALCOMM Incorporated (QCOM - NASDAQ, 71.38, OUTPERFORM) Apple Inc. (AAPL - NASDAQ, 106.82, OUTPERFORM) Advanced Micro Devices (AMD - NYSE, 2.52, UNDERPERFORM) Intel Corp. (INTC - NASDAQ, 36.19, PERFORM) NVIDIA Corp. (NVDA - NASDAQ, 19.60, PERFORM) Texas Instruments (TXN - NYSE, 52.39, PERFORM) Amgen Inc. (AMGN - NASDAQ, 151.92, PERFORM) Insulet Corp. (PODD - NASDAQ, 31.86, OUTPERFORM) Amazon.Com, Inc. (AMZN - NASDAQ, 286.95, OUTPERFORM) CenturyLink (CTL - NYSE, 38.30, PERFORM) Equinix Inc. (EQIX - NASDAQ, 218.21, OUTPERFORM) Google, Inc. (GOOG - NASDAQ, 501.79, PERFORM) InterXion Holding N.V. (INXN - NYSE, 27.84, PERFORM) Rackspace Hosting, Inc. (RAX - NYSE, 45.43, OUTPERFORM) Sprint Nextel (S - NYSE, 4.09, UNDERPERFORM) T-Mobile (TMUS - NYSE, 29.18, OUTPERFORM) Zayo Group (ZAYO - NYSE, 30.16, OUTPERFORM) Apollo Global Management (APO - NYSE, 23.52, PERFORM) The Blackstone Group (BX - NYSE, 33.47, PERFORM) Carlyle Group L.P. (CG - NYSE, 24.82, OUTPERFORM) Fortress Investment Group (FIG - NYSE, 7.65, OUTPERFORM) Freescale Semiconductor (FSL - NYSE, 25.29, PERFORM) HCA Inc. (HCA - NYSE, 70.07, OUTPERFORM) KKR & Co. (KKR - NYSE, 22.81, OUTPERFORM) Nationstar Mortgage Holdings (NSM - NYSE, 25.27, OUTPERFORM) Rexnord Corporation (RXN - NYSE, 25.02, OUTPERFORM) Sprouts Farmers Market, Inc. (SFM - NASDAQ, 33.94, PERFORM) American Express Company (AXP - NYSE, 87.07, PERFORM) Fidelity Nat'l Information Services (FIS - NYSE, 62.22, OUTPERFORM) Global Payments Inc. (GPN - NYSE, 84.70, OUTPERFORM) BJ's Restaurants Inc. (BJRI - NASDAQ, 47.04, OUTPERFORM) Carters, Inc. (CRI - NYSE, 83.79, PERFORM) The Childrens Place (PLCE - NASDAQ, 62.73, OUTPERFORM) Expedia Inc. (EXPE - NASDAQ, 82.53, OUTPERFORM) MakeMyTrip Limited (MMYT - NASDAQ, 25.56, OUTPERFORM)

9 Morning Summary -January 16, 2015

Orbitz Worldwide, Inc. (OWW - NYSE, 9.04, OUTPERFORM) The Priceline Group Inc. (PCLN - NASDAQ, 998.25, OUTPERFORM) Sabre Corporation (SABR - NASDAQ, 19.40, OUTPERFORM) Fairway Group Holdings (FWM - NASDAQ, 3.47, PERFORM) Hain Celestial Group, Inc. (HAIN - NASDAQ, 53.04, PERFORM) The Kroger Co. (KR - NYSE, 65.75, OUTPERFORM) Sprouts Farmers Market, Inc. (SFM - NASDAQ, 34.39, PERFORM) United Natural Foods Inc. (UNFI - NASDAQ, 77.87, OUTPERFORM) Whole Foods Market, Inc. (WFM - NASDAQ, 51.45, OUTPERFORM) WhiteWave Foods Company (WWAV - NYSE, 32.64, OUTPERFORM)

All price targets displayed in the chart above are for a 12- to- 18-month period. Prior to March 30, 2004, Oppenheimer & Co. Inc. used 6-, 12-, 12- to 18-, and 12- to 24-month price targets and ranges. For more information about target price histories, please write to Oppenheimer & Co. Inc., 85 Broad Street, New York, NY 10004, Attention: Equity Research Department, Business Manager.

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Distribution of Ratings/IB Services Oppenheimer & Co. Inc.

IB Serv./Past 12 Mos.

Rating Count Percent Count Percent BUY [O/B/OP] 330 55.00 144 43.64 HOLD [N/P/SP] 263 43.83 97 36.88 SELL [UP/S/U] 7 1.17 0 0.00

Although the investment recommendations within the three-tiered, relative stock rating system utilized by Oppenheimer & Co. Inc. do not correlate to buy, hold and sell recommendations, for the purposes of complying with FINRA rules, Oppenheimer & Co. Inc. has assigned buy ratings to securities rated Outperform, hold ratings to securities rated Perform, and sell ratings to securities rated Underperform.

10 Morning Summary -January 16, 2015

Oppenheimer & Co. Inc. makes a market in the securities of CG, PODD, INTC, PCLN, C, VRNT, BJRI, PLCE, BBRY, AMZN, EQIX, EXPE, GOOG, MMYT, NVDA, QCOM, SABR and TMUS.

Oppenheimer & Co. Inc. expects to receive or intends to seek compensation for investment banking services in the next 3 months from C, VRNT, BJRI, INXN, MMYT and ZAYO.

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The Oppenheimer & Co. Inc. analyst/associate(s) who covers this company also has a long position in KKR and BX.

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11 Morning Summary -January 16, 2015

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