EQUITY RESEARCH MORNING RESEARCH SUMMARY June 11, 2020

EQUITY RESEARCH MORNING RESEARCH SUMMARY June 11, 2020

EQUITY RESEARCH MORNING RESEARCH SUMMARY June 11, 2020 What's Inside Focus Items Initiation ShockWave Medical, Inc. (SWAV) Suraj Kalia, CFA DKNG O DraftKings, Inc. Market Flows Overshadowing Fundamentals; Moving to Perform from Underperform Rating Change GRUB NR ® GrubHub, Inc. HEALTHCARE Michael Wiederhorn SWAV P ­ ShockWave Medical, Inc. Election Series: Biden's Healthcare Plan + Payor Impact Estimates & PT Revisions Jack in the Box, Inc. (JACK) Brian Bittner, CFA ADBE O ­ Adobe Systems Incorporated JACK Is Back; Raise Target To $89 AXGT P ­ Axovant Sciences Ltd. Yum! Brands Inc. (YUM) Brian Bittner, CFA ¯ FIVE O Five Below Encouraging Business Update; Reiterate Outperform JACK O ­ Jack in the Box, Inc. ORCL P ¯ Oracle Corporation Adobe Systems Incorporated (ADBE) Brian Schwartz PRPL O ­ Purple Innovation, Inc. F2Q Preview: Transitory Quarter and Model Update ROKU O ­ Roku, Inc. Oracle Corporation (ORCL) Brian Schwartz SBUX O ¯ Starbucks Corporation Oracle's F4Q Preview and Model Change VRNS O ­ Varonis Systems, Inc. YUM O ­ Yum! Brands Inc. CrowdStrike Holdings, Inc. (CRWD) Shaul Eyal Investors' Meeting Takeaways Updates TECHNOLOGY Shaul Eyal ADI O Analog Devices Virtual Bus Tour Highlights: CyberArk and Varonis CRWD O CrowdStrike Holdings, Inc. CYBR O CyberArk Software Ltd. Analog Devices (ADI) Rick Schafer INTC P Intel Corp. Notes from the Road MPWR O Monolithic Power Systems NVIDIA Corp. (NVDA) Rick Schafer MRVL O Marvell Technology Group Bus Tour Notes Takeaways MXIM P Maxim Integrated Products NVDA O NVIDIA Corp. Marvell Technology Group (MRVL) Rick Schafer SWKS P Skyworks Solutions, Inc. Notes from the Road Estimates/Ratings/Price Target Updates Roku, Inc. (ROKU) Jason Helfstein Annual Estimates Advertising Recovering Faster Than Anticipated; GOOG/TCL Current FY Next FY Ratings Price Targets Headlines Overblown; Maintaining Outperform Company Ticker Prev Curr Prev Curr Prev Curr Prev Curr Other Headlines Technical Analysis Ari Wald, CFA, CMT Adobe Systems ADBE 9.75 9.25 11.80 10.85 O O $410.00 $430.00 Incorporated Color for Fundamental Focus Calls: ADBE, ORCL, NVDA, UNH, Axovant AXGT (2.35) (1.73) (2.25) (1.63) P P NA NA NDAQ, ROKU Sciences Ltd. Five Below FIVE 3.63 1.52 4.40 3.70 O O $140.00 $140.00 For analyst certification and important disclosures, see the Disclosure Appendix. Oppenheimer & Co Inc. 85 Broad Street, New York, NY 10004 Tel: 212-667-7990 Morning Summary - June 11, 2020 GrubHub, Inc. GRUB -- -- -- -- P NR NA NA Axovant Sciences Ltd. (AXGT) Jay Olson, CFA Jack in the Box, JACK 3.77 3.82 4.96 4.97 O O $75.00 $89.00 Quarterly Update Outlines Key Catalysts Inc. Oracle ORCL 3.91 3.79 4.31 4.06 P P NA NA GrubHub, Inc. (GRUB) Jason Helfstein Corporation Just Eat Takeaway.com to Acquire GrubHub for $7.3B; Moving to Purple PRPL 0.51 0.63 0.55 0.57 O O $19.00 $19.00 Innovation, Inc. Not Rated Roku, Inc. ROKU -- -- -- -- O O $135.00 $140.00 DraftKings, Inc. (DKNG) Jed Kelly, CFA ShockWave SWAV (2.32) (2.32) (2.08) (2.08) U P $23.00 NA Sharp Side on Proven Executor in Fast-Growing Sports Betting Medical, Inc. Market; Initiating with Outperform and $48 Price Target Starbucks SBUX 1.42 0.81 2.59 2.57 O O $85.00 $85.00 Corporation TECHNOLOGY Ittai Kidron Varonis VRNS (1.15) (1.15) (0.50) (0.50) O O $70.00 $95.00 Systems, Inc. Virtual Bus Tour Highlights: VMware and Citrix Yum! Brands YUM 2.81 2.92 3.83 3.83 O O $93.00 $103.00 Inc. Intel Corp. (INTC) Rick Schafer Bus Tour Notes Monolithic Power Systems (MPWR) Rick Schafer Virtual Bus Tour Notes Maxim Integrated Products (MXIM) Rick Schafer Notes from the Road Skyworks Solutions, Inc. (SWKS) Rick Schafer Notes from the Road TECHNOLOGY Rick Schafer Daily Chip Clips Starbucks Corporation (SBUX) Brian Bittner, CFA Thoughts on Recent Update; Maintain Outperform Five Below (FIVE) Brian Nagel, CFA Long-term EPS Power for FIVE Intact Purple Innovation, Inc. (PRPL) Brian Nagel, CFA Adjusting Model to Reflect Upbeat Business Update 2 Morning Summary -June 11, 2020 Snap Commentaries - Equities Updates Suraj Kalia, CFA HEALTHCARE 212-667-5387 ShockWave Medical, Inc. (SWAV - $46.67) Medical Devices Rating / Prior Market Cap Price Target / Prior Earnings Type 2019A 2020E 2021E P / U $1,486.9M NA / $23.00 EPS (1.80) (2.32) (2.08) Market Flows Overshadowing Fundamentals; Moving to Perform from Underperform We are upgrading ShockWave to a Perform rating (from our prior Underpeform/$23 PT). Consistent with the broader market, SWAV has rallied ~40% since early April (vs. the S&P 500 up ~24%), and now trades at ~15x FY21E P/S, one of the highest valuations in medtech-land. Recent news about C-codes for IVL is, in our view, adding more "speculation" into the name, despite the same codes currently being used for IVL billing. This "cost-analysis" exercise by CMS will be used to determine final rates, which might take a few years. Our overall frustration should be obvious in this note. We have been dead wrong on the timing of the downgrade. We do, however, stick with our field checks on the fundamentals. HEALTHCARE Michael Wiederhorn 954-356-8312 Election Series: Biden's Healthcare Plan + Payor Impact As we are fast approaching the important 2020 presidential election, we are taking a look at how policy could look in 2021 and beyond. We believe the COVID-19 pandemic is certain to bring healthcare to the forefront of the upcoming election, especially in light of the rapidly growing unemployment rate that is certain to affect insurance coverage throughout the country. Former VP Joe Biden is reportedly leading President Trump in the polls, although the election remains months away. At this point, we have a good sense for how HHS will operate under President Trump, but in today's report, we took a closer look at how policy might look under a Biden administration and more specifically how an expansion of Medicare would impact the insurers. The former VP has presented various healthcare policies that would strengthen the ACA, expand Medicare to the age 60–64 population, implement a public option, and allow prescription drug price negotiations. Brian Bittner, CFA CONSUMER 212-667-7127 Jack in the Box, Inc. (JACK - $71.03) Restaurants Rating Market Cap Price Target / Prior Earnings Type 2019A 2020E / Prior 2021E / Prior O $1,610.4M $89.00 / $75.00 EPS 4.35 3.82 / 3.77 4.97 / 4.96 JACK Is Back; Raise Target To $89 Ahead of JACK's participation in Oppenheimer's Consumer Conference on 6/16, the company provided a business update which implies SSS are positive high-singles since early-May. These recent trends are industry-leading and above consensus despite JACK's higher exposure to breakfast and late-night dayparts. Based on our work, we believe positive EBITDA revisions 3 Morning Summary -June 11, 2020 to '21E will be a key theme. Yet the model remains underappreciated by the market with valuation still a massive 30%+ discount to peers all while incoming CEO (starts next week) adds another layer to an improving story. Reiterate Outperform, raise estimates and increase target to $89 from $75. Brian Bittner, CFA CONSUMER 212-667-7127 Yum! Brands Inc. (YUM - $95.56) Restaurants Rating Market Cap Price Target / Prior Earnings Type 2019A 2020E / Prior 2021E O $28,762.2M $103.00 / $93.00 EPS 3.73 2.92 / 2.81 3.83 Encouraging Business Update; Reiterate Outperform After evaluating YUM's June 10th business update, it appears global SSS for TB and PH are recovering ahead of consensus while KFC's recovery appears to be in line. We carefully apply all moving pieces to our updated financial model and our 2021 EPS stays unchanged at $3.83, which sits above the Street's $3.73E. We view the global KFC business as the most important potential upside driver from here given: 1) it represents the largest business segment (roughly half of YUM's profits); 2) consensus underwrites negative SSS through year-end; and 3) opportunities for a stronger KFC recovery are now taking shape. Reiterate Outperform and raise price target to $103 from $93. 4 Morning Summary -June 11, 2020 Brian Schwartz TECHNOLOGY 415-399-5732 Adobe Systems Incorporated (ADBE - $406.82) SaaS/Applications Software Rating Market Cap Price Target / Prior Earnings Type 2019A 2020E / Prior 2021E / Prior O $196,006.2M $430.00 / $410.00 EPS 7.87 9.25 / 9.75 10.85 / 11.80 F2Q Preview: Transitory Quarter and Model Update We believe Adobe remains well-positioned to achieve its long-term financial goals. Our industry checks reveal good enterprise demand for Adobe with the company increasingly viewed as a cornerstone of customer-engagement-and-experience driven digital transformations. Certain segments of the business (i.e., commerce, messaging, e-signature, analytics) are experiencing accelerating demand during the Covid-19 pandemic while cycles for the distressed industries extend. Last, use cases in marketing departments are shifting from driving consumer-traffic via behavioral-targeting to brand promotion and messaging. This shift should benefit bookings by increasing usage and adoption of Adobe's creative software and Experience Cloud technologies. Bottom Line: We see F2Q as a transitory-quarter. Beyond F2Q we expect customers will continue viewing Adobe's technology as mission-critical driven by the immediate needs for digitizing, brand promotion and messaging. Raise PT to $430 (from $410). Brian Schwartz TECHNOLOGY 415-399-5732 Oracle Corporation (ORCL - $54.18) SaaS/Applications Software Rating Market Cap Price Target Earnings Type 2019A 2020E / Prior 2021E / Prior P $170,861.2M NA EPS 3.52 3.79 / 3.91 4.06 / 4.31 Oracle's F4Q Preview and Model Change We maintain our Perform rating and revise lower our forecast.

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