Evercore ISI's Best "Core" Ideas

This report is prepared solely for the use of Joyce Poon
Best 'Core' Ideas

February 01, 2021
Evercore ISI Evercore ISI's Best "Core" Ideas

212 497 0872
research.evercoreisi@evercoreisi.com
Here is an update on the companies that compose our Best
“Core” Ideas List – our top longer term (1 year +) stock
picks. Our teams maintained their current selections this month.
We make our selections by leveraging Evercore ISI’s leading
macro research and reflecting the current market environment,
identifying companies best positioned to outperform. Please
contact us if you have any questions. Summaries of our current
Best "Core" Ideas are provided in alphabetical order below.
Best "Core" Ideas Companies

Price Price
Company Analyst 1/29/21 Target
Activision Blizzard, Inc Benjamin Black $91 $110
Amphenol Corporation Amit Daryanani $125 $148
Avantor, Inc. Vijay Kumar $29 $32
Caterpillar Inc David Raso $183 $206
Centene Corp Michael Newshel $60 $88
Chevron Corp Doug Terreson $85 $98
Cisco Systems, Inc. Amit Daryanani $45 $54
Cummins Inc. David Raso $234 $289
Danaher Corporation Vijay Kumar $238 $280
Equitable Holdings, Inc. Thomas Gallagher $25 $38
Facebook Inc. Kevin Rippey $258 $360
Fidelity National Information Svcs David Togut $123 $185
Magna International Inc. Chris McNally $70 $100
Medtronic plc Vijay Kumar $111 $135
Microsoft Corporation Kirk Materne $232 $300
NIKE, Inc. Omar Saad $134 $185
NVIDIA Corp. C.J. Muse $520 $675
PayPal Holdings, Inc. David Togut $234 $312
salesforce.com Inc. Kirk Materne $226 $290
Schlumberger Ltd. James West $22 $28
Southwest Airlines Co. Duane Pfennigwerth $44 $60
Square, Inc. Rayna Kumar $216 $304
T-Mobile US, Inc. Vijay Jayant $126 $150
The Blackstone Group, L.P. Glenn Schorr $67 $71
The Home Depot, Inc. Greg Melich $271 NA
The Procter & Gamble Company Robert Ottenstein $128 $163
Thermo Fisher Vijay Kumar $510 $520
Please see the analyst certification and important disclosures on page 19 of this report. Evercore ISI and affiliates do and seek to do business with
companies covered in its research reports. 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.
© 2021. Evercore Group L.L.C. All rights reserved.
Best Long Term "Core" Ideas

Market Perf from 3-Month 1/29/21 Price
Company Ticker Rating Cap (bn) Add Date Add Date* Perf Price Target
Activision Blizzard, Inc ATVI Outperform $70.3 11/16/20 17.5% 17.5% $91 $110
Amphenol Corporation APH Outperform $37.4 7/6/20 27.2% 10.7% $125 $148
Avantor, Inc. AVTR Outperform $17.1 6/11/19 67.6% 26.7% $29 $32
Caterpillar Inc CAT Outperform $99.3 4/20/18 19.3% 16.4% $183 $206
Centene Corp CNC Outperform $35.0 2/18/20 -9.5% 2.1% $60 $88
Chevron Corp CVX Outperform $164.1 7/6/20 -3.8% 22.6% $85 $98
Cisco Systems, Inc. CSCO Outperform $188.2 7/6/20 -4.0% 24.2% $45 $54
Cummins Inc. CMI Outperform $34.7 7/6/20 31.6% 6.6% $234 $289
Danaher Corporation DHR Outperform $169.1 1/4/21 6.6% 6.6% $238 $280
Equitable Holdings, Inc. EQH Outperform $11.0 7/6/20 27.6% 15.3% $25 $38
Facebook Inc. FB Outperform $735.8 7/6/20 7.5% -1.8% $258 $360
Fidelity National Information Svcs FIS Outperform $76.6 12/17/19 -10.4% -0.9% $123 $185
Magna International Inc. MGA Outperform $21.0 7/6/20 54.1% 37.4% $70 $100
Medtronic plc MDT Outperform $149.9 8/24/20 11.2% 10.7% $111 $135
Microsoft Corporation MSFT Outperform $1,749.5 4/20/18 144.2% 14.6% $232 $300
NIKE, Inc. NKE Outperform $210.6 4/20/18 102.1% 11.3% $134 $185
NVIDIA Corp. NVDA Outperform $321.6 7/6/20 32.0% 3.6% $520 $675
PayPal Holdings, Inc. PYPL Outperform $274.5 4/20/18 197.6% 25.9% $234 $312
salesforce.com Inc. CRM Outperform $206.5 4/20/18 83.7% -2.9% $226 $290
Schlumberger Ltd. SLB Outperform $30.9 4/20/18 -67.9% 48.7% $22 $28
Southwest Airlines Co. LUV Outperform $25.9 7/6/20 28.1% 11.2% $44 $60
Square, Inc. SQ Outperform $97.4 1/5/21 -6.0% -6.0% $216 $304
T-Mobile US, Inc. TMUS Outperform $156.5 11/2/20 14.2% 14.2% $126 $150
The Blackstone Group, L.P. BX Outperform $79.5 4/20/18 108.5% 33.3% $67 $71
The Home Depot, Inc. HD Outperform $291.6 4/26/19 33.0% 1.5% $271 NA
The Procter & Gamble Company PG Outperform $315.9 7/6/20 5.5% -6.4% $128 $163
Thermo Fisher TMO Outperform $202.0 6/28/18 147.9% 7.7% $510 $520
* Performance figures exclude dividends
2
Activision Blizzard, Inc. vs. S&P 500

25-Jan-2019 to 26-Jan-2021 Price (Local Currency) Activision Blizzard, Inc (ATVI): Outperform, PT $110
4,000 Activision Blizzard, Inc. (Right) S&P 500 (Left)
3,600
90 Internet
80
3,200 70 Benjamin Black, Benjamin.Black@evercoreisi.com, 212.653.9022
2,800 60
50
2,400
40 Call of Duty provides clear proof-point of the upside associated with ATVI’s strategy of
doubling down on existing franchises. Out of all the video game companies, we are of the
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21
Source: FactSet Prices
view that ATVI has the clearest path to revenue and margin upside over the next 3 years: a
rich pipeline of games with popular owned IP, business models with a proven track record of
driving user scale, and growing in game sales providing ample margin upside – a successful Call
of Duty Mobile launch into China provides incremental upside optionality for FY21. Looking
beyond FY21, we expect franchise reboots for Overwatch and Diablo, which likely follow the
successful strategy to more than double Call of Duty revenue in FY21. As such, we model 18%
revenue CAGR over the next 3 years as the company leverages hit IP in new game modes,
business models (think free-to-play), distribution channels (mobile), rolls out sequels of hit
franchises in Diablo and Overwatch, and expands internationally. Moreover, we believe ATVI
provides investors with a compelling margin narrative as incremental revenue largely skews
to in-game spend, which carries much higher incremental operating margins (up to +80% vs 20%
for boxed game sales), particularly for owned IP, which we expect will drive 900bps of margin
expansion over the next 3 years and a 28% OI CAGR from FY19-22 (11% from FY20-23).
Amphenol Corporation Class A vs. S&P 500

25-Jan-2019 to 26-Jan-2021 Price (Local Currency) Amphenol Corp. (APH): Outperform, PT $148
4,000 Amphenol Corporation Class A (Right) S&P 500 (Left) 140
3,600
130 IT Hardware
120
3,200 110
100 Amit Daryanani, Amit.Daryanani@evercoreisi.com, 415.800.0185
2,800 90
80
 ALL YOU NEED TO KNOW: APH remains a core mid-cap growth asset to own and in a
2,400
70
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

Source: FactSet Prices post COVID world EPS can get to $4.50+ in CY21 driven by: 1) Revenue recovery: Sales
should snap-up double digits as not only does demand recover, but we also see tailwinds
from pent-up demand and inventory getting rebuilt. 2) Localization – The New Share
Enabler? We think in a post-COVID world global tech manufacturing is likely to have a more
localized framework; this would bolster APH’s ability to accelerate their market share gains,
since APH runs a decentralized and localized manufacturing model with 100+ manufacturing
sites across the globe. 3) Automotive: Should broader auto macro recovery continue, we
think content growth and a better unit sales/production environment could yield better than
expected segment performance. 4) Mobile Devices: We think performance in this business
will be a swing factor for the company’s revenue trajectory. Management acknowledges that
this business has the least degree of visibility. 5) M&A: APH continues to remain active in
the deal market and has a strong track record of executing successful acquisitions. Most
recently, APH announced the acquisition of MTS Systems in a deal valued at $1.7B. The
acquisition is expected to close mid-way through 2021 and should be accretive in the first
year post close (~$0.16 benefit). Given today’s fragmented market, we think APH can go
after even more deals and further drive EPS upside, and 6) 5G: Evolution of
telecommunication standards typically drives a prolonged network infrastructure equipment
refresh cycle. Net/net: We think APH is positioned to sustain low double digit sales and
mid/high teens EPS growth for the next few years. Maintain Outperform and price target at
$140.
 Positioned for Recovery in CY21: With the ongoing COVID-19 pandemic, CY20 was a
significant down year for some large markets (auto, aerospace); therefore we believe the
focus for investors will be how these markets recover in CY21. In a post-COVID-19
environment, the combination of an easy compare vs. CY20 and broad-based pent-up
demand could drive material revenue growth. Based on APH’s recovery after the last
recession (08/09) where the company saw +26% (CY10) y/y revenue growth, we think a
>10% y/y growth upside is within the realm of possibility.
 Capital Allocation: APH’s net leverage ratio will increase to ~2.1x after the MTS deal closes
as the transaction was financed with cash on hand and commercial paper. APH will still have
some flexibility to increase to the 2.5-3.0x range.
3
 5G: The evolution of telecommunication standards typically drives a prolonged network

infrastructure equipment refresh cycle. We see potential from infrastructure upgrades from
the upcoming 5G refresh cycle materially benefiting APH’s Mobile Networks business.
Avantor, Inc. vs. S&P 500

25-Jan-2019 to 26-Jan-2021 Price (Local Currency) Avantor, Inc. (AVTR): Outperform, PT $32
4,000 Avantor, Inc. (Right) S&P 500 (Left)
3,600
30
Life Science and Diagnostic Tools
25
3,200
20 Vijay Kumar, Vijay.Kumar@evercoreisi.com, 212.653.9033
2,800
15
2,400 10
AVTR marks the emergence of a new Tools consolidator (to eventually be spoken about amongst
Danaher, Thermo and Merck), with a familiar business model built on highly differentiated
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products (predominantly consumable in nature) as well as the chassis of a key Life Sciences
distribution channel.
1. Sustainable growth w Biopharma exposure – Biopharma end market growth has
inflected and a COVID vaccine could provide incremental growth opportunities for the
industry. While ATR has ~50% exposure to Biopharma, its capabilities in bioproduction
(biologic drug manufacturing) are not well understood by the ST. The recent 1Q’20
earnings where AVTR put up positive organic growth was a testament to AVTR’s
resiliency and exposure to Biopharma. We think AVTR will be one of key Tools
companies to benefit from the COVID vaccine opportunity over the medium term, giving
comfort in the MSD topline profile.
2. Channel biz + FCF potential offer superior growth potential – We think getting
access to customers in a post COVID world will be challenging as customers limit
interactions with vendors. From this perspective, we think AVTR’s VWR channel
business confers on it a strategic advantage and gives comfort in pricing power
remaining positive. Additionally, we think FCF could triple over the next 3 years, making
AVTR one of fastest FCF growth companies in the Life Science Tools.
3. Liquidity not an issue – While levels are high at >4.5x, we note that AVTR is ‘covenant
light’ with no major cash needs expected for the next 3 years. With FCF potential
remaining strong, we do not see liquidity as being a concern for the company.
Overall, while the ST has been concerned on levered names, we think AVTR is a misunderstood
name and its superior FCF growth + sustainable topline potential offer meaningful upside over
the MT from current valuation levels.
Caterpillar Inc. vs. S&P 500

25-Jan-2019 to 26-Jan-2021 Price (Local Currency)
Caterpillar Inc. (CAT): Outperform, PT $206
Caterpillar Inc. (Right) S&P 500 (Left)
4,000
3,600
200 Machinery
180
3,200 160
140
David Raso, David.Raso@evercoreisi.com, 212.446.5647
2,800
120
2,400 100
80
Reflation Trades Face Higher Credibility Bar Than In The Past Reflation Hasn’t Happened
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Source: FactSet Prices In A Long While But Odds Are High Enough, Plus M&A Potential & Dealer Inventory
Assistance Clear Enough, With Many Investors Skeptical, To Keep CAT Attractive
 After many years of dormant inflation, we appreciate most investors are reticent to ascribe
a multi-year recovery as likely base case to many of Caterpillar’s commodity-drive
equipment markets, particular as some key markets like oil & gas and coal mining face
secular headwinds.
 However, with current commodity prices, continued money supply growth in China, weaker
US$ trends, and supportive global monetary policy all supportive of increased odds of, at a
minimum, better equipment recovery prospects for these high-margin end markets than
investors currently expect, we find Caterpillar attractive.
 Combine that with Caterpillar’s general construction equipment markets are set to enjoy
easy growth in 2021 simply from the end of dealer inventory destocking in 2020 of $2.5b,
non-zero odds of fiscal help to those markets’ retail demand prospects, we see EPS upside
4
to Street consensus for Caterpillar of greater than 20% for 2021 while we continue to
evaluate the prospects for a multi-year reflation story (one that investors are not positioned
for regarding Caterpillar).
 Lastly, but maybe as or more importantly as the reflation trade debate, Caterpillar has over
$9b of balance sheet flexibility that we see Caterpillar using some or all of in 2021 with
investments and acquisitions that could soften the negative narrative of Caterpillar will be
left behind as the economy shifts away from fossil fuels.
Centene Corporation vs. S&P 500

Centene Corp. (CNC): Outperform, PT $88
Centene Corporation (Right) S&P 500 (Left)
4,000
3,600
75
70
Health Care Facilities & Managed Care
65
3,200 60 Mike Newshel, Michael.Newshel@evercoreisi.com, 212.653.9031
55
2,800
50
2,400 45 COVID net positive to earnings from dropoff in general healthcare exceeding direct virus costs.
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Source: FactSet Prices Political tail risks overly discounted, and we see upside to accretion from WellCare acquisition.
 COVID Impact: For MCOs, the incremental direct costs of testing and treatment for
COVID (including covering normal patient cost share) are being more than offset by
the broader dropoff in normal healthcare utilization as elective procedures are
delayed and people stay home and avoid doctors’ offices and hospitals. There will
likely be some catch-up in electives in the back half of the year, but a significant
amount of care will be eliminated entirely and avoidance of healthcare facilities may
last into next year. Medicaid, where CNC is focused (half of earnings), tends to have
higher ER utilization (due to access issues) that may instead remain depressed. And
given high mix of full-risk premium revenue with low margins, CNC has highest
earnings sensitivity to medical loss ratio (MLR) – more upside/downside if healthcare
utilization is lower/higher. Upside will be limited by minimum medical loss ratios (profit
caps) and risk corridors in some states, but also by the political optics of avoiding
being seen benefiting from the crisis (any windfall might be returned as premium
rebates, provider payments or other voluntary actions). But the current track of the
virus gives us positive bias on original earnings targets.
 Unemployment: As a safety net, CNC’s Medicaid business is countercyclical, with
enrollment rising along with unemployment. Its subsidized exchange business (~20%
of earnings) could also see higher enrollment. Only 3% of earnings are from
commercial group insurance, where enrollment will instead decline. Risk factor to
watch is pressure on state finances (Medicaid 30% of budgets) and whether
Congress comes through with aid.
 Political Overhang: The Medicare-for-all cloud over MCOs has cleared with Biden
primary win, but ahead of election political tail risks still overly discounted. We think
Supreme Court will still likely uphold Affordable Care Act even with conservative
replacement for Ruth Bader Ginsburg, and even if it does high political pressure to
maintain coverage for 20M people and Republicans no longer campaigning on ACA
repeal. In the event of a Democrat sweep, we think stabilizing ACA with more
subsidies and pushing Medicaid expansion could be net positive, with robust public
option with pricing power to be a competitive threat unlikely (and notably not included
in legislation passed by Democrats in the House as a campaign marker). Reversal of
corporate tax rate cut a bigger risk than health policy changes, in our view, but the
rate unlikely to go back to the 30s. Biden’s proposal is 28%, and our Washington
policy team views that as a ceiling that would likely come down in negotiations even
with a Dem sweep.
 WCG Upside: Current guidance calls for accretion from recent WellCare acquisition
in mid-to-upper single-digits in 2021, up from original MSD target due solely to lower
financing costs. But this is still based on stale WCG projections prior to 2019’s double-
digit earnings outperformance. Some of the Part D margin upside priced back, but
high 2020 PDP enrollment plus ramping margins in FL/AZ/IL, eventual North Carolina
managed Medicaid launch, incremental Meridian synergies, health insurer fee repeal
and PBM rebid along with core growth gets us to potential 2021 accretion in low
double digits in 2021.
5
Chevron Corporation vs. S&P 500

Chevron Corp (CVX): Outperform, PT $98
Chevron Corporation (Right) S&P 500 (Left)
4,000
3,600
130
120 Integrated Oil
110
3,200 100
90
Doug Terreson, Doug.Terreson@evercoreisi.com, 251.928.6440
2,800 80
70
2,400 60
50
Chevron emphasizes returns, value creation and shareholder distributions. Balance between
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21
Source: FactSet Prices spending and shareholder distribution almost always leads to higher returns and valuation, and
positive shareholder outcomes in the Integrated Oil sector. Indeed, Chevron equity improbably
outperformed every Big Oil peer over 1, 3, 5, 10 and 20 years including: ExxonMobil, BP, Shell
and Total. The merit of the value-based model that Chevron and Evercore ISI espouse is clear
(see the “Pledge”). Chevron could sustain the next two years at $30 Brent while investing in the
business, maintaining the dividend, and exiting 2021 with a net debt ratio below 25%.
Cisco Systems, Inc. vs. S&P 500

Cisco Systems, Inc. (CSCO): Outperform, PT $54
IT Hardware
4,000 Cisco Systems, Inc. (Right) S&P 500 (Left) 60
3,600 55
3,200
50
45
Amit Daryanani, Amit.Daryanani@evercoreisi.com, 415.800.0185
2,800
40
2,400 35
We think CSCO remains an attractive asset particularly in a post COVID-19 world given the
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company’s incumbency in a growing and profitable networking product market, increasing
software/security/services mix, strong degree of revenue visibility/recurring revenue, potential for
M&A tailwinds, and a favorable shareholder return framework. In addition, we note that there are
near/medium-term industry tailwinds which should provide CSCO with growth vectors including
the upcoming 400G switching cycle, Wi-Fi 6 standard transition, and growing demand for security
solutions. The levers for revenue/EPS and stock multiple upside include: 1) Low/mid-single digit
core networking market growth, 2) entry into new markets (Silicon One), 3) margin expansion
due to growing mix of higher value solutions and opex discipline, 4) increasing mix of recurring
revenue, 5) pivot towards faster growing segments of the market, and 6) value-add M&A. As
investors become more comfortable with CSCO’s consistent FCF generation, we see potential
for CSCO stock to re-rate around an EV/FCF valuation methodology (similar to TXN.
Key Factors Underpinning Our Positive Bias
Fundamental Revenue/EPS Levers: We see multiple levers that should enable CSCO to
sustain continued top line and EPS/FCF growth over the next few years – 1) Core networking
equipment market growing low/mid single-digits (and CSCO maintains core product growth in-
line with market), 2) contribution from faster growing businesses such as applications, security,
and Silicon One, 3) moderate level of operating margin expansion driven by a stable gross
margin profile, mix shift, and opex scale, 4) contribution from accretive acquisitions, and 5) share
repurchases.
Staggering Market Share Provides an Enviable Moat (~50% in key areas): CSCO enjoys
market leading positions in several key product categories including Switching (~52%), Routing
(~37%), and WLAN (~45%). Given CSCO’s dominant share and strong profitability profile,
competition from both legacy and emerging vendors will impact CSCO’s ability to expand share.
However, the incumbency of CSCO, its proven track record of product performance, and strong
services/support capabilities across both the company and channel has led to a widely accepted
adage among IT managers/decision makers: “Nobody ever got fired for buying CSCO.”
Transformation Underway, Shift to Services & Recurring Mix: Since FY15, CCSO has been
able to expand its mix of recurring software and services from 35% to over 40% by FY18. The
mix shift towards recurring revenue became an area of focus for CSCO following the appointment
of current CEO Chuck Robbins in 2015; a higher recurring mix provides the company with
improved revenue visibility (contributes toward multiple expansion as well).
Active Acquisition Strategy: CSCO remains active on the acquisition front and we think the
company targets assets that provide a combination of: 1) new product/technical capabilities that
enhance the company’s product/solutions portfolio and/or 2) increases the mix of recurring higher
margin software/services revenue. Examples of deals fitting CSCO’s strategy include
6
AppDynamics, Japser, Sentryo, Singularity, Duo, Ensoft, BroadSoft, CliQr, etc. We note that
CSCO acquired AppDynamics just prior to the target’s intended IPO date. For CY20, CSCO has
announced the acquisitions (or intent to acquire) eight companies – ThousandEyes, Fluidmesh
Networks, Modcam, BabbleLabs, Portshift, Banzai Cloud, and Slido.
FCF Driven Valuation Framework? As investors gain comfort around CSCO’s ability to sustain
revenue growth, margin expansion, and shift towards a recurring business model, we see
potential for CSCO’s multiple to re-rate higher and perhaps lead investors toward an EV/FCF
valuation for the stock. If we assume CSCO stock can trade toward a ~20x EV/FCF, we see a
path to $70 longer term for CSCO stock. Although CSCO currently trades closer to ~13x on a
EV/FCF basis, a ~20x upside multiple is reasonable given there are other tech companies such
as analog semiconductor companies that are valued using similar methodologies by investors.
Cummins Inc. vs. S&P 500

Cummins Inc. (CMI): Outperform, PT $289
Cummins Inc. (Right) S&P 500 (Left)
4,000
3,600
260
240 Machinery
220
3,200
200
180 David Raso, David.Raso@evercoreisi.com, 212.446.5647
160
2,800
140
2,400 120
100 More Than Just A Domestic Heavy Truck Cycle Play For Significant Upside To
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21
Source: FactSet Prices Upcoming EPS To Be Shunned As “Backward Looking Peak Domestic Truck Cycle
Earnings”, Especially With Stock At 10%+ Discount To Sector Already Baking In Some
“Peak Domestic Truck” Concerns
 Cummins’ previously perceived demise as on-highway vehicle markets transition from diesel
to alternative technologies as reversed course with its strong position in electrification,
particularly for an eventual hydrogen economy on vehicle and for industrial applications
broadly.
 Meanwhile, it is positioned to gain incremental business as the 5-15 year transition away
from diesel will cause customers to outsource even more of its diesel business to Cummins
as customers focus costs and attention to newer technologies across their entire product
portfolio, not just drivetrains.
 Thus, Cummins’ terminal value concerns have eased notably. Now, the attention returns to
more medium term cycle trends.
 North America heavy truck markets, which represent approximately 30%+ of
Cummins’ business, provide strong growth and EPS upside potential over the next 12-18
months. However, with its early cycle nature, investors may compress the valuation multiple
on that portion of earnings.
 However, nearly 45% of Cummins business are relatively early in their cycle, principally off-
highway equipment markets and emerging markets outside of China.
 The China market exposure for Cummins (15%+ of revenues), once a key asset, could
become more of a concern as we move into 2021 give the tough comparisons of the very
strong 2020 China capital goods markets. As of now, though, surprisingly and better than
what our model is incorporating, further growth in China in 2021 what our contacts are seeing
in their order books.
 Cummins also has a rising content per vehicle story in India and China.
 Cummins’ balance sheet, by our estimate, ends 2021 with net debt to cap well below 10%
and net debt to ebitda ~0.25x, positioning it to not only drive further EPS upside but
potentially further enhancing its valuation multiples (i.e., pushing back against traditional
sharp P/E contraction as EPS recovers) if acquisitions enhance its business portfolios
regarding sustainability and ESG investor appeal.
7
Danaher Corporation vs. S&P 500

25-Jan-2019 to 26-Jan-2021 Price (Local Currency) Danaher Corporation (DHR): Outperform, PT $280
4,000 Danaher Corporation (Right) S&P 500 (Left) 260
3,600
240
220
Life Science and Diagnostic Tools
200
3,200
180
160
Vijay Kumar, Vijay.Kumar@evercoreisi.com, 212.653.9033
2,800
140
We view DHR as a top pick for a number of reasons including sustainable COVID TWs
2,400 120
100
(emerging stronger post pandemic), continued execution strength, and potential for M&A.
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Sustainable COVID TWs:

 While investors have struggled with COVID fatigue and questions remain about industry
wide TWs, we see DHR as a standout in the group. With ~30k GeneXperts installed (and
growing to ~35-40k by YE), the business is well set up to grow beyond the pandemic, and
DHR’s focus on PoC (Point of Care) should make the TWs more sustainable as COVID has
accelerated the shift toward PoC.
 We think the wild card is likely to be the vaccine opportunity. We are estimating total COVID
vaccine revenues to be ~$3.5-5.0bn for DHR ($3-5 doses x 8bn doses = $25-40bn industry
revenues, with DHR capturing ~15-20% at the midpoint).
Execution / Potential upside to #s: We believe that tripledigit OMx will drive upside to
numbers in FY21. Post pandemic, DHR’s strong execution history should provide comfort
around DHR’s ability to drive teens EPS growth in the medium term (core compounder).
M&A: It is remarkable that we are talking about M&A as a source of upside within a year of
Cytiva’s (largest deal by DHR) closing. Historically LST companies have been opportunistic
post downturns – we think M&A could be an incremental value driver in 2021/2022.
Equitable Holdings, Inc. vs. S&P 500

Equitable Holdings, Inc. (EQH): Outperform, PT $38
Insurance - Life
4,000 Equitable Holdings, Inc. (Right) S&P 500 (Left)
28
3,600 24
3,200 20 Thomas Gallagher, Thomas.Gallagher@evercoreisi.com, 212.446.9439
2,800 16
2,400 12
EQH has lower credit risk than most, especially vs. the free cash flow it generates – and it
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21
Source: FactSet Prices screens as best risk/reward in the space. While the stock has done quite well following its
recent announcement of a VA risk transfer deal and has outperformed the life insurance sector
by over 1000 bps YTD, we still view it as the most compelling risk reward in the space. The
stock now trades at 4.8x our 2021 EPS estimate, still a sharp discount to the peer group at
7.6x, and excluding its stake in AB, we estimate that its insurance business trades at just 3.0x
2021 GAAP EPS and 8.5x price to free cash flow, a sharp discount to peers with sizeable VA
blocks such as LNC and PRU, which currently trade around 11x price to free cash flow. With a
material de-risking of the VA portfolio likely to result in greater stability of capital generation, we
suspect this discount vs. the peer group will continue to shrink over time.
 Risk Transfer Deal Should Lead to Continued Multiple Uplift – EQH’s recently
announced risk transfer deal has lifted the stock, and we think continued re-rating and
an additional risk transfer deal could lie ahead. With a 2/3rds reduction in tail risk from
its recently announced risk transfer deal, there should be considerable reduction in
capital volatility and this greater consistency of capital generation should markedly
reduce its price to free cash flow discount vs. the peer group (currently 8.5x vs. peer
group average of 13x). Also, the remaining 1/3rd VA tail risk could also be reinsured
after its first deal closes in 2Q 21, provided enhanced capital return visibility.
 Lower Risk Investment Portfolio – Credit risk is a key variable in assessing risk for
life insurers and with an overall lower risk portfolio vs. peers, based on our assessment
of risk assets, this should allow EQH to produce above average capital generation vs.
peers.
Strong Capital and Lower Risk Should Drive Outsized Capital Returns for the Next 2 Years:
Following the risk transfer deal and given its sizeable excess capital position, we expect EQH to
be able to return 15% plus of its market cap through a combination of share repurchase and
common dividends annually over each of the next 2 years, in 2021 and 2022.
8
Facebook, Inc. Class A vs. S&P 500

25-Jan-2019 to 26-Jan-2021 Price (Local Currency) Facebook (FB): Outperform, PT $360
Facebook, Inc. Class A (Right) S&P 500 (Left)
Internet
4,000 320
3,600 280
3,200 240
Kevin Rippey, Kevin.Rippey@Evercoreisi.com, 212-653-9035
2,800 200
2,400 160
Benefits of blurring advertising and e-commerce monetization underappreciated amidst
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Source: FactSet Prices massive penetration pull forward
We continue to see FB as the single most likely upward estimate revision story across large
cap internet. Further, our view is that narrative trajectory is in the early-stages of a long term
positive inflection, as investors increasingly view the company’s core monetization engine as
tied directly to the growth of e-commerce and direct-to-consumer retail. While questions
around regulatory risk will persist, we see these as well understood, and ultimately overly
discounted, as public perception around the role of social media both good and bad mature.
With near-term revenues set to reaccelerate to the mid-20s, coupled with a clear path to margin
expansion, we see current valuation levels (23.4x our 2021 GAAP EPS estimate) as potentially
biased upward as well.
 FB advertising: the rent of the DTC economy – our simple view is that FB
advertising represents the rent of online retail. With the last six months seeing six
years of growth in e-comm penetration, the benefits to FB both in the near and long-
term are under articulated in consensus models. Over the next 12 months, we see a
pending resolution to the status quo, with FB being subject to persistent positive
forward estimate revisions
 Margin upside should drive EPS growth above revenue– ’21 and ’22 margins
remain a source of much debate. We take the over, and contend the most likely
scenario is a march toward 40%, ~300bps ahead of where we see Street forecasts.
 Regulatory narrative: not going away, but room for concerns to ease-
Particularly among the long-only community, we continue to hear regulatory risk as a
primary concern. While we expect headlines to continue suggesting that FB is a
source of volatility in social discourse, we also anticipate a greater appreciation that
this characterizes the advent of all new forms of media, and increasingly understand
that this is as a feature not a bug.
Valuation- nothing stretched about it. At under 24x our ’21 EPS estimate and a clear path to
medium term mid-20s EPS growth, FB is the most attractive stock in large cap internet with
respect to conventional valuation relative to growth
Fidelity National Information Services, Inc. vs. S&P 500

Fidelity National Information Services, Inc (FIS): Outperform, PT $185
Payments, Processors & IT Services
4,000 Fidelity National Information Services, Inc. (Right) S&P 500 (Left)
160
3,600 150
3,200
140
130
David Togut, David.Togut@evercoreisi.com, 212.497.0865
2,800 120
2,400 110
100
The transformational acquisition of Worldpay should accelerate FIS’ organic revenue growth
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from a COVID-pressured -1% in 2020 to at least high single digits in 2021, sustaining in 2022
and beyond. FIS enjoys a superior market position in the regional and Tier 1 bank outsourcing
space, evidenced by recent long-term core processing contract wins with 4 of the top 30 US
banks by assets. These deals should begin generating revenue in 4Q/20, becoming material in
2021. FIS offers strong defensive characteristics, given 80%+ recurring revenue from its Bank
Tech business and 70% from Capital Markets Solutions. For 2022E, FIS targets $550 million
annualized run rate revenue synergy target and a $500 million annualized run rate cost synergy
target from Worldpay. No other CEO in our Payments & Processors coverage has successfully
executed more strategic acquisitions in the last 15 years than FIS CEO Gary Norcross.
Historically, FIS exceeded cost synergy targets on acquisitions by 30-60%. We are 3% and 2%
above consensus for 2021E and 2022E EPS, respectively. We recently reduced our 2020E –
2022E EPS estimates given continued COVID-19 pressure on consumer spending, negatively
impacting FIS’ Merchant Solution revenue (~30% of total revenue).
9
Magna International Inc. vs. S&P 500

Magna International Inc. (MGA): Outperform, PT $100
Magna International Inc. (Right) S&P 500 (Left)
4,000
3,600
100
90
Global Automotive
80
3,200 70 Chris McNally, Chris.Mcnally@evercoreisi.com, +44 207 847 3502
2,800 60
50
2,400 40 Magna (MGA) is a top 5 global supplier with broad exposure to many parts of the car (Body &
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Source: FactSet Prices Exteriors, their Power & Vision segment is ADAS, Lighting & Powertrain, and they also have a
Seating and Contract Manufacturing business). MGA trades in both US and CDN lines with a
market cap of ~$22Bn and is generally thought of as high quality…but can be a little “sleepy”
at times. So why now? On a mid-cycle outlook, we see MGA earning ~$11/share in EPS/FCF
once demand rebounds to ’19 levels again in ’23.
We believe the market is finally awakening to our long-held thesis that MGA could be a
“sleeping AutoTech & EV Giant” given Steyr’s significant EV production capabilities &
MGA’s scale/scope as a top 5 global supplier. We got a glimpse of MGA’s potential in Oct
when they won the Fisker Ocean production contract, followed by media rumblings of Apple’s
possibly reinvigorated “Project Titan”, and most recently last week’s announcement of a $1Bn
JV with LG Chem for more rapid expansion of EV powertrain supply ($150MM’19 Revs we
believe headed to ~$700-800MM in ’23 & maybe $1.5-$2Bn ‘25). We no longer think investors
can afford to ignore MGA as this often-thought-of “sleepy” stock, is a rare large-cap where
both the “E” and the “P/E” have room to run. On ’23 EPS of ~$11, we believe MGA could be a
$100-120 stock based on 9-11x pure historical valuation metrics. If we price in the potential
for an Apple car or any EV-halo from the recent EV frenzy…we could go higher still.
Why MGA in 3 main points:
1. Built for Recession – if you look back at its history, MGA has grown Rev at a +7% CAGR
for the last 20yrs or ~5pts above global production and has primarily done so with share gains
acquired at the bottom of cycles. Given its size, it can acquire Tier 2 or Tier 3 players
essentially for free by extending life-lines. In addition to these share gains, we do think MGA
has strong Auto 2.0 offerings in both ADAS and EV which will allow for its core markets to grow
+3-5% above global production + share gains. When combined with an upturn of ~15%
production growth in 2021, MGA could be a mid to high teens Rev grower or high single
digits on a cycle long basis.
2. FCF as your floor, Buyback as your Accelerant – MGA generates a lot of cash and has
aggressively used this cash historically to repurchase its stock at attractive 10-12% yields.
Think of Magna as a mini Outsiders candidate for those of you familiar w/ William
Thorndike’s book on capital allocation. Pre COVID – MGA had acquired 40% of its share
base since 2010. We now believe MGA can generate $5Bn+ over the next 3 years, and on a
$18Bn mkt cap, even paying some dividend (while most other suppliers have canceled theirs)
it is likely to acquire another ~20%+ of its market cap over the next 2-3yrs.
3. Mid-Cycle EPS power because of the buyback + recovery, MGA mid-cycle EPS/FCF can
be ~$11 in ‘23. On a more near term 2021 basis we see $7-8 (20-30% upside to consensus)
so MGA is trading at ~9x 2021 PE vs the rest of the auto group trading at ~17x 2021 EPS.
Medtronic Plc vs. S&P 500

Medtronic plc (MDT): Outperform, PT $135
4,000 Medtronic Plc (Right) S&P 500 (Left)
120 Medical Supplies & Devices
3,600
110
3,200 100 Vijay Kumar, Vijay.Kumar@evercoreisi.com, 212.653.9033
2,800 90
2,400 80
MDT shares have been range bound for the past 5 years – various one-off factors have weighed
70
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in on shares, resulting in MDT trading at a 25-30% discount to the MedTech avg. We are adding
MDT to our large cap Best ‘Core Ideas’ list as we think a multi-year turnaround is beginning.
Key Themes
 New CEO ushering in cultural change + enhancing R&D productivity: At times CEO
changes can be a precursor for multiyear stock outperformance – within our coverage,
we cite BSX & BAX as examples highlighting this. We think new CEO Geoff Martha
could act as a similar catalyst for MDT shares – he is making sweeping changes in the
10
organization, incentivizing sales force / key leaders to win in their categories.

Additionally, we think MDT will become a more nimble R&D organization – the ST hasn’t
yet thought through the implications of its recent Diabetes agreement with Blackstone.
We think the pace of R&D activity will pick up meaningfully as a result of more deals
like this.
 Best new product cycle in the space: MDT has at least 6 multi Bn products currently
launching or in near future (Micra AV, robotics, Renal denervation, Diabetes, Mitral,
Mazor) that will accelerate topline. While there is a lot of debate on this topic, we are
bullish on robotics (meaning price differentiation vs current standard) and longer term
for the role of AI in diabetes management.
 B/S strength, dividend growth & tax structure provide downside protection: The macro
environment is uncertain and valuations seem extended – we think MDT’s strong B/S
and high single digit dividend growth in the context of valuation discount to peers makes
it attractive. Additionally, with a Democratic win and higher tax rates, MDT’s Irish
domicile provides it flexibility to manage NT impact.
Framing MT upside & Risks: We think MDT should trade at a ~10-15% premium to the S&P
(which is still at the LE of the group) as the ST digests the coming inflection – this represents a
~25% upside to P/E multiple vs current levels. Key risk would be large M&A, which would not be
well received by investors.
Microsoft Corporation vs. S&P 500

Microsoft Corporation (MSFT): Outperform, PT $300
Software
4,000 Microsoft Corporation (Right) S&P 500 (Left) 240
220
3,600
200
3,200 180
160
Kirk Materne, Kirk.Materne@evercoreisi.com, 212.497.0873
2,800 140
2,400
120
100 There are a lot of reasons to remain bullish on Microsoft in these uncertain times, and while we
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acknowledge that there are obviously a ton of variables, especially macroeconomic, that could
derail any thesis attached to a stock with a +$1trn market cap, the bottom line is we believe there
is still a lot of gas in the tank when looking at Microsoft’s positioning in the public cloud markets
and potential to expand its TAM in markets like business applications and gaming. The
company’s base of recurring revenue (70%) and its balance sheet ($71bn in net cash) put
Microsoft in an enviable position to continue to take share in its core markets as the shift to the
cloud accelerates post-COVID. We believe the company could ultimately use some of its cash
stockpile to acquire assets, which can help tap into new pools of spend outside of IT, including
the broader enterprise applications and IT mgmt. markets (~$300bn TAM). We see a tremendous
investment opportunity for Microsoft in the enterprise market and expect that the company will
remain aggressive in investing in areas like business apps, analytics, augmented reality,
quantum computing, and AI/ML. As a result, we continue to believe that MSFT is a ‘must own’
name for software investors and should remain a stock for all seasons given the breadth of its
cloud portfolio, its growing annuity revenue base, and its strong balance sheet position. In terms
of questions for Microsoft heading into 2H20, we would highlight the following:
 Azure growth in FY21? While we are modeling 35% Azure growth for FY21, we
continue to believe that the public cloud market is broad enough to support multiple
winners over the long term. We believe that Azure’s hybrid portfolio, non-conflicted
business model, and enterprise footprint are structural advantages that will allow for
continued growth (~30% CAGR) through FY24.
 Can Teams + Power Platform help Microsoft go ‘deeper’ with customers as it

relates to automating front office business processes? While we believe that the
rapid adoption of Teams due to COVID is notable, we believe there is a bigger
opportunity for Microsoft to go deeper with customers.
 Could the new Xbox console spark renewed interest in Microsoft’s broader
gaming strategy? We believe that gaming could ultimately become the third pillar of
growth for Microsoft and a successful Xbox launch in F2Q will be key in terms of
expanding its platform.
11
 While software valuations have only gone up, with Microsoft adding ~$320bn in
market cap in 1H, could Microsoft start looking at bigger acquisitions? As we
discussed after visiting Microsoft earlier this year, we believe that the company’s
balance sheet provides Microsoft with a lot of optionality around M&A and our view is
that M&A will have a profound impact on the investment narrative when taking a 3-5
year view.
 Can Microsoft take more share in a tougher economic backdrop? While we believe
that there is some risk to Microsoft’s growth if the SMB portion of the economy remains
under pressure, we believe that there is also an opportunity for Microsoft to leverage its
balance sheet in the enterprise market to aggressively price its services and take market
share in areas like public cloud services and collaboration.
NIKE, Inc. (NKE): Outperform, PT $185

NIKE, Inc. Class B vs. S&P 500
4,000 NIKE, Inc. Class B (Right) S&P 500 (Left)
3,600
140
Luxury, Apparel & Footwear
120
3,200
2,800
100 Omar Saad, Omar.Saad@evercoreisi.com, 212.653.8992
80
2,400
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60 Because of technology, Nike is adding consistency to its strong growth algorithm, we think
Source: FactSet Prices transforming the investment profile from mega cap consumer cyclical to a hybrid with the growth
characteristics of a top consumer discretionary franchise and the consistency of a consumer
staples conglomerate. Given the health of the category, Nike’s market-leading position, and its
ability to scale best-in-class digital technologies across its operations, we are confident company
will deliver consistent long-term HS/LD+ sales growth and strong DD EPS growth for an
extremely long duration, meriting a structurally higher, tech-like valuation.
Channel shift driving new margin structure in digital era. Nike has been shedding its
historic wholesale footprint in favor of DTC (stores + Nike.com + mobile apps) where the
customer experience is much more rich and compelling (and Nike keeps the full vertical margin
for itself). As Nike continues to shift wholesale consumers to ecomm (where Nike enjoys a 1.5-
2.0x revenue lift per unit, and a meaningfully higher net margin), we think its EBIT profile shifts
from ~12% historically to 20%.
Best-in-class digital. In addition to its app ecosystems (SNKRS, Nike app, NTC, nike.com,
etc.) Nike has been pioneering innovative digital partnerships and consumer experiences
(Snapchat, Instagram, Jet, augmented reality, GPS-enabled Sneaker Stash, many more). The
company leaps & bounds ahead figuring out how to meet and engage with customers across
digital channels, and the depth of the technology moats under-appreciated by investors.
Ecomm in FY20 expected to be ~30% (vs. 4% five years ago), with 50% penetration the
ultimate goal.
Healthy category. Athletic and active lifestyle remain among the strongest long-term
consumer trends supported by growing health & fitness awareness, casualization, and
streetwear/sneaker culture.
Women’s opportunity taking off. Women spend 10-30% more than men on apparel and
footwear, but only represent 23% of Nike’s business.
China still a major white space. Despite six straight years of double digit growth, China still
remains a major growth opportunity for NKE and the largest long-term growth market for
athletic given the strong economic growth, faster recovery from COVID, and rising awareness
of health, fitness, and sports.
COVID beneficiary. Industrywide, COVID has been a major accelerant for: digital
engagement, e-commerce, casualization, athleisure, health & fitness, outdoors, rationalization
of wholesale, and omni-channel consumption – all which play into Nike’s strengths.
Valuation deceptive. With its P/E in the 30s, Nike is trading above history, but given the
structural shift in its growth, margin, and volatility profile, we believe the shares will maintain 30-
40x and see $13 EPS potential which assumes sales-at-retail double in 5-7 years, and EBIT
margins expand to 20% driven mostly by channel shift, implying a $400-500 share price.
12
NVIDIA Corporation vs. S&P 500

NVIDIA Corp (NVDA): Outperform, PT $675
NVIDIA Corporation (Right) S&P 500 (Left)
4,000
3,600
600
500
Semiconductors and Semiconductor Equipment
3,200 400
C.J. Muse, CJ.Muse @evercoreisi.com, 212.653.9025
2,800 300
200
2,400
100 NVIDIA is a uniquely positioned accelerated computing company with obvious leverage to
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Source: FactSet Prices Data Center, Gaming, and Autonomous Driving but likely underappreciated growth to other
key industry verticals. We think the company’s end-to-end software stack combined with
optimized hardware offerings will make the company’s platform based strategy a success and
support 20+% EPS growth for years to come. To this end, we continue to view NVIDIA as the
best growth story in all of semiconductors. NVIDIA remains our top pick in Semis, and we
maintain our 12-month price target of $600 with CY25 earnings power of at least $25
suggesting fair value closer to $1,000 if not higher over time.
NVIDIA – An Accelerated Computing Platform Company: NVIDIA has created the standard
platform for compute acceleration. Through this platform approach, NVIDIA is able to address
huge TAMs (basically an increasing % of IT spend across all industries), with open-ended
growth (constant stream of newly imagined opportunities), a high degree of stickiness
(applications are built around CUDA’s libraries), and a very strong moat (NVDA has created
THE AI standard). Further, the company is focused on continually enhancing its platform
offering and solidifying its positioning as THE compute company in the age of AI from the data
center to the edge – to this end we highlight the acquisition of MLNX (our thoughts on NVDA’s
new DPU roadmap here) and proposed acquisition of ARM which we view as a
transformational opportunity for NVDA should the deal be approved (regulatory approval
remains a question mark, both from competitors/customers and China). Importantly though,
NVDA is not a company concerned with taking market share, but rather in creating and growing
new markets and ecosystems – i.e. evolving from a graphics compute company, to now
opening its aperture across domains including Autos (Drive), Robotics (Isaac), Healthcare
(Clara), Big Data (Rapids), Conversational AI (Jarvis), Recommenders (Merlin), etc.
2020-2021 Upside Led by Both Data Center and Gaming Ampere Product Cycles: Led by
strong secular growth drivers and a “staggering” response to product cycles across both Data
Center (more computationally intensive 2nd wave AI plus new A100 offering and ongoing strength
V100/T4/DGX) and Gaming (2nd Gen Ray Tracing should lead to meaningful Pascal upgrade
cycle), we continue to look for consensus estimates to move higher as we exit CY20 and
throughout all of CY21. Today, consensus is modeling $9.08/$10.90 for CY20/21 EPS while we
view our $9.28/$12.00 estimates as very conservative. With $3.00 in Q earnings (or $12
annualized) power potentially doable into the Jan Q (cons $2.54) and look for investors to soon
discussing $15 in earnings power for CY21.
Still Only in the Early Innings of AI Adoption and Accelerated Compute: We believe we are
still in the early innings of the company’s growth story, with cloud (the company’s current major
revenue stream) representing only 10% of the IT Industry and 90% “other”. This “other” is where
NVIDIA is focused on creating new markets, accelerating large ecosystems, and building the
software stacks to support these opportunities – see WMT, BMW, USPS, etc. And as these
opportunities garner success, NVIDIA’s scale only becomes larger as edge customers
standardize on NVIDIA’s platform – creating a virtuous cycle for developers between the edge
and the cloud. Longer-term, we see topline growth of 15+% as sustainable supporting EPS
growth of 20+% and vision to $25 in EPS by CY25.
PayPal Holdings Inc vs. S&P 500

PayPal Holdings, Inc. (PYPL): Outperform, PT $312
4,000 PayPal Holdings Inc (Right) S&P 500 (Left)
240
3,600
3,200
200
160
David Togut, David.Togut@evercoreisi.com, 212.497.0865
2,800
120
2,400
80 A pure-play in e-commerce, PYPL occupies a superior market position as a digital and mobile
merchant acquirer with strong mobile wallet, gateway, P2P payments, and ACH money transfer
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capability. For 2022E EPS, we are 6% above consensus and for 2021E, in-line given our view
that PYPL should generate strong adjusted operating margin expansion stemming from ongoing
expense discipline, coupled with an accelerating secular shift to online payments, sparked by the
COVID-19 pandemic. Potential new marketplace wins could offset the headwind from the end of
eBay operating agreement. The recent rollout of cryptocurrency to buy, sell and hold along with
13
the imminent introduction of crypto-funding of the PayPal wallet could substantially increase both
customer engagement and transaction margin, over time, given the low cost of funding crypto
currency. PYPL’s recent introduction of QR codes with large national retailers such as CVS
advance the company’s long-held goal to become an omnichannel payments company at a time
of heightened health and safety concerns by consumer and merchants alike. PYPL scored
highest among the 10 global merchant acquirers we analyzed across 6 payments industry growth
vectors in our 2021 Next Gen Merchant Acquirer Primer: E-Commerce, Disruption & Digital
Banking. At its February 2021, investor meeting, PYPL plans to increase its medium-term
guidance of 17-18% FX neutral revenue growth, and 20% non-GAAP EPS growth.
salesforce.com Inc. (CRM): Outperform, PT $290

salesforce.com, inc. vs. S&P 500
4,000 salesforce.com, inc. (Right) S&P 500 (Left)
Software
280
260
3,600
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220
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Kirk Materne, Kirk.Materne@evercoreisi.com, 212.497.0873
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120
Despite the macro uncertainty, demand around digital transformation remains strong. We
Source: FactSet Prices continue to believe that CRM’s growing product portfolio and expanding international reach put
it in a strong position to reaccelerate growth coming away from the COVID crisis. With Slack now
working its way into the fold, we believe the investor ‘debate’ around op. margin expansion will
continue to overshadow CRM’s long-term growth opportunity. We acknowledge CRM is likely in
the penalty box for the near-term due to the timing and price paid for Slack, which most likely
keeps CRM shares in a trading range. While CRM did an admirable job outlining the technology
rationale behind Slack, making it a foundational element of the Customer 360 platform makes
logical sense and Slack will clearly benefit from CRM’s enterprise credibility. Why CRM had to
acquire Slack now - with software valuations at all-time highs and CRM barely a year removed
from DATA deal – remains to be answered. While the COVID crisis gave CRM the opportunity
to put the margin debate in the rearview mirror, Slack and the idea that this will not be the last
large deal leaves many shareholders skeptical if there will ever be a disciplined approach to
margin expansion. Bottom line: The fundamental outlook for Salesforce is sound, but the Slack
deal is going to kill the recent momentum in the shares and proving out the technology and
financial merits of the deal is going to take some time:
 MuleSoft is a key part of the growth story. We continue to believe the acquisition of
MuleSoft presents a meaningful opportunity over the longer-term as we heard from both
partners and customers that integration challenges are the number one inhibitor for
enterprise-wide digital transformations. As companies begin to rely more on Salesforce
to streamline integrations, we would expect to see more of the IT budget shift from
implementation services towards application spend which should drive some
incremental bookings over the longer-term. As Salesforce continues to evolve into an
enterprise platform, being able to integrate with legacy systems is key, especially in
certain industries where there is a lot of ‘technical debt’ in terms of systems that are
antiquated but very difficult to unplug or replace.
 Increasing industry focus remains a differentiator and allows CRM to better

address customer pain points. We expect Salesforce to double down on its industry
strategy both in terms of its partnerships as well as its own internal development efforts.
We believe ISV partners are strategic to extend the company’s vertical knowledge. As
we think about all industries going through a digital transformation, the ability to
understand the nuances of an industry is essential to position Salesforce as a critical
partner. We also believe the ability to go deeper into industries such as healthcare and
banking with vertical ISV partners presents a massive opportunity to expand the
company’s current ~$160B TAM.
 Europe is starting to move more aggressively to the cloud as executives are now
under pressure to adjust their business practices to compete in a more digital
world. Europe was CRM’s fastest-growing region in FY19 at 33% vs. the U.S. at 24%
and represented only 19% of CRM’s total revenue, up 100bps y/y. We believe Europe
and Asia are going to be a huge part of the growth story over the next few years as
businesses leverage Salesforce’s platform to reach customers on a global scale. While
it’s fair to say the macro environment creates some noise in the near-term, longer-term
14
it’s very much an untapped opportunity as the adoption curve for technology lags the
U.S. on average by three to four years.
Schlumberger Ltd. (SLB): Outperform, PT $28

Schlumberger NV vs. S&P 500
4,000 Schlumberger NV (Right) S&P 500 (Left) 50
3,600
45
40
Oilfield Services, Equipment & Drilling
35
3,200
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30
25
James West, James.West@evercoreisi.com, 212.653.9047
20
2,400
Defining moment in the re-invention of Schlumberger. Schlumberger’s CEO Olivier Le
15
10
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Source: FactSet Prices Peusch laid out a very clear financial strategy and the company is executing: drive returns above
the cost of capital which equals value creation. We view last quarter as proof of the re-invention
of Schlumberger with a clear promise to take the OFS Pledge, the creation of a new, leaner
technology-driven platform, and the ability to experience significant and substantial operating
leverage. Schlumberger remains our top pick and is extremely well positioned for the coming
upcycle due to its heavy international exposure, capital disciplined approach, leading digital
businesses and leveraging the benefits of size, scale and scope. The company is quickly
becoming asset light, free cash flow generative and is a key leader in the industry’s digital
transition. The company has fully embraced the key tenets of the OFS Pledge; lowering capital
intensity, structurally reducing its cost structure, driving returns higher, and exiting commoditized
businesses; all positive moves in our view.
Southwest Airlines Co. vs. S&P 500

Southwest Airlines Co. (LUV): Outperform, PT $60
Southwest Airlines Co. (Right) S&P 500 (Left)
4,000
3,600
60
55
Airlines
50
3,200 45
40
Duane Pfennigwerth, Duane.Pfennigwerth@evercoreisi.com, 212.497.0817
2,800 35
30
2,400
25 LUV was added to the Core Ideas list in early July. Southwest has financial strength (negative
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Source: FactSet Prices net debt), a diversified domestic network and investor friendly capital allocation in more favorable
times. Importantly, Southwest continues to focus on improving its cost structure despite its
relative financial strength. Airline stocks are looking through the current demand environment to
normalization of air travel post vaccine. Balance sheets, cost structures and returns focus always
in fashion.
Square, Inc. Class A vs. S&P 500

Square, Inc (SQ): Outperform, PT $304
4,000 Square, Inc. Class A (Right) S&P 500 (Left)
250
3,600 200
3,200 150 Rayna Kumar, Rayna.Kumar@evercoreisi.com, 212.497.0875

2,800 100
2,400 50
The most disruptive company in payments and banking, Square should sustain extraordinary
growth through continued, rapid innovation and TAM expansion. From 2020E-2023E, we
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21
project SQ will grow adjusted EBITDA at a 50% compound annual rate. Over time, Cash App
could become a one stop, disruptive, digital payments bank. With P2P, digital wallet, debit
card, stock trading, and Bitcoin purchasing capabilities already in place, and, with its banking
license, consumer and SMB lending potential, we believe Cash App’s network will continue to
grow aggressively with expanded paths to monetization over time. For 2021E, we are 24%
above the Street on adjusted EBITDA and 5% higher for 2022E. Our well- above-consensus
estimates are fueled by our view that SQ will sustain superior growth from Cash App combined
with adjusted EBITDA margin improvement from the Seller business. Rapid innovation should
fuel continued TAM expansion. 2021 catalysts include integration of the Cash App & Seller
ecosystems, earnings outperformance from the second government stimulus, and SQ’s usage
of its banking license to introduce new products.
15
T-Mobile US (TMUS): Outperform, PT $150

T-Mobile US, Inc. vs. S&P 500
4,000 T-Mobile US, Inc. (Right) S&P 500 (Left)
3,600
130
120
Cable, Satellite & Telecom Services
110
Vijay Jayant, Vijay.Jayant@evercoreisi.com, 212.446.9490

3,200
100
2,800 90
80
2,400
70
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21 The Growth Layer Cake: Best Network and Consumer Value Proposition
TMUS represents the only growth story in US wireless, with service revenue growth of 4-5% and
material margin expansion, as the company realizes synergies from the Sprint acquisition, driving
a ~10% adjusted cash EBITDA CAGR over the next 5 years. Cash flow will be compressed over
the next 2-3 years as the company integrates the Sprint operations and network, but we expect
it to expand sharply thereafter. Our price target reflects 14x 2024E fully-taxed FCF discounted
back, slightly above VZ’s valuation on 2021E FCF, despite materially higher growth.
Network Performance and Perception, Continue to Improve. TMUS’s network performance
is benefiting from deploying the company’s 600MHz holdings and the 2.5GHz it acquired along
with Sprint; new TMUS has a clear spectrum lead, particularly on a per-sub basis. TMUS is also
positioned to benefit from having the most widely-available 5G coverage. Even though we don’t
believe that 5G is a near-term game-changer for consumers, being perceived as the leader is
valuable.
Network Performance and Perception, Continue to Improve. TMUS’s network performance
is benefiting from deploying the company’s 600MHz holdings and the 2.5GHz it acquired along
with Sprint; new TMUS has a clear spectrum lead, particularly on a per-sub basis. TMUS is also
positioned to benefit from having the most widely-available 5G coverage. Even though we don’t
believe that 5G is a near-term game-changer for consumers, being perceived as the leader is
valuable.
Best Customer Value Proposition, Upside in Enterprise, Wholesale. TMUS’s service is
priced at a 10-20% discount to T and VZ, depending on the plan and number of lines. We see
potential revenue upside in the business segment (where TMUS has only ~10% share) and in
wholesale as its network capacity increases more than ten-fold.
Culture and Brand Focused on Disruption and Innovation. TMUS has built a culture and
brand around being a disruptive player in the US wireless industry. Since 2013, the Un-
carrier branded marketing campaign has introduced numerous innovations to the wireless
industry - no service contracts, free streaming, free international roaming, and free spam-call
protection, to name a few, some of which have been copied by the competition.
Balancing Growth vs. Profitability. Historically, TMUS has been focused on growth, since it
needed additional scale to compete effectively in a higher fixed/low variable cost business. Now,
with nearly 100M subscribers it is a full-scale player (#2 in size), but we don’t see the company
moving the needle materially away from a growth focus.
Large Merger Synergy Potential, But Cost to Achieve Outweighs Synergies Until
2023E. We see management’s goal of $6B in annualized synergies as attainable, but given the
cost to achieve those synergies (~$15B), we don’t expect TMUS to generate positive net
synergies until 2023E. As such, ~70% FCF/share CAGR over 5-years is off a depressed base
but is driven by service cash EBITDA margins getting to over 50% (from ~40%) and capital
intensity declining from low-mid 20% of service revenues to mid-high teens.
The Blackstone Group, L.P. (BX): Outperform, PT $71

Blackstone Group Inc. Class A vs. S&P 500
4,000 Blackstone Group Inc. Class A (Right) S&P 500 (Left)
3,600
65
60 Brokers, Banks & Asset Managers
55
3,200
2,800
50
45
Glenn Schorr, Glenn.Schorr@evercoreisi.com, 212.653.9045
40
2,400
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

35
We think Blackstone is the best positioned alternative manager with leading scale and
performance in its businesses such as real estate (global leader in real estate with $167bn AUM),
private equity ($184bn AUM), credit (world’s largest credit-oriented alternative asset managers
with $138bn AUM), and hedge fund solutions (world’s largest allocator of hedge funds with $76bn
AUM). BX is a really well-positioned asset manager for the secular trends flowing to alternatives,
has scale & high barriers to entry, is the most innovative with its product suite, and is intensely
focused on investment returns that allow it to navigate through market cycles with less volatility
than its peers. We believe Blackstone is well positioned to outperform given its ever expanding
16
investment platform (i.e. newer strategies include insurance, growth equity, life sciences,
infrastructure), the significant durable and patient capital they can raise and deploy in good and
stress times ($110bn of perpetual capital and increasing; ~$30bn of dry powder earmarked to
support their portfolios, and importantly, another $126bn of dry powder to deploy in these
dislocated markets patiently as opportunities unfold), and BX’s clear and solid FRE story (path
to $2/share FRE over next couple of years). Finally, we think the stock trades at an attractive
valuation at ~19x our adj’d DE, ~5% FY21e distribution yield.
The Home Depot, Inc. (HD): Outperform

Home Depot, Inc. vs. S&P 500
4,000 Home Depot, Inc. (Right) S&P 500 (Left) 300
3,600
280
260
Retail Broadlines & Hardlines
240
Greg Melich, Greg.Melich@evercoreisi.com, 212.446.9484

3,200
220
2,800 200
180
2,400 160
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

140
Home Depot has reinvented itself over the past decade into a benchmark multichannel
consumer company. We have a favorable view of the U.S. Home Improvement market due
to healthy industry growth of (normalized) +4-5%, H.I. spending levels per occupied
housing unit still well below previous peak levels. The COVID pandemic appears to have
triggered some sticky changes in consumer behavior, which we outline in our M.E.N.D
framework: Multichannel, Ecommerce, Nesting, De-densification. While Home Depot was
already well positioned from a multichannel perspective, they also appear uniquely positioned to
benefit from Nesting and potentially De-densification as well. Nesting is spending more on or
around your home, on everything from paint to plumbing, renovations, extensions, and outside
on the lawn and garden. We see Home Depot’s 55%/45% DIY/DIFM mix as a great balance
allowing them to capture sales in the current COVID DIY surge yet also pick up business as pros
are able to get back to work. De-densification is less clear, although it works if urban dwellers in
major metro market such as New York, California, and Miami choose the suburbs or building out
rather than up.
Bottom Line on the stock. Many high quality cash compounding winners have busted out
of historical trading ranges. HD has not, with the 15-20% premium the same it’s averaged
over the past 20 years. HD is a best-in-class operator in a competitive, rational duopoly, with
upside from growth, FCF and strong ROIC. With our Home Improvement Lead Indicator
(HILI) hitting a cycle high of 12% (as EHS grow and mortgage rates continue to fall) we think
comp growth can remain positive into 2021 even as they cycle the “DIY surge” during COVID
shutdowns. HD stock has held a 10%-40% premium to the market over the past decade. Once
$12+ of 2021 EPS power is baked in, we think a 30%% premium to the S&P500 should propel
the stock towards our $325 Base Case, with a kicker if it follows the WMT multichannel winner
re-rating path. Growth is 50% better than GDP, return on capital is north of 35%, the balance
sheet is under 2x leveraged, and strong FCF provide a powerful mix. In a below 1% 10-year
treasury rate world with Amazon continuing to pressure most retail categories, Home Depot is a
core holding in a unique position to champion what a multichannel future should look like. HD
remains the benchmark in a preferred home improvement space.
The Procter and Gamble Company (PG): Outperform, PT $163

Procter & Gamble Company vs. S&P 500
4,000 Procter & Gamble Company (Right) S&P 500 (Left)
3,600
140
130
Global Household & Personal Care
Robert Ottenstein, Robert.Ottenstein@evercoreisi.com, 212.653.9020
3,200
120
2,800 110
2,400 100
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

90
PG came into C2020 with strong and improving commercial momentum and a fortress-like
balance with high cash conversion. Despite Covid-19, the board raised its dividend 6% in April,
while many others fell shy, suspended or cut their payouts. Consumer behavior trends
emphasizing “nesting” and “hygiene” have elevated demand for 40-50% of the firms products
and we believe P&G is well-positioned to gain share on and off-line thanks to its best in class
supply chain, iconic products, and ability to lean-into commercial opportunities. Critically, the
firm’s move to de-matrix the organization has allowed it to operate with greater agility and
accountability. This improvement is most evident in emerging markets where 98/100 are now
running at least flat, when a few years ago “many” were in the red. We see upside to
consensus estimates in C2020 and C2021 and the firm is better positioned for a recession then
many investors fear. In our view, the PG’s valuation has yet to reflect improved fundamentals
17
and we see the stock going to $240 over the next 12 months as it likely triumphs over whatever
challenges the world throws at it.
Thermo Fisher (TMO): Outperform, PT $520

Thermo Fisher Scientific Inc. vs. S&P 500
4,000 Thermo Fisher Scientific Inc. (Right) S&P 500 (Left) 550
3,600
500 Life Science and Diagnostic Tools
450
3,200
2,800
400
350
Vijay Kumar, Vijay.Kumar@evercoreisi.com, 212.653.9033
300
2,400
4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

250
TMO represents a core holding within healthcare as its growth algorithm delivers consistent low-
double-digit to mid-teens EPS growth over the long-term and epitomizes the potential long-term
alpha generated by ‘compounders’. On a medium term basis, we expect Biopharma end markets
to inflect due to upside from a multibillion-dollar COVID vaccine opportunity. We think TMO’s
exposure to COVID vaccine opportunity is not well understood in general – apart from its
Upstream presence, we note that TMO dominates the Fill/Finish market.
Second, we think the benefit from COVID Diagnostics will sustain for at least 12 months, at which
time the COVID vaccine opportunity should pick off any slack on the Dx side. This makes TMO
one of the more durable growth assets in the space.
Lastly, we see meaningful upside post the closure of QGEN transaction in 4Q20/1Q21 timeframe
– QGEN’s topline inflection due to benefit from COVID Dx provides ample support to TMO’s
rationale for the deal.
With the S&P500 trading at ~21x CY21 P/E currently, we think TMO’s teens EPS outlook
warrants a 20-30% premium to the market. Given this thesis of durable topline growth, upside
from capital allocation, and top of the class management team, we believe TMO is a unique asset
in healthcare and a top pick in healthcare.
18
TIMESTAMP
(Article 3(1)e and Article 7 of MAR)
Time of dissemination: February 01 2021 06:45 AM ET
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The analysts, Evercore ISI, primarily responsible for the preparation of this research report attest to the following: (1) that the views and opinions
rendered in this research report reflect his or her personal views about the subject companies or issuers; and (2) that no part of the research
analyst’s compensation was, is, or will be directly related to the specific recommendations or views in this research report.
DISCLOSURES
This report is approved and/or distributed by Evercore Group L.L.C. ("Evercore Group"), a U.S. licensed broker-dealer regulated by the Financial
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Kingdom by the Financial Conduct Authority. The institutional sales, trading and research businesses of Evercore Group and lSI UK collectively
operate under the global marketing brand name Evercore lSI ("Evercore lSI"). Both Evercore Group and lSI UK are subsidiaries of Evercore Inc.
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This report may include a Tactical Call, which describes a near-term event or catalyst affecting the subject company or the market overall and
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and may differ from the target prices and recommendations reflected in the analyst's long-term view.
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Ratings Definitions
Current Ratings Definition
Evercore lSI's recommendations are based on a stock's total forecasted return over the next 12 months. Total forecasted return is equal to the
expected percentage price return plus gross dividend yield. We divide our stocks under coverage into three primary ratings categories, with the
following return guidelines:
Outperform- the total forecasted return is expected to be greater than the expected total return of the analyst's coverage universe
In Line- the total forecasted return is expected to be in line with the expected total return of the analyst's universe
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Coverage Suspended- the rating and target price have been removed pursuant to Evercore lSI policy when Evercore is acting in an advisory
capacity in a merger or strategic transaction involving this company and in certain other circumstances.*
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determining, or there are legal, regulatory or policy constraints around publishing, a rating or target price. The previous rating and target price, if
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FlNRA requires that members who use a ratings system with terms other than "Buy," "Hold/Neutral" and "Sell" to equate their own
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Prior to March 2, 2017, Evercore lSI's recommendations were based on a stock's total forecasted return over the next 12 months:
Buy- the total forecasted return is expected to be greater than 10%
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Sell -the total forecasted return is expected to be less than 0%
19
On October 31, 2014, Evercore Partners acquired International Strategy & Investment Group LLC ("lSI Group") and lSI UK (the "Acquisition") and
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Prior to October 10, 2014, the ratings system of lSI Group LLC and lSI UK which was based on a 12-month risk adjusted total return:
Strong Buy- Return > 20%
Buy- Return 10% to 20%
Neutral - Return 0% to 10%
Cautious- Return -10% to 0%
Sell- Return< -10%
For disclosure purposes, lSI Group and lSI UK ratings were viewed as follows: Strong Buy and Buy equate to Buy, Neutral equates to Hold, and
Cautious and Sell equate to Sell.
Evercore Group:
Prior to October 10, 2014, the rating system of Evercore Group was based on a stock's expected total return relative to the analyst's coverage
universe over the following 12 months. Stocks under coverage were divided into three categories:
Overweight- the stock is expected to outperform the average total return of the analyst's coverage universe over the next 12 months.
Equal-Weight- the stock is expected to perform in line with the average total return of the analyst's coverage universe over the next 12 months.
Underweight -the stock is expected to underperform the average total return of the analyst's coverage universe over the next 12 months.
Suspended- the company rating, target price and earnings estimates have been temporarily suspended.
For disclosure purposes, Evercore Group's prior "Overweight," "Equal-Weight" and "Underweight" ratings were viewed as "Buy," "Hold" and
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Ratings Definitions for Portfolio-Based Coverage
Evercore lSI utilizes an alternate rating system for companies covered by analysts who use a model portfolio-based approach to determine a
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Short- the stock is a negative holding in the model portfolio; the total forecasted return is expected to be less than 0%.
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Evercore lSI rating (as of 02/01/2021)
Coverage Universe Investment Banking Services I Past 12 Months

Ratings Count Pct. Ratings Count Pct.
Buy 439 56 Buy 96 22
Hold 295 37 Hold 30 10
Sell 31 4 Sell 4 13
Coverage Suspended 13 2 Coverage Suspended 5 38
Rating Suspended 12 2 Rating Suspended 3 25
Issuer-Specific Disclosures (as of February 01, 2021)
Price Charts
20
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This report is approved and/or distributed by Evercore Group L.L.C. (“Evercore Group”), a U.S. licensed broker-dealer regulated by the Financial
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Evercore ISI's Best "Core" Ideas

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Best 'Core' Ideas

Evercore ISI Evercore ISI's Best "Core" Ideas

Best "Core" Ideas Companies

Best Long Term "Core" Ideas

Activision Blizzard, Inc. vs. S&P 500

Amphenol Corporation Class A vs. S&P 500

4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

 5G: The evolution of telecommunication standards typically drives a prolonged network

Avantor, Inc. vs. S&P 500

Caterpillar Inc. vs. S&P 500

Centene Corporation vs. S&P 500

Chevron Corporation vs. S&P 500

Cisco Systems, Inc. vs. S&P 500

Key Factors Underpinning Our Positive Bias

Cummins Inc. vs. S&P 500

Danaher Corporation vs. S&P 500

Sustainable COVID TWs:

Equitable Holdings, Inc. vs. S&P 500

Facebook, Inc. Class A vs. S&P 500

Fidelity National Information Services, Inc. vs. S&P 500

Magna International Inc. vs. S&P 500

Medtronic Plc vs. S&P 500

organization, incentivizing sales force / key leaders to win in their categories.

Microsoft Corporation vs. S&P 500

 Can Teams + Power Platform help Microsoft go ‘deeper’ with customers as it

NIKE, Inc. (NKE): Outperform, PT $185

4,000 NIKE, Inc. Class B (Right) S&P 500 (Left)

4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

NVIDIA Corporation vs. S&P 500

PayPal Holdings Inc vs. S&P 500

salesforce.com Inc. (CRM): Outperform, PT $290

4,000 salesforce.com, inc. (Right) S&P 500 (Left)

4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

 Increasing industry focus remains a differentiator and allows CRM to better

Schlumberger Ltd. (SLB): Outperform, PT $28

4,000 Schlumberger NV (Right) S&P 500 (Left) 50

Southwest Airlines Co. vs. S&P 500

Square, Inc. Class A vs. S&P 500

3,200 150 Rayna Kumar, Rayna.Kumar@evercoreisi.com, 212.497.0875

T-Mobile US (TMUS): Outperform, PT $150

4,000 T-Mobile US, Inc. (Right) S&P 500 (Left)

Vijay Jayant, Vijay.Jayant@evercoreisi.com, 212.446.9490

The Blackstone Group, L.P. (BX): Outperform, PT $71

4,000 Blackstone Group Inc. Class A (Right) S&P 500 (Left)

4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

The Home Depot, Inc. (HD): Outperform

4,000 Home Depot, Inc. (Right) S&P 500 (Left) 300

Greg Melich, Greg.Melich@evercoreisi.com, 212.446.9484

4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

The Procter and Gamble Company (PG): Outperform, PT $163

4,000 Procter & Gamble Company (Right) S&P 500 (Left)

4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

Thermo Fisher (TMO): Outperform, PT $520

4/19 7/19 10/19 1/20 4/20 7/20 10/20 1/21

Evercore lSI rating (as of 02/01/2021)

Coverage Universe Investment Banking Services I Past 12 Months

Issuer-Specific Disclosures (as of February 01, 2021)

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