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					                                                           EQUITY RESEARCH

                                                          2013 BEST IDEAS


    Maxim Group’s Best Stock Ideas for 2013
After carefully analyzing the coverage universe of Maxim Group’s equity research
department, each analyst was asked to select a single best long idea, as well as a stock
to avoid. This report is only meant as a summary of our best stock ideas for 2013.
For full reports on each stock, please contact your Maxim Group salesperson or the
analyst on the report.

Best wishes for a prosperous and happy new year,

Anthony Vendetti
Executive Managing Director of Research



                     Maxim Group Research Analysts
                                 Anthony Vendetti
                      Aesthetic Devices, Healthcare IT & Services

      Bryan Brokmeier, CFA                                  Jason Kolbert
    Healthcare & Life Science Tools                          Biotechnology

       Echo He, M.D., PH.D.                                 Aaron Chew
        Biotechnology & China                                Cleantech

           Michael Diana                                  William Bremer
           REITs & BDCs                               Industrials & Infrastructure

         Greg Mesniaeff                                      John Tinker
     Communications Infrastructure                              Media

            Ashok Kumar
              Technology

                  STOCKS MENTIONED:
  CTRX… QSII… SQNM… EXAS… IMUC… CUR… ONXX… BIDU…
DIAL.L… FSLR… EFC…ANH…PWR… RBN… ARRS… ADTN… MSG…
                     DDD… MLNX…

  Maxim Group LLC - 405 Lexington Avenue - New York, NY 10174 - www.maximgrp.com
   SEE PAGES 46 FOR IMPORTANT DISCLOSURES AND DISCLAIMERS
                                                       Best Stock Ideas 2013


                  Table of Contents
       Pages 3     Catamaran corporation

       Page 5      Quality Systems Inc.

       Page 7      Sequenom, Inc.

       Page 9      Exact Sciences Corp.

       Page 11     ImmunoCellular Therapeutics, Inc.

       Page 13     Neuralstem, Inc.

       Page 15     Onyx Pharmaceuticals, Inc

       Page 17     Bidu, Inc.

       Page 19     Dialight plc.

       Page 21     First Solar, Inc.

       Page 23     Ellington Financial LLC

       Page 25     Anworth Mortgage Asset Corp.

       Page 27     Quanta Services, Inc.

       Page 29     Robbins & Myers Inc.

       Page 31     ARRIS Group, Inc.

       Page 33     ADTRAN, Inc.

       Page 35     The Madison Square Garden Co.

       Page 37     3D Systems Corp.

       Page 39     Mellanox Technologies Ltd

       Page 46     Disclosures and Disclaimers




Maxim Group LLC                                                          2
                                                                                                              Best Stock Ideas 2013


Healthcare Services                                      Catamaran Corp.                                                         Buy
December 20, 2012                                        (CTRX – Nasdaq – $49.58)
Closing Price (12/19/12):                      $49.58
12-Month Target Price:                            $66
                                                         2013 Best Long Idea: A transformational year characterized
52-Week Range:                        $27.95 - $53.13    by industry consolidation and disruptions has positioned
Market Cap (MM):                             $10,169     CTRX to capture share in 2013
Shares O/S (MM):                                205.1       Bottom line. We recommend that investors Buy shares of CTRX. We
Float (MM):                                     204.1        believe the company is poised to benefit from the added scale achieved
Shares Short (MM):                                 0.0       through the merger with Catalyst, which should significantly increase its
Avg. Vol. (000)                                 220.0        ability to attract RFPs from large clients – we believe this is already
Book Value/Share:                              $22.28        happening. While CTRX’s core strength has been, and continues to be, in
Dividend/Yield:                          $0.00/0.00%         the middle market, we believe the company should garner substantial
Risk Profile:                                 Medium         growth opportunities from its channel agnostic and flexible product
                                                             offering, which is generating increased interest from large employers and
    Maxim Group                   Revenues ($M)              support from the benefit consultant community.
   FYE: December             2012E            2013E
         1Q                 $1,717A           $3,508        Momentum builds for the 2014 selling season. CTRX has won $2.3B in
                                                             new business for the 2013 selling season and is already tracking a large set
         2Q                 $1,703A           $3,668
                                                             of pipeline opportunities for 2014, earlier than selling seasons traditionally
         3Q                 $3,191A           $3,767
                                                             begin. We expect CTRX to convert a large proportion of RFPs and
         4Q                 $3,326            $3,916         announce additional large employer contracts in 1H13 as the company
         FY                 $9,937           $14,860         benefits from its combined and flexible product offering.
    Maxim Group             Current Prior Current
   FYE: December              EPS     EPS       P/E         CTRX remains the HCIT-enabled PBM, but it has adopted the
                                                             Catalyst customer focus model. The new scale of the combined PBM
    2011A: GAAP              $0.73      -      67.9
                                                             assets of SXC and Catalyst has given way to the company’s new focus –
    2012E: GAAP              $0.68      -      72.9          National Scope, Regional Delivery, and Personal Experience. In addition to
    2013E: GAAP              $1.35      -      36.7          leveraging and expanding the Catalyst Centers of Excellence, the top
    2014E: GAAP              $1.85      -      26.8          executives remain deeply involved in customer relationships, which we
LT Earnings Growth              34%                          expect to support the company’s continued 98% retention rate.
                              Quarterly GAAP EPS
                                                            Gross profit buoyed by the generic wave. Approximately $41.3B of
    Maxim Group             Current Prior Current
                                                             branded sales is expected to come off patent between 2013 and 2015. While
  FYE: December             2012E 2012E 2013E                the increased use of generics should have a moderate negative impact on the
        1Q                  $0.21A      -     $0.25          top-line, we believe CTRX should experience a significant gross margin,
        2Q                  $0.20A      -     $0.29          and more importantly, gross profit tailwind as it continues to drive generic
        3Q                  $0.10A      -     $0.35          utilization. We estimate the generic dispensing rate to increase 200bps to
        4Q                  $0.19       -     $0.46          83.2% in 2013, from 81.2% in 2012.
        FY                  $0.68       -     $1.35         Specialty pharmacy dominates spending growth. Specialty pharmacy
Consensus-First Call          Quarterly GAAP EPS             sales are forecasted to increase 10% annually through 2015, compared to
  FYE: December             2012E             2013E          4% for non-specialty. CTRX is committed to driving increased utilization of
        1Q                  $0.21A            $0.24          specialty within its book of business (now $1B with another $1B of
        2Q                  $0.20A            $0.25          opportunity from Catalyst), as well as taking share within their competitors’
        3Q                  $0.10A            $0.29          books. We expect CTRX, with one of the few full-service specialty
        4Q                  $0.17             $0.33
                                                             operations in the middle market, to capture a large portion of the increased
                                                             specialty spend.
        FY                   $0.67            $1.15
Anthony Vendetti                       (212) 895-3802       Attractive valuation. Shares trade at 72.9x and 36.7x our 2012 and 2013
avendetti@maximgrp.com                                       GAAP EPS estimates, respectively, compared to peer averages of 39.5x and
                                                             24.1x. On an adjusted cash EPS basis, CTRX’s shares trade at 44.3x and
Bryan Brokmeier, CFA                   (212) 895-3845        26.3x our 2012 and 2013 estimates, compared to peer averages of 24.4x and
bbrokmeier@maximgrp.com                                      17.3x. Our 12-month target price of $66 is derived using a 10-year DCF
                                                             analysis with a 10% discount rate. Our target price implies that shares trade
                                                             at 35x our 2013 adjusted cash EPS estimate of $1.88, which is inline with
                                                             its earnings growth rate and warranted, in our opinion, given CTRX’s
                                                             significant growth and margin expansion opportunities.


Maxim Group LLC                                                                                                              3
                                                                                                                                                                          Best Stock Ideas 2013
 Catamaran Corp. (CTRX)
 Income Statement (2010-2014E)
 (in millions except per share data)

                                                 Mar 11    June 11   Sept 11   Dec 11              Mar 12    June 11   Sept 12   Dec 12              Mar 13    June 13   Sept 13   Dec 13
 Fiscal Year ends December 31           2010A     1Q11      2Q11      3Q11      4Q11      2011A     1Q12      2Q12      3Q12     4Q12E      2012E    1Q13E     2Q12E     3Q13E     4Q13E      2013E      2014E
 PBM revenue                           1,841.6   1,071.9   1,182.9   1,256.4   1,348.1   4,859.2   1,681.1   1,661.1   3,150.7   3,285.5   9,778.5   3,472.1   3,628.0   3,728.3   3,876.4   14,704.7   16,350.0
 % change (y/y)                        37.8%     150.7%    162.1%    171.3%    169.7%    163.9%    56.8%     40.4%     150.8%    143.7%    101.2%    106.5%    118.4%    18.3%     18.0%      50.4%         11.2%
 % of total revenue                    94.5%     97.7%     97.6%     97.6%     97.8%     97.7%     97.9%     97.6%     98.7%     98.8%     98.4%     99.0%     98.9%     99.0%     99.0%      99.0%         99.0%
 HCIT revenue                          106.8      25.7      29.2      30.9      30.4     116.3      36.0      41.6      40.0      40.9     158.5      36.1      40.0      39.0      40.0      155.1         157.3
 % change (y/y)                         4.0%      4.4%      3.7%     15.0%     12.2%      8.9%     39.7%     42.5%     29.4%     34.6%     36.3%      0.4%     (3.7%)    (2.6%)    (2.3%)     (2.1%)        1.4%
 % of total revenue                     5.5%      2.3%      2.4%      2.4%      2.2%      2.3%      2.1%      2.4%      1.3%      1.2%      1.6%      1.0%      1.1%      1.0%      1.0%       1.0%         1.0%
 Revenues                              1,948.4   1,097.7   1,212.0   1,287.3   1,378.5   4,975.5   1,717.1   1,702.7   3,190.8   3,326.4   9,937.0   3,508.2   3,668.1   3,767.2   3,916.4   14,859.9   16,507.3
   % change (y/y)                      35.4%     142.8%    152.8%    162.8%    161.6%    155.4%     56.4%     40.5%    147.9%    141.3%    99.7%     104.3%    115.4%    18.1%     17.7%      49.5%         11.1%
 Cost of Revenues                      1,734.3   1,034.1   1,137.8   1,204.9   1,289.1   4,666.0   1,606.7   1,580.2   2,955.9   3,065.4   9,208.2   3,236.0   3,388.3   3,475.3   3,601.3   13,700.8   15,179.2
  % change (y/y)                        38.5%    157.3%    167.3%    175.7%    174.5%    169.0%     55.4%     38.9%    145.3%    137.8%     97.3%    101.4%    114.4%     17.6%     17.5%      48.8%      10.8%
 Gross profit                           214.1      63.6      74.2      82.3     89.4      309.5     110.4     122.5     234.9     261.0     728.8     272.2     279.8     292.0     315.1     1,159.1    1,328.1
  % change (y/y)                        14.7%     26.6%     38.1%     55.8%     56.2%     44.6%     73.6%     65.1%    185.3%    192.1%    135.5%    146.6%    128.4%     24.3%     20.7%      59.0%    2220.9%
 Gross margin                           11.0%     5.8%      6.1%      6.4%      6.5%      6.2%      6.4%      7.2%      7.4%      7.8%      7.3%      7.8%      7.6%      7.8%      8.0%       7.8%       8.0%

 SG&A                                  101.7      30.8      35.9      37.4      41.7     145.8      56.7      64.7     133.7     126.1     381.2     119.0     115.2     107.0      91.7      432.8         432.4
   % change (y/y)                       4.0%     26.3%     46.5%     51.4%     48.4%     43.4%     84.1%     80.1%     257.8%    202.2%    161.5%    109.7%    78.2%     (20.0%)   (27.3%)    13.6%         (0.1%)
   % of revenue                         5.2%      2.8%      3.0%      2.9%      3.0%      2.9%      3.3%      3.8%      4.2%      3.8%      3.8%      3.4%      3.1%      2.8%      2.3%       2.9%         2.6%
 Depreciation of P&E                     6.0       1.6       1.6       1.6       2.0       6.7       2.4       2.5       5.7       5.8      16.3       5.7       5.7       5.6       5.5       22.6         29.7
   % change (y/y)                       3.1%      7.6%      2.9%      8.5%     30.9%     12.5%     47.8%     56.7%     260.0%    190.3%    141.7%    142.2%    129.4%    (1.3%)    (3.8%)     38.4%         31.5%
   % of revenue                         0.3%      0.1%      0.1%      0.1%     0.1%       0.1%      0.1%      0.1%      0.2%      0.2%      0.2%      0.2%      0.2%      0.1%      0.1%       0.2%          0.2%
 Amortization of intangible assets       7.9       3.6       3.7       3.9       5.3      16.4      10.3       9.0      51.4      51.0     121.7      52.0      52.9      53.9      54.9      213.7         205.1
   % change (y/y)                      (19.2%)   78.4%     85.4%     100.8%    171.1%    108.6%    189.8%    145.7%    1217.8%   869.7%    642.8%    403.7%    487.5%     4.9%      7.6%      75.6%         (4.0%)
   % of revenue                          0.4%     0.3%      0.3%      0.3%      0.4%      0.3%      0.6%      0.5%       1.6%     1.5%      1.2%      1.5%      1.4%      1.4%      1.4%       1.4%          1.2%
 Operating income(EBIT)                 98.5      27.6      33.1      39.5      40.4     140.6      41.0      46.4      44.1      78.2     209.6      95.6     106.0     125.4     163.0      490.0         660.8
   % change (y/y)                      34.4%     23.5%     28.5%     59.4%     57.5%     42.7%     48.4%     40.2%     11.6%     93.5%     49.1%     133.1%    128.7%    184.5%    108.5%    133.7%         34.9%
   EBIT margin                          5.1%      2.5%      2.7%      3.1%      2.9%      2.8%      2.4%      2.7%      1.4%      2.4%      2.1%      2.7%      2.9%      3.3%      4.2%      3.3%          4.0%

 Interest and Other, Net                (1.0)     (0.3)     (0.6)     (1.1)     (0.3)     (2.3)     (1.2)     (2.0)     (11.8)    (16.3)    (31.4)    (14.1)    (12.6)    (11.2)    (9.5)     (47.5)        (37.6)
   % change (y/y)                      (81.5%)   (35.2%)   187.7%      NM      104.1%    135.4%      NM        NM        NM        NM        NM        NM        NM      (5.1%)    (42.0%)    51.3%     (20.9%)
 Income (loss) before taxes (EBT)       97.6      27.3      32.5      38.4       40.1    138.3      39.8      44.4       32.2      61.9    178.2      81.4      93.4     114.2      153.5     442.5         623.3
   % change Y/Y                        43.3%     24.7%     32.0%     50.4%     (58.9%)   41.8%     22.4%     15.6%     (19.6%)   (55.3%)   28.9%     83.5%     189.6%    84.5%     (13.9%)   148.2%         40.9%
 Total tax expense (benefit)            32.8       9.1      10.9      13.1      13.4      46.5      13.4      17.1      12.8      23.7      67.0      30.9      35.5      43.4      58.3      168.1         243.1
 Implied tax rate                      33.6%     33.2%     33.6%     34.2%     33.5%     33.6%     33.7%     38.5%     39.8%     38.3%     37.6%     38.0%     38.0%     38.0%     38.0%      38.0%         39.0%
 Non-controlling interest                0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0      (1.1)     (1.1)     (2.2)     (1.2)     (1.2)     (1.3)     (1.3)      (5.0)        (5.5)
   % of revenue                         0.0%      0.0%      0.0%      0.0%      0.0%      0.0%      0.0%      0.0%      0.0%      0.0%      0.0%      0.0%      0.0%      0.0%      0.0%       0.0%         0.0%
 GAAP Net Income                        64.7      18.3      21.6      25.3      26.7      91.8      26.3      27.3      20.5      39.3      113.4     51.7      59.1      72.0      96.5      279.3         385.7
   % change (y/y)                      40.5%     23.5%     25.8%     56.2%     60.5%     41.8%     44.2%     26.6%     (19.0%)   47.3%     23.6%     96.1%     116.5%    251.8%    145.5%    146.3%         38.1%
 Non-GAAP Diluted EPS                  $0.51     $0.14     $0.17     $0.20     $0.21     $0.73     $0.21     $0.20      $0.10    $0.19     $0.68     $0.25     $0.29      $0.35    $0.46      $1.35         $1.85
  % change y/y                         18.6%     16.7%     21.4%     53.8%     61.5%     43.1%     50.0%     17.6%     (50.0%)   (9.5%)    (6.8%)    19.0%     45.0%     250.0%    142.1%     98.5%         37.0%
 GAAP Diluted EPS                      $0.51     $0.14     $0.17     $0.20     $0.21     $0.73     $0.21     $0.20      $0.10    $0.19     $0.68     $0.25     $0.29      $0.35    $0.46      $1.35         $1.85
  % change Y/Y                         18.6%     16.7%     21.4%     53.8%     61.5%     43.1%     50.0%     17.6%     (50.0%)   (9.5%)    (6.8%)    19.0%     45.0%     250.0%    142.1%     98.5%         37.0%
 Wgt. Avg Diluted Shares               126.3      127.1     127.5     126.1     126.2    125.9      126.6     133.8     204.4    205.9     167.7     206.3     206.7     207.1     207.5      206.9         207.9
 Wgt. Avg Basic Shares                 121.5      123.6     124.1     124.5     124.7    124.3      125.1     132.4     203.5    204.9     166.5     205.3     205.7     206.1     206.5      205.9         206.9

 Non-GAAP Net Income                    64.7      18.3      21.6      25.3     26.7       91.8      26.3      27.3      20.5      39.3     113.4      51.7      59.1      72.0      96.5      279.3         385.7
 Adjusted cash net income               70.0      20.7      24.0      27.8     30.2      102.7      33.2      32.9      51.4      70.4     187.9      82.8      90.2     101.2     115.6      389.8         477.2
 Adjusted cash EPS                     $0.55     $0.16     $0.19     $0.22     $0.24     $0.82     $0.26     $0.25     $0.25     $0.34     $1.12     $0.40     $0.44     $0.49     $0.56      $1.88         $2.30
  % change Y/Y                         15.9%     25.2%     27.8%     58.9%     69.2%     47.1%     61.3%     30.5%     14.0%     43.0%     37.4%     53.0%     77.8%     94.2%     62.9%      68.1%         21.8%
Note: Expenses are modeled on a GAAP basis; Our Non-GAAP EPS excludes non-recurring charges and discontinued operations; Adjusted cash EPS excludes non-recurring charges, discontinued
operations, and amortization of acquisition related intangibles; Source: Company reports and Maxim Group estimates.




Maxim Group LLC                                                                                                                                                                                         4
                                                                                                           Best Stock Ideas 2013


Healthcare Information Technology                     Quality Systems, Inc.                                                   Hold
December 20, 2012                                     (QSII – Nasdaq – $18.12)
Closing Price (12/19/12):                   $18.12
12-M onth Target Price:                         NA    2013 Stock to Avoid: QSII lacking visibility moving into
52-Week Range:                     $15.04 - $45.00    2013; Shrinking pipeline remains a concern
M arket Cap (M M ):                         $1,076
                                                         Bottom line. We recommend that investors remain on the sidelines with
Shares O/S (M M ):                            59.4        shares of QSII. Although we expect QSII to pick up business via the
Float (M M ):                                 39.8        replacement market, as smaller vendors struggle to meet increasingly more
Shares Short (M M ):                            2.6       stringent government requirements for meaningful use, we also recognize
Avg. Vol. (000)                              660.0        that delays to ICD-10 and meaningful use 2 have pushed this opportunity
Book Value/Share:                            $5.26        out to 2014. In the meantime, the company is faced with a shrinking
Dividend/Yield:                       $0.70/4.07%         pipeline, the loss of the large Health Management Associates (HMA –
Risk Profile:                                  High       $9.02 – Not Rated) contract to athenahealth (ATHN – $76.20 – Hold), and
                                                          diminished penetration into large hospitals and group practices. While the
   Maxim Group               Revenues ($M)                company restructured senior management by creating two new positions of
   FYE: March            F2012          F2013E            chief operating officer and chief technology officer, we remain somewhat
       1Q               $100.4          $118.3A           concerned with the lack of visibility which ultimately resulted in the
       2Q               $107.6          $116.1A           suspension of guidance. We continue to believe that the company’s strong
       3Q               $112.8           $118.9           reputation and customizable solutions position it to benefit from long-term
       4Q               $109.0           $123.3           growth opportunities, but given the current headwinds, we believe it is
        FY         $429.8                  $476.6
                                                          prudent to take a more cautious view of the stock until visibility improves.
   Maxim Group     Current Prior          Current        Shrinking pipeline. QSII’s pipeline has declined in three consecutive
    FYE: March      EPS     EPS              P/E          quarters, dropping to $140M (down 19.1% y/y), from $173M in F2Q12
  F2012A: GAAP       $1.28   -              14.2          (September). Management attributes the shrinking pipeline to a wide-
  F2013E: GAAP       $1.10   -              16.5          ranging lack of seven-figure deals from large hospital systems. While we
  F2014E: GAAP       $1.29   -              14.0          recognize that many large hospitals and group practices have made their
                                                          buying decisions, we are concerned that QSII may be receiving fewer RFPs,
LT Earnings Growth    15%
                                                          limiting the company’s ability to bid for the remaining large contracts
   Maxim Group              Quarterly GAAP EPS            altogether. Barring a re-acceleration in RFPs and large deal wins, we fear
                       Current Prior Current              the pipeline may remain at the current suppressed levels until the
    FYE: March          F2012 F2012 F2013E                replacement market picks up.
        1Q              $0.32    -   $0.31A              Lost HMA opportunity. Although the loss of the HMA was a setback, we
        2Q              $0.35    -   $0.26A               note that at the time of the contract loss QSII had approximately 400 HMA
        3Q              $0.36    -    $0.29               doctors subscribed to Quality’s EHR service and 500 to the company’s
        4Q              $0.25    -    $0.29               RCM service. We fully expect some conversion among the existing doctors
        FY              $1.28    -    $1.10               to ATHN; however, in our view the lager loss is associated with the 10,000
Consensus-First Call     Quarterly GAAP EPS               independent physicians affiliated with HMA, who will likely be
    FYE: March          F2012          F2013E             aggressively targeted by ATHN.
        1Q              $0.32          $0.31A            Valuation. Shares of QSII trade at 17.1x and 14.7x our 2012 and 2013
        2Q              $0.35          $0.26A             calendar year GAAP EPS estimates of $1.06 and $1.23, below peer
        3Q              $0.36           $0.31             averages of 29.0x and 20.6x, respectively. Given the limited visibility due
        4Q              $0.25           $0.33             to ICD-10 and MU Stage 2 delays and the company’s shirking pipeline,
        FY              $1.28           $1.20             which raises concerns about the ability to generate near-term revenue, we
                                                          believe the shares are fairly valued at this time with no near-term catalysts.
Anthony Vendetti                    (212) 895-3802
avendetti@maximgrp.com
Bryan Brokmeier, CFA                (212) 895-3845
bbrokmeier@maximgrp.com




Maxim Group LLC                                                                                                           5
                                                                                                                                                                              Best Stock Ideas 2013
 Quality Systems, Inc.
 Income Statement
 (in thousands, except per share data)

                                                                     June 11   Sept 11   Dec 11    Mar 12              June 12   Sept 12   Dec 12      Mar 13                June 13     Sept 13      Dec 13      Mar 14
 Fiscal Year ends March 31                        F2010     F2011     1Q12      2Q12      3Q12      4Q12      F2012     1Q13      2Q13     3Q13E       4Q13E       F2013E    1Q14E       2Q14E        3Q14E       4Q14E       F2014E
Revenues:
 System sales                                    104,137   124,529   34,383    37,954    41,629    34,832    148,798   37,890    32,255    38,518      38,135      146,797   39,949      38,622       45,140      48,206      171,917
    % change (YoY)                                5.4%      19.6%    18.3%     52.6%     22.7%     (5.0%)     19.5%    10.2%     (15.0%)   (7.5%)       9.5%        -1.3%     5.4%       19.7%        17.2%       26.4%        17.1%
    % of total revenues                           35.7%     35.2%     34.2%     35.3%    36.9%      32.0%     34.6%     32.0%     27.8%     32.4%       30.9%       30.8%     31.9%      30.8%        34.5%        34.7%       33.0%

 Maintenance, EDI, and other                     187,674   228,834   66,059    69,680    71,136    74,162    281,037   80,406    83,873    80,355      85,140      329,774   85,387      86,609       85,762      90,896      348,653
    % change (YoY)                                27.9%     21.9%     22.6%     23.1%     22.8%     22.7%     22.8%     21.7%     20.4%     13.0%       14.8%       17.3%     6.2%        3.3%         6.7%        6.8%        5.7%
    % of total revenues                           64.3%     64.8%     65.8%     64.7%     63.1%     68.0%     65.4%     68.0%     72.2%     67.6%       69.1%       69.2%     68.1%       69.2%        65.5%       65.3%       67.0%
 Total Operating Revenues                        291,811   353,363   100,442   107,634   112,765   108,994   429,835   118,296   116,128   118,872     123,275     476,571   125,336     125,231      130,901     139,102     520,570
     % change (YoY)                              18.9%     21.1%     21.1%     32.1%     22.7%     12.2%     21.6%     17.8%      7.9%      5.4%       13.1%        10.9%     6.0%        7.8%        10.1%       12.8%        9.2%
Cost of Revenues:
 Total cost of system sales                      24,098    34,789    8,689     9,237     10,616    11,155    39,697    14,916    13,131    15,089      15,283      58,418    16,560      15,402       17,144      19,178      68,283
    % change (YoY)                               2.68%     44.36%    (5.6%)    13.0%     13.6%     38.2%     14.11%    71.7%     42.2%     42.1%       37.0%       47.16%    11.0%       17.3%        13.6%       25.5%       16.89%
    % of system sales                             23.1%     27.9%    25.3%     24.3%     25.5%      32.0%     26.7%     39.4%     40.7%     39.2%       40.1%       39.8%     41.5%      39.9%        38.0%        39.8%       39.7%
 Total cost of maintenance, EDI, revenue cycle
                                                 86,709    92,693    26,239    26,783    27,718    30,786    111,526   33,479    33,233    31,796      32,988      131,496   33,007      33,527       33,098      35,576      135,208
 mgmt and other services
    % change (YoY)                                32.5%     6.9%     15.8%     22.0%     20.6%     22.7%      20.3%    27.6%     24.1%     14.7%        7.2%        17.9%    (1.4%)       0.9%         4.1%        7.8%        2.8%
    % of revenues                                 46.2%     40.5%     39.7%     38.4%    39.0%      41.5%     39.7%     41.6%     39.6%     39.6%       38.7%       39.9%     38.7%      38.7%        38.6%        39.1%       38.8%
 Total Cost of Revenue                           110,807   127,482   34,928    36,020    38,334    41,941    151,223   48,395    46,364    46,884      48,271      189,914   49,567      48,929       50,242      54,753      203,491

 Gross profit                                    181,004   225,881   65,514    71,614    74,431    67,053    278,612   69,901    69,764    71,988      75,004      286,657   75,769      76,302       80,659      84,348      317,079
   % change (YoY)                                15.6%     24.8%     28.3%     39.5%     25.0%      4.9%     23.3%      6.7%     (2.6%)    (3.3%)      11.9%        2.9%      8.4%        9.4%        12.0%       12.5%       10.6%
 Gross margin                                    62.0%     63.9%     65.2%     66.5%     66.0%     61.5%     64.8%     59.1%     60.1%     60.6%       60.8%       60.1%     60.5%       60.9%        61.6%       60.6%       60.9%
 Operating Expenses
 SG&A                                            88,734    109,992   29,868    32,689    33,639    34,848    131,044   37,818    39,148    39,562      41,274      157,802   42,089      41,553       43,173      45,321      172,136
   % change (YoY)                                26.0%      24.0%    12.3%     29.3%     18.4%     17.2%      19.1%    26.6%     19.8%     17.6%       18.4%        20.4%    11.3%        6.1%         9.1%        9.8%        9.1%
   % of total revenues                            30.4%     31.1%     29.7%     30.4%     29.8%     32.0%     30.5%     32.0%     33.7%     33.3%       33.5%       33.1%     33.6%       33.2%        33.0%       32.6%       33.1%
 R&D                                             16,546    21,797    6,827     7,358     8,277     8,907     31,369    8,576      6,272     5,980       6,325      27,154     6,306      6,175        5,800       6,024       24,305
   % change (YoY)                                20.1%     31.7%     25.1%     40.6%     54.5%     54.9%     43.9%     25.6%     (14.8%)   (27.7%)     (29.0%)     (13.4%)   (26.5%)     (1.5%)       (3.0%)      (4.8%)      (10.5%)
   % of total revenues                            5.7%      6.2%      6.8%      6.8%      7.3%      8.2%      7.3%      7.2%      5.4%      5.0%        5.1%        5.7%      5.0%        4.9%         4.4%        4.3%        4.7%
 Total operating expenses                        105,280   131,789   36,695    40,047    41,916    43,755    162,413   46,394    45,420    45,542      47,599      184,955   48,395      47,728       48,973      51,345      196,441
   % change (YoY)                                 25.0%     25.2%    14.5%     31.3%     24.2%     23.3%      23.2%    26.4%     13.4%      8.7%        8.8%        13.9%     4.3%        5.1%         7.5%        7.9%        6.2%
   % of total revenues                            36.1%     37.3%     36.5%     37.2%     37.2%     40.1%     37.8%     39.2%     39.1%     38.3%       38.6%       38.8%     38.6%       38.1%        37.4%       36.9%       37.7%
 Operating income(EBIT)                          75,724    94,092    28,819    31,567    32,515    23,298    116,199   23,507    24,344    26,446      27,405      101,701   27,374      28,574       31,687      33,003      120,638
   % change (YoY)                                 4.6%     24.3%     51.5%     51.6%     26.1%     (18.1%)   23.5%     (18.4%)   (22.9%)   (18.7%)     17.6%       (12.5%)   16.5%       17.4%        19.8%       20.4%       18.6%
   % change Q/Q                                     -         -       1.3%      9.5%      3.0%     (28.3%)      -       0.9%      3.6%      8.6%        3.6%          -      (0.1%)       4.4%        10.9%        4.2%          -
   EBIT margin                                   25.9%     26.6%     28.7%     29.3%     28.8%      21.4%    27.0%     19.9%     21.0%     22.2%       22.2%       21.3%     21.8%       22.8%        24.2%       23.7%       23.2%
 Interest income                                  226       263        82        75        55        35       247        35        (62)      61          39          72        37          (65)         64          40          76
  Other income (expense)                          268        61        (38)     (144)     (218)     261       (139)     (213)     220              -           -     7               -            -           -           -     0
 Income before taxes (EBT)                       76,218    94,416    28,863    31,498    32,352    23,594    116,307   23,329    24,502    26,506      27,443      101,780   27,411      28,509       31,750      33,044      120,714
   % change Y/Y                                   3.9%      23.9%     51.3%     49.9%    25.2%     (17.2%)    23.2%    (19.2%)   (22.2%)   (18.1%)      16.3%       -12.5%    17.5%      16.4%        19.8%        20.4%        18.6%
 Income tax (benefit)                            27,839    32,810     9,880    11,002    11,247     8,521    40,650     7,832     8,811     9,542       9,880       36,065    9,868      10,263       11,430      11,896       43,457
 Implied tax rate                                 36.5%     34.8%     34.2%     34.9%    34.8%      36.1%     35.0%     33.6%     36.0%     36.0%       36.0%        35.4%    36.0%      36.0%        36.0%        36.0%        36.0%
 Net Income                                      48,379    61,606    18,983    20,496    21,105    15,073    75,657    15,497    15,691    16,964      17,564       65,716   17,543      18,246       20,320      21,148       77,257
   % change (YoY)                                 4.9%     27.3%     57.0%     52.6%     20.4%     (18.8%)   22.8%     (18.4%)   (23.4%)   (19.6%)     16.5%       (13.1%)   13.2%       16.3%        19.8%       20.4%       17.6%
   Net margin                                     16.6%     17.4%     18.9%     19.0%     18.7%     13.8%     17.6%     13.1%     13.5%     14.3%       14.2%       13.8%     14.0%       14.6%        15.5%       15.2%       14.8%
 Non-GAAP Diluted EPS                            $0.86     $1.10     $0.33     $0.36     $0.37     $0.26     $1.32     $0.27     $0.27     $0.29       $0.30       $1.13     $0.30       $0.31        $0.34       $0.36       $1.31
   % change (YoY)                                 1.8%     27.5%     51.8%     48.2%     17.7%     (19.9%)   19.8%     (18.9%)   (23.7%)   (20.8%)     13.4%       (14.4%)   10.2%       14.2%        18.6%       19.2%       16.0%
 GAAP Diluted EPS                                $0.84     $1.06     $0.32     $0.35     $0.36     $0.25     $1.28     $0.26     $0.26     $0.29       $0.29       $1.10     $0.29       $0.30        $0.34       $0.35       $1.29
   % change (YoY)                                 3.7%     26.2%     52.4%     52.2%     20.0%     (21.9%)   20.8%     (18.8%)   (25.7%)   (19.4%)     16.0%       (14.1%)   11.5%       15.4%        17.2%       20.7%       17.3%
 Diluted wtd avg shares outstanding              57,592    58,236    58,800    59,005    59,128    59,232    59,049    59,388    59,386    59,511      59,636      59,480    59,761      59,886       60,011      60,136      59,949
 Basic                                           57,270    57,894    58,362    58,664    58,847    59,048    58,729    59,281    59,347    59,472      59,597      59,424    59,722      59,847       59,972      60,097      59,910

 Non-GAAP Net Income                             49,681    64,040    19,612    20,955    21,629    15,620    77,816    16,071    16,091    17,233      17,835      67,086    17,823      18,531       20,611      21,445      78,409
Note: Expenses are modeled on a GAAP basis; Source: Company reports and Maxim Group Estimates




Maxim Group LLC                                                                                                                                                                                                     6
                                                                                                       Best Stock Ideas 2013


Life Science Tools & Diagnostics
December 20, 2012
                                                      Sequenom, Inc.                                                       Buy
Closing Price (12/19/12):                    $4.82
                                                      (SQNM – Nasdaq – $4.82)
12-Month Target Price:                           $7   2013 Best Long Idea: SQNM is positioning itself to be a
52-Week Range:                        $2.65- $5.83    double in 2013
Market Cap (MM):                              $553
Shares O/S (MM):                             114.8       Bottom line. We recommend that investors Buy shares of SQNM.
Float (MM):                                    98.8       SQNM has payor contracts covering more than 100,000 high-risk
Shares Short (MM):                             37.5       pregnancies, which should increase given the company’s greater
Avg. Vol. (M)                                   2.7       penetration of MFMs, and the recently announced recommendations from
Book Value/Share:                            $0.66        ACOG, CTAF, and BCBS technology board – and that doesn’t even
Dividend/Yield:                        $0.00/0.00%
                                                          reflect new technology coverage decisions by payors, including the recent
                                                          decision by WellPoint (WLP – $59.97 – Not Rated). While the
Risk Profile:                                  High
                                                          reimbursement rate remains uncertain, management reports that it is in
    Maxim Group                Revenues ($M)              line with the company’s expectations and we expect improved clarity
   FYE: December         2012E             2013E          throughout 2013. Moreover, MaterniT21 volume has significantly
         1Q             $14.9A              $31.7         exceeded our expectations as the company continues to take market share
         2Q             $18.3A              $35.4         despite the increasingly competitive environment.
         3Q             $22.9A              $42.6
                                                         Payor contracts covering more than 100,000 high-risk pregnancies
         4Q              $28.8              $49.9
                                                          are now in place, representing 15% of an estimated 716,000 high-risk
         FY              $84.9             $159.6
                                                          market. We anticipate a couple of large payor contracts in the near-term,
    Maxim Group         Current Prior Current             which could double SQNM’s covered lives, providing the company with
   FYE: December          EPS      EPS       P/E          improved volume and reimbursement rate visibility. Industry sources
    2011A: GAAP         ($0.75)      -       NM           report that they’re seeing significant reductions in invasive
    2012E: GAAP         ($1.00)      -       NM           amniocentesis/CVS, which should support additional payor decisions.
    2013E: GAAP         ($0.64)      -       NM
    2014E: GAAP         ($0.15)      -       NM          MaterniT21 Plus run rate is accelerating as we conservatively project
3-Year EPS Growth         NM                              SQNM’s market share to rise from 10% in 3Q12 to 15% in 4Q13.
    Maxim Group            Quarterly GAAP EPS
                                                          The company recently announced that, as of the first week of November,
                                                          it reached a 100,000 annualized test volume run rate for the MaterniT21
                        Current Prior Current
                                                          test—up from 90,000 in October, and we believe that its run rate
  FYE: December       2012E 2012E 2013E                   continues to rise. Although we remain concerned about the impact from
        1Q           ($0.22)A     -      ($0.21)          new competition, specifically Ariosa, Verinata, and Natera, payor
        2Q           ($0.26)A     -      ($0.19)          contracts and its highly-experienced salesforce, which was recently
        3Q           ($0.26)A     -      ($0.14)          expanded by 25 reps to a total of 75, should allow it to reach more
        4Q            ($0.25)     -      ($0.10)          accounts and continue to capture market share.
        FY            ($1.00)     -      ($0.64)
Consensus-First Call    Quarterly GAAP EPS
                                                         New data in 2013 on the use of NIPT in the low risk population
                                                          expands the market opportunity to the total 4.1M annual births.
  FYE: December       2012E              2013E
                                                          Although current recommendations are for use of NIPT in high-risk
        1Q           ($0.22)A            ($0.21)
                                                          populations, followed by a confirmatory amnio/CVS, we expect
        2Q           ($0.26)A            ($0.19)
                                                          additional data on the use of NIPT in the low risk population, which
        3Q           ($0.26)A            ($0.15)          would further support the adoption rate of the MaterniT21.
        4Q            ($0.25)            ($0.09)
        FY            ($0.98)            ($0.63)         $7 target price, but it could sail past $10 in 2013. Shares of SQNM
Bryan Brokmeier, CFA              (212) 895-3845          currently trade at EV/revenue multiples of 6.0x and 3.2x our 2012 and
bbrokmeier@maximgrp.com
                                                          2013 revenue outlooks, a discount to where it has historically traded and
                                                          compared to peer averages of 4.7x and 3.7x. Our 12-month target price of
                                                          $7 is based on SQNM trading at an EV/revenue multiple of 4.5x our 2013
                                                          revenue outlook, inline with the peer 2012 average. However, provided
                                                          reimbursement contracts from a couple of the largest payors, 200K tests
                                                          could be within reach. Given recent investments that brought capacity up
                                                          to 200K tests and the planned mid-2013 opening of its North Carolina
                                                          facility, management appears to be confident in its ability to take this
                                                          share of the market soon.




Maxim Group LLC                                                                                                        7
                                                                                                                                                                                                                         Best Stock Ideas 2013
Sequenom, Inc. (SQNM)
Bryan Brokmeier, CFA (212-895-3845; bbrokmeier@maximgrp.com)
Income Statement
(in thousands except per share data)

Fiscal Year ends December 31               2009A           2010A        1Q11        2Q11        3Q11        4Q11        2011A       1Q12        2Q12        3Q12        4Q12E       2012E        1Q13E       2Q13E       3Q13E       4Q13E       2013E           2014E
Genetic analysis                          $37,769         $44,905      $11,844     $11,723     $11,362     $12,659     $47,588     $10,140     $10,142     $10,352     $10,437     $41,071      $8,771      $10,011     $11,440     $12,605     $42,826         $48,377
% change (y/y)                             (19.9%)             18.9%    13.8%        6.9%        3.3%        1.0%        6.0%       (14.4%)     (13.5%)     (8.9%)      (17.6%)     (13.7%)      (13.5%)     (1.3%)      10.5%       20.8%        4.3%           13.0%
% of total revenue                          99.8%              94.6%    87.7%       87.9%       83.7%       81.8%       85.1%       68.0%       55.6%       45.3%       36.2%        48.4%       27.7%       28.2%       26.9%       25.3%       26.8%           23.2%
Diagnostic services                         $94            $2,554      $1,666      $1,609      $2,219      $2,825       $8,319     $4,780      $8,110      $12,501     $18,405     $43,796      $22,934     $25,425     $31,146     $37,285     $116,790        $160,513
% change (y/y)                               NM            2617.0%      716.7%      262.4%      223.0%      131.7%      225.7%      186.9%      404.0%      463.4%      551.5%      426.5%       379.8%      213.5%      149.1%      102.6%      166.7%          37.4%
% of total revenue                          0.2%               5.4%     12.3%       12.1%       16.3%       18.2%       14.9%       32.0%       44.4%       54.7%       63.8%        51.6%       72.3%       71.8%       73.1%       74.7%       73.2%           76.8%

Total revenue                             $37,863         $47,459      $13,510     $13,332     $13,581     $15,484     $55,907     $14,920     $18,252     $22,853     $28,842     $84,867      $31,705     $35,436     $42,586     $49,890     $159,616        $208,890
 % change (y/y)                            (19.7%)             25.3%    27.3%       16.8%       16.2%       12.6%       17.8%       10.4%       36.9%       68.3%       86.3%        51.8%       112.5%      94.1%       86.3%       73.0%       88.1%           30.9%

Cost of revenues                          $14,570         $18,996      $5,013      $4,425      $5,459      $8,417      $23,314     $9,478      $12,371     $16,846     $18,773     $57,468      $16,025     $16,285     $17,265     $18,459     $68,034         $59,547
 % change (y/y)                            (25.6%)             30.4%    (6.5%)       1.6%       33.0%       62.7%       22.7%       89.1%       179.6%      208.6%      123.0%      146.5%       69.1%       31.6%        2.5%       (1.7%)      18.4%           (12.5%)
 % of revenue                               38.5%              40.0%    37.1%       33.2%       40.2%       54.4%       41.7%       63.5%        63.0%       62.5%       62.0%       67.7%       67.2%       66.7%       66.2%       65.7%       42.6%            28.5%
Gross profit                              $23,293         $28,463      $8,497      $8,907      $8,122      $7,067      $32,593     $5,442      $5,881      $6,007      $10,069     $27,399      $15,679     $19,151     $25,321     $31,431     $91,582         $149,343
 % change (y/y)                            (15.5%)             22.2%    61.9%       26.2%        7.1%       (17.6%)     14.5%       (36.0%)     (34.0%)     (26.0%)     42.5%       (15.9%)      188.1%      225.6%      321.5%      212.1%      234.3%          63.1%
Gross margin                               61.5%           60.0%        62.9%       66.8%       59.8%       45.6%       58.3%       36.5%       32.2%       26.3%       34.9%       32.3%        49.5%       54.0%       59.5%       63.0%       57.4%           71.5%

Research and development                   37,453          43,431      10,722      17,146      12,643      13,074       53,585     12,663      13,870      13,243      13,541       53,317      13,617      14,156      15,309      15,690       58,772          59,159
 % change (y/y)                             36.4%              16.0%    (3.3%)      62.8%       11.8%       24.4%       23.4%       18.1%       (19.1%)      4.7%        3.6%        (0.5%)       7.5%        2.1%       15.6%       15.9%       10.2%            0.7%
 % of revenue                               98.9%              91.5%    79.4%       128.6%      93.1%       84.4%       95.8%       84.9%       76.0%       57.9%       46.9%        62.8%       42.9%       39.9%       35.9%       31.4%       36.8%           28.3%

Selling and marketing                      26,845          28,387       6,060       7,678       8,276       9,073       31,087      9,757      11,303      12,358      13,001       46,419      13,340      14,024      14,299      14,756       56,418          57,123
 % change (y/y)                             10.5%              5.7%     (2.1%)       4.9%       19.9%       13.7%        9.5%       61.0%       47.2%       49.3%       43.3%        49.3%       36.7%       24.1%       15.7%       13.5%       21.5%            1.2%
 % of revenue                               70.9%              59.8%    44.9%       57.6%       60.9%       58.6%       55.6%       65.4%       61.9%       54.1%       45.1%        54.7%       42.1%       39.6%       33.6%       29.6%       35.3%           27.3%

General and administrative                 28,127          22,280       4,838       5,038       5,461       6,848       22,185      7,350       9,949      10,126      10,674       38,099      10,624      10,634      10,650      10,731       42,639          43,687
 % change (y/y)                             52.6%          (20.8%)      (1.1%)      (21.3%)      3.3%       20.3%       (0.4%)      51.9%       97.5%       85.4%       55.9%        71.7%       44.5%        6.9%        5.2%        0.5%       11.9%            2.5%
 % of revenue                               74.3%              46.9%    35.8%       37.8%       40.2%       44.2%       39.7%       49.3%       54.5%       44.3%       37.0%        44.9%       33.5%       30.0%       25.0%       21.5%       26.7%           20.9%

Total operating expenses                  $92,425         $94,098      $21,620     $29,862     $26,380     $28,995     $106,857    $29,770     $35,122     $35,727     $37,216     $137,835     $37,581     $38,815     $40,258     $41,176     $157,829        $159,969
 % change (y/y)                             31.7%              1.8%     (2.5%)      23.1%       12.3%       19.9%       13.6%       37.7%       17.6%       35.4%       28.4%        29.0%       26.2%       10.5%       12.7%       10.6%       14.5%           355.5%
Operating income(EBIT)                    ($69,132)       ($65,635)    ($13,123)   ($20,955)   ($18,258)   ($21,928)   ($74,264)   ($24,328)   ($29,241)   ($29,720)   ($27,146)   ($110,435)   ($21,901)   ($19,663)   ($14,937)   ($9,746)    ($66,247)       ($10,626)
 % change (y/y)                              N/A               N/A       N/A         N/A         N/A         N/A         N/A         N/A         N/A         N/A         N/A          N/A         N/A         N/A         N/A         N/A         N/A             N/A
  EBIT margin                             (182.6%)        (138.3%)     (97.1%)     (157.2%)    (134.4%)    (141.6%)    (132.8%)    (163.1%)    (160.2%)    (130.0%)    (94.1%)     (130.1%)     (69.1%)     (55.5%)     (35.1%)     (19.5%)     (41.5%)          (5.1%)

Interest and other, Net                     (173)              165       404         29          (24)        (207)       202         (123)       (361)       (486)      (1,778)     (2,748)      (1,794)     (1,760)     (1,726)     (1,693)     (6,973)         (6,971)
 % change (y/y)                              N/A               N/A     7980.0%       N/A         N/A         N/A        22.4%        N/A         N/A         N/A         N/A          N/A         N/A         N/A         N/A         N/A         N/A             N/A
Earnings before taxes                     ($69,305)       ($65,470)    ($12,719)   ($20,926)   ($18,282)   ($22,135)   ($74,062)   ($24,451)   ($29,602)   ($30,206)   ($28,925)   ($113,184)   ($23,695)   ($21,423)   ($16,663)   ($11,439)   ($73,220)       ($17,597)
 % change Y/Y                                N/A               N/A       N/A         N/A         N/A         N/A         N/A         N/A         N/A         N/A         N/A          N/A         N/A         N/A         N/A         N/A         N/A             N/A
Income tax expense (benefit)                118                (10)      (49)        12          90          42          95           2          20          20          20           62          30          30          30          30          120             150
Implied tax rate                            (0.2%)             0.0%      0.4%       (0.1%)      (0.5%)      (0.2%)      (0.1%)      (0.0%)      (0.1%)      (0.1%)      (0.1%)       (0.1%)      (0.1%)      (0.1%)      (0.2%)      (0.3%)      (0.2%)          (0.9%)
Non-GAAP net income                       ($69,423)       ($65,460)    ($12,670)   ($20,938)   ($18,372)   ($22,177)   ($74,157)   ($24,453)   ($29,622)   ($30,226)   ($28,945)   ($113,246)   ($23,725)   ($21,453)   ($16,693)   ($11,469)   ($73,340)       ($17,747)
 % change (y/y)                              N/A               N/A       N/A         N/A         N/A         N/A         N/A         N/A         N/A         N/A         N/A          N/A         N/A         N/A         N/A         N/A         N/A             N/A
Non-GAAP Diluted EPS                       ($1.13)         ($0.91)      ($0.13)     ($0.21)     ($0.19)     ($0.22)     ($0.75)     ($0.22)     ($0.26)     ($0.26)     ($0.25)     ($1.00)      ($0.21)     ($0.19)     ($0.14)     ($0.10)     ($0.64)         ($0.15)
 % change y/y                                N/A               N/A       N/A         N/A         N/A         N/A         N/A         N/A         N/A         N/A         N/A          N/A         N/A         N/A         N/A         N/A         N/A             N/A
GAAP Diluted EPS                           ($1.16)         ($1.69)      ($0.13)     ($0.21)     ($0.19)     ($0.22)     ($0.75)     ($0.22)     ($0.26)     ($0.26)     ($0.25)     ($1.00)      ($0.21)     ($0.19)     ($0.14)     ($0.10)     ($0.64)         ($0.15)
 % change Y/Y                                N/A               N/A       N/A         N/A         N/A         N/A         N/A         N/A         N/A         N/A         N/A          N/A         N/A         N/A         N/A         N/A         N/A             N/A
Basic                                      61,171          71,697      98,929      99,083      99,220      99,325       99,139     110,512     114,549     114,712     114,862     113,659      115,012     115,162     115,312     115,462     115,237         115,437
Diluted                                    61,171          71,697      98,929      99,083      99,220      99,325       99,139     110,512     114,549     114,712     114,862     113,659      115,012     115,162     115,312     115,462     115,237         115,437

GAAP Net Income                           ($71,012)       ($120,844)   ($12,670)   ($20,938)   ($18,372)   ($22,177)   ($74,157)   ($24,453)   ($29,622)   ($30,226)   ($28,945)   ($113,246)   ($23,725)   ($21,453)   ($16,693)   ($11,469)   ($73,340)       ($17,747)
Note: Expenses are modeled on a non-GAAP basis; Non-GAAP EPS excludes restructuring and other non-recurring charges
Source: Company reports and Maxim Group estimates




Maxim Group LLC                                                                                                                                                                                                                                             8
                                                                                                             Best Stock Ideas 2013


Life Science Tools & Diagnostics                        Exact Sciences Corp.                                                      Sell
December 20, 2012                                       (EXAS – Nasdaq – $10.23)
Closing Price (12/19/12):                     $10.23
12-Month Target Price:                            $7    2013 Stock to Avoid: Priced for perfection, even after the 2H12
52-Week Range:                         $7.83-$12.30     pullback
Market Cap (MM):                               $653        Bottom line. We recommend that investors Sell shares of EXAS. 2012 had
Shares O/S (MM):                               63.8         many milestone achievements for the company, which drove the stock
Float (MM):                                    58.3         higher for much of the year. 2013 has far fewer positive catalysts, in our
Shares Short (MM):                               6.7        view. We expect the company to release the clinical trial data in March and
Avg. Vol. (MM)                                   0.6        submit it to the FDA in 2Q13. However, blood-based LDTs for colorectal
                                                            cancer (CRC) continue to expand volume (now more than an estimated 15K
Book Value/Share:                              $1.83
                                                            quarterly tests) and others are in various stages of development. One of
Dividend/Yield:                            $0.0/0.0%
                                                            these tests is planned for an FDA submission by the end of 2012. While we
Risk Profile:                                   High        also expect the Cologuard to achieve FDA approval, we believe that it will
    Maxim Group                    Revenues ($M)            be just one of the new CRC screening options available to non-compliant
   FYE: December             2012E             2013E        patients, which should create a difficult competitive environment.
         1Q                  $1.0A              $1.0
                                                           Blood-based tests should limit the market penetration and ASP that
         2Q                  $1.0A              $1.0
                                                            EXAS can achieve. Multiple blood-based tests are at various stages of
         3Q                  $1.0A              $1.0        development and commercialization. The most significant near-term threat
         4Q                   $1.0              $1.0        is from Epigenomics (ECX.DE – 1.93 Euros – Not Rated). We expect that
         FY                   $4.1              $4.2        EXAS should capture a greater share of the market than all blood-based
    Maxim Group             Current Prior Current           tests combined due to its higher sensitivity and specificity, detection of
   FYE: December              EPS      EPS      P/E         large polyps, and planned targeting of the FOBT market (10M people).
    2011A: GAAP             ($0.55)     -        NA         However, given the ease of use, lower cost, partnerships with large
    2012E: GAAP             ($0.85)     -        NA         diagnostic labs, and the planned targeting of the non-compliant patient
    2013E: GAAP             ($0.75)     -        NA         population (28M people), we expect blood-based tests to gain significant
    2014E: GAAP             ($0.48)     -        NA         share in the market.
LT Earnings Growth              10%                        Lack of a distribution partner will make strong market penetration
                              Quarterly GAAP EPS            more difficult, in our view. EXAS plans to bring the Cologuard to market
    Maxim Group             Current Prior Current           without partnering with a national lab. Although the company can retain the
  FYE: December          2012E 2012E 2013E                  full economic value of its test, its distribution reach is more limited and it
        1Q              ($0.19)A     -   ($0.18)            will need to compete with the testing offerings from the large national labs,
        2Q              ($0.26)A     -   ($0.18)            particularly Quest Diagnostics (DGX – $60.18 – Hold), which appears to be
        3Q              ($0.21)A     -   ($0.19)            very committed to the CRC screening market. Moreover, the expenses
        4Q               ($0.20)     -   ($0.21)            required to build out the necessary manufacturing and distribution
        FY               ($0.85)     -   ($0.75)            capabilities are going to further pressure the company’s cash position and
                                                            may necessitate another equity raise in 2013, in our view.
Consensus-First Call       Quarterly GAAP EPS
  FYE: December          2012E           2013E             Price matters when competing with the low-cost option. According to
        1Q              ($0.19)A         ($0.17)            EXAS, FIT tests have been successful in taking 35%-40% of the FOBT
        2Q              ($0.26)A         ($0.17)            market over a six-year period. This was done through a sensitivity that is
        3Q              ($0.21)A         ($0.17)            roughly double that of FOBT's at a price of $20-$30, compared to $5-$10
        4Q               ($0.18)         ($0.17)            for an FOBT. Cologuard, on the other hand, has a sensitivity that is roughly
        FY               ($0.83)         ($0.62)            50% higher than a FIT (as well as some detection of large polyps), but
                                                            EXAS is targeting a $300 price – a difficult value proposition, in our view.

Bryan Brokmeier, CFA                   (212) 895-3845      Valuation is expensive. Shares of EXAS currently trade at price/revenue
bbrokmeier@maximgrp.com                                     multiples of 6.3x and 4.3x our 2015 and 2016 revenue outlooks, premiums
                                                            to peer 2012 and 2013 averages of 4.7x and 3.7x. Our 12-month target price
                                                            of $7 is based on EXAS trading at a price/revenue multiple of 4.6x our 2016
                                                            revenue outlook of $151M, in line with the peer average 2012 multiple, and
                                                            discounted back to 2013 at a 17% discount rate.




Maxim Group LLC                                                                                                             9
                                                                                                                                                                                                             Best Stock Ideas 2013
Exact Sciences Corp. (EXAS)
Bryan Brokmeier, CFA (212-895-3845; bbrokmeier@maximgrp.com)
Income Statement
(in thousands except per share data)
Fiscal year ends October 31             2010A        1Q11       2Q11       3Q11       4Q11        2011A       1Q12        2Q12        3Q12       4Q12E       2012E       1Q13E       2Q13E       3Q13E       4Q13E       2013E       2014E        2015E      2016E
Product royalty fees                      $26         $4         $6         $4         $6          $20         $0          $0          $0          $0          $0          $0          $0          $0          $0          $0          $0           $0          $0
% change (y/y)                            4.0%      (66.7%)    (14.3%)    (20.0%)    200.0%      (23.1%)        -           -           -           -           -           -           -           -           -           -            -            -          -
License fees                            $5,318      $1,036     $1,036     $1,035     $1,036      $4,143      $1,036      $1,036      $1,036      $1,036      $4,144      $1,041      $1,041      $1,041      $1,041      $4,165      $4,998       $5,497     $5,772
% change (y/y)                           12.4%      (19.5%)    (20.7%)    (23.4%)    (24.5%)     (22.1%)      0.0%        0.0%        0.1%        0.0%        0.0%        0.5%        0.5%        0.5%        0.5%        0.5%        20.0%        10.0%       5.0%
Product                                    $0         $0         $0         $0         $0           $0         $0          $0          $0          $0          $0          $0          $0          $0          $0          $0       $37,800      $98,000    $145,600
% change (y/y)                              -           -          -          -          -           -          -           -           -           -           -           -           -           -           -           -            -        159.3%      48.6%
Net Revenue                             $5,344      $1,040     $1,042     $1,039     $1,042      $4,163      $1,036      $1,036      $1,036      $1,036      $4,144      $1,041      $1,041      $1,041      $1,041      $4,165     $42,798     $103,497    $151,372
% change (y/y)                           12.3%      (19.9%)    (20.7%)    (23.4%)    (24.2%)     (22.1%)     (0.4%)      (0.6%)      (0.3%)      (0.6%)      (0.5%)       0.5%        0.5%        0.5%        0.5%        0.5%       927.6%       141.8%      46.3%

Cost of Royalty fees                     $24          $6         $6         $6         $6         $24         $0          $0          $0           $0         $0           $0          $0          $0          $0         $0          $0          $0          $0
% change (y/y)                          20.0%        0.0%       0.0%       0.0%       0.0%        0.0%          -           -           -           -           -           -           -           -           -           -           -            -          -
Cost of Product revenue                  $0           $0         $0         $0         $0         $0          $0          $0          $0           $0         $0           $0          $0          $0          $0         $0        $14,364     $34,300     $46,592
% change (y/y)                           NM          NM          NM         NM         NM         NM          NM          NM          NM          NM          NM          NM          NM          NM          NM          NM          NM         150.0%      35.0%
% of product revenue                     NM          NM          NM         NM         NM         NM          NM          0.0%        0.0%        0.0%        0.0%        0.0%        0.0%        0.0%        0.0%        0.0%       38.0%        35.0%      32.0%
Gross profit                           $5,320       $1,034     $1,036     $1,033     $1,036     $4,139      $1,036      $1,036      $1,036      $1,036      $4,144      $1,041      $1,041      $1,041      $1,041      $4,165      $28,434     $69,197     $104,780
% change (y/y)                          12.3%       (20.0%)    (20.8%)    (23.5%)    (24.3%)     (22.2%)      0.2%        0.0%        0.3%        0.0%        0.1%        0.5%        0.5%        0.5%        0.5%        0.5%       582.7%      143.4%      51.4%
Gross margin                            100%         99%        99%        99%        99%         99%        100%        100%        100%        100%        100%        100%        100%        100%        100%        100%         66%         67%         69%
Product gross margin                     NM          NM         NM         NM         NM          NM          NM          NM          NM          NM          NM          NM          NM          NM          NM          NM         62.0%       65.0%       68.0%

Research and development                9,023       2,989      5,197      6,110       7,672     21,968       8,999      11,202      10,481       9,820      40,502       8,279       8,289       8,280       7,856      32,705      23,967      30,014       33,302
% revenue                               168.8%      287.4%     498.8%     588.1%     736.3%      527.7%      868.6%     1081.3%     1011.7%      947.9%      977.4%      795.2%      796.2%      795.3%      754.5%      785.3%       56.0%      29.0%       22.0%
% change (y/y)                          114.2%       66.5%     144.8%     131.9%     210.6%      143.5%      201.1%      115.5%      71.5%        28.0%       84.4%      (8.0%)      (26.0%)     (21.0%)     (20.0%)     (19.3%)     (26.7%)     25.2%       11.0%
General and administrative              6,330       2,150      1,830      1,951       2,206      8,137       2,145       2,393       2,547       2,493       9,578       2,681       2,872       3,438       3,490      12,481      14,123      18,630       24,220
% revenue                               118.5%      206.7%     175.6%     187.8%     211.7%      195.5%      207.0%      231.0%      245.8%      240.6%      231.1%      257.5%      275.8%      330.2%      335.2%      299.7%      33.0%       18.0%       16.0%
% change (y/y)                          (33.4%)     42.2%       36.7%      8.6%       31.1%      28.5%       (0.2%)      30.8%       30.5%       13.0%       17.7%       25.0%       20.0%       35.0%       40.0%       30.3%       13.2%       31.9%       30.0%
Sales and marketing                     1,793        297        651        815        1,094      2,857        594        1,331       1,006       1,258       4,189       1,455       1,837       1,911       3,774       8,978      23,539      34,672       42,384
% revenue                               33.6%       28.6%       62.5%      78.4%     105.0%      68.6%       57.3%       128.5%      97.1%       121.4%      101.1%      139.8%      176.4%      183.6%      362.5%      215.6%      55.0%       33.5%       28.0%
% change (y/y)                          693.4%      172.5%      97.3%     158.7%      5.3%       59.3%       100.0%      104.5%      23.4%       15.0%       46.6%       145.0%      38.0%       90.0%       200.0%      114.3%      162.2%      47.3%       22.2%
Total operating expenses               $17,146      $5,436     $7,678     $8,876     $10,972    $32,962     $11,738     $14,926     $14,034     $13,571     $54,269     $12,416     $12,998     $13,630     $15,120     $54,164     $61,629     $83,315     $99,906
% revenue                               320.8%      522.7%     736.9%     854.3%     1053.0%     791.8%     1133.0%     1440.7%     1354.6%     1309.9%     1309.6%     1192.5%     1248.4%     1309.1%     1452.2%     1300.5%      144.0%      80.5%       66.0%
% change (y/y)                          22.9%       59.1%      102.5%      87.0%     111.3%      92.2%       115.9%      94.4%       58.1%       23.7%       64.6%        5.8%       (12.9%)     (2.9%)      11.4%       (0.2%)      13.8%       35.2%       19.9%
Operating income (EBIT)                ($11,826)   ($4,402)    ($6,642)   ($7,843)   ($9,936)   ($28,823)   ($10,702)   ($13,890)   ($12,998)   ($12,535)   ($50,125)   ($11,374)   ($11,957)   ($12,589)   ($14,079)   ($49,999)   ($33,195)   ($14,118)    $4,875
% change (y/y)                          28.4%       107.3%     167.4%     130.9%     159.9%      143.7%      143.1%       NM          NM          NM         73.9%        NM          NM          NM          NM         (0.3%)      (33.6%)     (57.5%)    (134.5%)
EBIT margin                            (221%)       (423%)     (637%)     (755%)     (954%)     (692%)      (1033%)     (1341%)     (1255%)     (1210%)     (1210%)     (1092%)     (1148%)     (1209%)     (1352%)     (1201%)      (78%)       (14%)        3%
Other income, net                        26           29         17         70         32         148         57          54          56          53          220         50          52          54          56          212         220         229         237
% change (y/y)                          (78.2%)    (3000.0%)   142.9%     400.0%     433.3%      469.2%      96.6%       217.6%      (20.0%)     64.5%       48.4%       (12.0%)     (3.5%)      (3.4%)       6.6%       (3.3%)       3.8%        3.8%        3.7%
Earnings before taxes                  ($11,800)   ($4,373)    ($6,625)   ($7,773)   ($9,904)   ($28,675)   ($10,645)   ($13,836)   ($12,942)   ($12,482)   ($49,905)   ($11,324)   ($11,905)   ($12,535)   ($14,023)   ($49,787)   ($32,974)   ($13,889)    $5,112
% change (y/y)                          29.8%       105.9%     167.5%     129.8%     159.5%      143.0%      143.4%      108.8%      66.5%       26.0%       74.0%        6.4%       (14.0%)     (3.1%)      12.3%       (0.2%)      (33.8%)     (57.9%)    (136.8%)
Income tax expense (benefit)             $0          $0          $0         $0         $0          $0          $0          $0          $0          $0          $0          $0          $0          $0          $0          $0          $0          $0        $1,022
Implied tax rate                         NM          NM          NM         NM         NM          NM          NM          NM          NM          NM          NM          NM          NM          NM          NM          NM          NM          NM        20.0%
Non-GAAP net income                    ($11,800)   ($4,373)    ($6,625)   ($7,773)   ($9,904)   ($28,675)   ($10,645)   ($13,836)   ($12,942)   ($12,482)   ($49,905)   ($11,324)   ($11,905)   ($12,535)   ($14,023)   ($49,787)   ($32,974)   ($13,889)    $4,090
% change (y/y)                          29.8%       105.9%     167.5%     129.8%     159.5%      143.0%      143.4%      108.8%      66.5%       26.0%       74.0%        6.4%       (14.0%)     (3.1%)      12.3%       (0.2%)      (33.8%)     (57.9%)      N/A
Non-GAAP diluted EPS                    ($0.29)     ($0.08)    ($0.13)    ($0.15)    ($0.18)     ($0.55)     ($0.19)     ($0.24)     ($0.21)     ($0.20)     ($0.84)     ($0.18)     ($0.18)     ($0.19)     ($0.21)     ($0.75)     ($0.48)     ($0.20)     $0.05
% change (y/y)                           3.6%       33.3%      116.7%      87.5%     125.0%      89.7%       137.5%      84.6%       40.0%       11.1%       52.7%       (5.3%)      (25.0%)     (9.5%)       5.0%       (10.7%)     (36.0%)     (58.3%)    (125.0%)
GAAP diluted EPS                        ($0.29)     ($0.08)    ($0.13)    ($0.15)    ($0.18)     ($0.55)     ($0.19)     ($0.26)     ($0.21)     ($0.20)     ($0.85)     ($0.18)     ($0.18)     ($0.19)     ($0.21)     ($0.75)     ($0.48)     ($0.20)     $0.05

Basic                                   40,455      51,930      52,010     52,443     53,647     52,512      56,718      57,037      60,531      63,944      59,557      64,194      64,444      67,694      67,944      66,069      69,069      70,069      78,694
Diluted                                 40,455      51,930      52,010     52,443     53,647     52,512      56,718      57,037      60,531      63,944      59,557      64,194      64,444      67,694      67,944      66,069      69,069      70,069      78,694

GAAP Net income                        ($11,556)   ($4,373)    ($6,625)   ($7,773)   ($9,904)   ($28,675)   ($10,645)   ($14,836)   ($12,942)   ($12,482)   ($50,905)   ($11,324)   ($11,905)   ($12,535)   ($14,023)   ($49,787)   ($32,974)   ($13,889)    $4,090
Note: Expenses are modeled on a non-GAAP basis; 2Q12 GAAP EPS includes: ($0.02) of non-cash charge related to Mayo collaboration expansion;
Source: Company reports and Maxim Group estimates




Maxim Group LLC                                                                                                                                                                                                                                 10
                                                                                                                                                                                                            Best Stock Ideas 2013

Biotechnology                                                                                                                                         ImmunoCellular Therapeutics, Inc.                                         Buy
December 20, 2012
Closing Price 12/19/2012                                                                                                         $2.00
                                                                                                                                                      (IMUC – NYSE – $2.00)
12-Month Target Price:                                                                                                   $18.00                       2013 Best Long Idea: A third-generation vaccine for brain
                                                                                                                                                      cancer
52-Week Range:                                                                                                      $0.98-$4.00
                                                                                                                                                         We select ImmunoCellular Therapeutics, Inc. as a best idea based on
Market Cap (B):                                                                                                                        $79
                                                                                                                                                          the upside we believe exists on positive phase II results in the current
Shares O/S (M):                                                                                                          39,394                           PII brain cancer trial. We believe the company has an innovative third-
                                                                                                                                                          generation dendritic cancer vaccine that addresses many of our perceived
Float (M):                                                                                                               37,424                           shortfalls of Dendreon’s (DNDN, $4.88, Hold) Provenge. If the company’s
Avg. Vol. (000)                                                                                                                        564                lead product ICT-107 is successful, we estimate it has the potential to be a
                                                                                                                                                          billion-dollar product. Phase II data should represent a significant inflection
Debt (M)                                                                                                                                $0
                                                                                                                                                          point and is expected this time next year.
Dividend/Yield:                                                                                               $0.00/0.00%
                                                                                                                                                         ICT-107 is the company’s lead product. ICT-107 is a therapeutic
Risk Profile:                                                                                                                         High                autologous dendritic-cell-based vaccine that targets multiple antigens from
                                                                                                                                                          the patient’s own tumor that attack the tumor and its core stem cells. The
FYE: December                                                                 EPS                                       P/E                               product was granted orphan drug status by the FDA and is now in a large
         2018                                                                ($0.21)                                    nm                                multi-centered Phase II trial. The Phase I data is impressive, in our opinion.
         2019                                                                ($0.47)                                    nm                                If Phase II data shows a survival benefit greater than the current standard of
         2020                                                                ($0.32)                                    nm                                care (four to five months) in glioblastoma (brain cancer) – particularly if
                                                                                                                                                          survival is out to eight to nine months – we believe we could see approval
                                                                                                                                                          on the Phase II data set. We note that the Phase I trial showed a median
                                                                                                                                                          survival out to 38.4 months. For now, we assume EU approval in 2014 and
(IMUC)                                                                                                                                                    a U.S. approval in 2018 (presuming that a pivotal Phase III trial will be
  $5
  $4                                                                                                                                                      required in the United States).
  $4
  $3
                                                                                                                                                         Next-generation vaccine: ICT-121. ICT-121 is a universal peptide-based
  $3                                                                                                                                                      vaccine that targets CD-133, a protein that is highly expressed on multiple
  $2                                                                                                                                                      tumor types. It will initially be evaluated in recurrent glioblastoma
  $2                                                                                                                                                      multiforme (GBM). On July 26, 2012, the company announced FDA
  $1                                                                                                                                                      clearance to begin a Phase I trial of the vaccine in up to 20 patients with
  $1
  $0
                                                                                                                                                          recurrent GBM.
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                                                                                                                                                         Model assumptions. We currently assume that the Phase II data set in
                                                                                                                                                          glioblastoma for ICT-107 is strong enough to warrant EU approval, but that
                                                                                                                                                          a Phase III study will be needed for U.S. approval (which we expect in
Source: bigcharts.com as of 12/20/2012                                                                                                                    2018). We model a $25,000 unit price and assume patients will get six to
                                                                                                                                                          seven units during their course of treatment. The total COGS of this product
                                                                                                                                                          (including owed royalties) are substantially lower than Dendreon’s
Jason Kolbert                                                                                            (212) 895-3516                                   Provenge. We assume COGS between 10% and 15%.
jkolbert@maximgrp.com
                                                                                                                                                         Valuation. Our current assumption is that the ICT-107 data drives an EU
                                                                                                                                                          approval in 2016 and U.S. approval in 2018. Using these metrics, we model
                                                                                                                                                          the market share in glioblastoma and discount back using a 30% rate in our
                                                                                                                                                          free cash flow, discounted EPS, and sum-of-the-parts models. Based on
                                                                                                                                                          2022 future revenues of $2.3 billion, these metrics suggest an $18 fair
                                                                                                                                                          value; however, these metrics assume solid data.




Maxim Group LLC                                                                                                                                                                                                       11
                                                                                                                                                                                                                                   Best Stock Ideas 2013

Immunocellular Pharmaceuticals Income Statement ($ MM's except per share data)
($ in thousands except per share data)                2011A       1Q12A        2Q12A        3Q12A       4Q12E          2012E          2013E          2014E          2015E          2016E          2017E          2018E            2019E            2020E         2021E        2022E
Revenues:
   ICT-107 (US)                                                                                                                                                                        $0              $0             $0         $405,681         $526,806      $532,074     $644,873
   ICT-107 (Ex. US)                                                                                                                                                                              $850,500       $935,550       $1,262,993       $1,313,512    $1,339,782   $1,623,816

Total Sales                                         $        - $         - $         - $         - $         - $            - $            - $            - $            - $            -        $850,500       $935,550 $ 1,668,674            $1,840,318    $1,871,856   $2,268,690
Royalty revenues                                             -                       -           -           -              -              -              -              -              -               -              -           -                     -             -            -
Contract and other Revenues                                  -
Total Revenues                                      $        - $         - $         - $         - $         - $            - $            - $            - $            - $            - $      850,500 $      935,550 $ 1,668,674 $ 1,840,318               $1,871,856   $2,268,690
Operating expenses:
COGS (including royalties to others)                                                                                                                                                             $127,575       $140,333   $250,301    $276,048    $280,778    $340,303
COGS (%)                                                                                                                                                                                            15.0%          15.0%       15.0%       15.0%       15.0%       15.0%
Gross Profit                                        $        - $         - $         - $         - $         - $            - $            - $            - $            - $            -        $722,925 $     795,218 $ 1,418,372 $ 1,564,270  $1,591,078 $ 1,928,386
Research & Development                                   4,989       1,999       2,190       2,379       2,403          8,970          9,854         21,000         31,679         38,507         $34,439        $28,000     $24,362     $20,302     $20,302     $20,000
Stock based compensation                                 1,190         245         104          34          34            417            140            146            152            158            165            171         178         185         $193        $201
Sales, General & Adminastrative                          2,447         806         837       1,004       1,014          3,662          4,159          4,328         10,000         16,000         $17,665        $19,190     $19,970     20,780      $21,624     $22,502
Total costs & operating expenses                        $8,626      $3,049      $3,027      $3,383      $3,417        $12,876        $14,013        $25,328        $41,679        $54,507        $179,680       $187,523   $294,633    $317,130    $322,705    $382,806
Total non-GAAP expenses                                 $7,435      $2,804      $3,131      $3,417      $3,383        $12,735        $13,872        $25,182        $41,527        $54,348        $179,515       $187,352   $294,455    $316,945    $322,512
Operating Income                                    $   (8,626) $   (3,049) $   (3,027) $   (3,383) $   (3,417) $     (12,876) $     (14,013) $     (25,328) $     (41,679) $     (54,507) $     670,820 $      748,027 $ 1,374,040 $ 1,523,188 $ 1,549,152 $ 1,885,884
Other Income (expense)
Interest Income and other                                    4           1          2            2           2              7              7              7              7              7              7              7           7           7           $7          $7
Financial expense                                            -        (369)                      -           -           (369)             -              -              -              -              -              -           -           -           0           0
Change in fair value of warrant liability                2,901      (4,473)     (3,323)      2,778                     (5,018)             -              -              -              -              -              -           -           -
Total Other Income (expense)                             2,906      (4,840)     (3,321)      2,779           2         (5,380)             7              7              7              7              7              7           7           7           7           7
Income Before Taxes                                 $   (5,720) $   (7,889) $   (6,348) $     (604) $   (3,415) $     (18,256) $     (14,005) $     (25,321) $     (41,672) $     (54,499) $     670,828 $      748,035 $ 1,374,048 $ 1,523,195 $ 1,549,159 $ 1,885,892
Income Tax Expense                                           -           0           0           0           0    $       -      $       -      $       -      $       -      $    (1,840)   $   109,572    $   198,227    $     474,037    $     548,350 $     557,697 $ 678,921
Tax Rate                                                  0.0%        0.0%        0.0%        0.0%        0.0%           0.0%           0.0%           0.0%           0.0%           3.4%          16.3%          26.5%            34.5%            36.0%         36.0%       36.0%
Net Income (loss)                                   $   (5,720) $   (7,889) $   (6,348) $     (604) $   (3,415)   $   (18,256)   $   (14,005)   $   (25,321)   $   (41,672)   $   (52,659)   $   561,256    $   549,808    $     900,011    $     974,845 $     991,462 $ 1,206,971
Net Income attributable to common stock             $   (5,720) $   (7,889) $   (6,348) $     (604) $   (3,415)   $   (18,256)   $   (14,005)   $   (25,321)   $   (41,672)   $   (52,659)   $   561,256    $   549,808    $     900,011    $     974,845 $     991,462 $ 1,206,971
Non-GAAP (dilluted)                                 $   (8,621)     (3,417)     (3,025)     (3,381)     (3,415)   $   (13,238)   $   (14,005)   $   (25,321)   $   (41,672)   $   (52,659)   $   561,256    $   549,808    $     900,011    $     974,845       991,462   1,206,971
Basic EPS                                               ($0.21)     ($0.21)     ($0.16)     ($0.01)     ($0.08)   $     (0.47)   $     (0.32)   $     (0.47)   $     (0.72)        ($0.88)         $9.29    $      9.09    $       14.84    $       16.03        $16.14      $19.46
Diluted EPS                                             ($0.21)     ($0.21)     ($0.16)     ($0.01)     ($0.08)        ($0.47)        ($0.32)        ($0.47)        ($0.72)        ($0.88)         $9.29          $9.09           $14.84           $16.03        $16.14      $19.46
Weighted avg. shares, basic (000)                       27,451      36,984      39,893      40,329      40,370         39,394         44,224         53,163         57,884         60,121         60,362         60,513           60,665           60,816        61,425      62,039
Weighted avg. shares, diluted (000)                     27,451      36,984      39,893      40,329      40,370         39,394         44,224         53,163         57,884         60,121         60,362         60,513           60,665           60,816        61,425      62,039
Source: Company reports and Maxim Group estimates

Source: Company reports and Maxim Group estimates




Maxim Group LLC                                                                                                                                                                                                                                                             12
                                                                                                                                                                                                                  Best Stock Ideas 2013

Biotechnology                                                                                                                                           Neuralstem, Inc.                                                              Sell
December 20, 2012
Closing Price 12/19/2012                                                                                                             $1.17              (CUR – NYSE – $1.17)
12-Month Target Price:                                                                                                               $0.25
                                                                                                                                                        2013 Stock to Avoid: Neuralstem: Why are we negative?
52-Week Range:                                                                                                       $0.42-$1.96                           The company is doing pioneering research in Lou Gehrig’s disease but it’s
Market Cap (M):                                                                                                                               $65           in the very early stages and many years before any products can come to
                                                                                                                                                            market. Compounding this is our concern by the move to continue cell therapy
Shares O/S (M):                                                                                                                     55,635
                                                                                                                                                            trials for ALS in Mexico and start a stroke trial in China, as well as the
Float (M):                                                                                                                          52,853                  company’s recent efforts to develop a small molecule depression drug. We see
                                                                                                                                                            this as representing a lack of focus and discipline at Neuralstem. Especially with
Avg. Vol. (000)                                                                                                                      1,283
                                                                                                                                                            such a tiny company, a handful of employees and having just completed a
Debt (M)                                                                                                                                           $0       dilutive financing. With only six months of operational cash on hand (estimate),
Dividend/Yield:                                                                                                      $0.00/0.00%                            before the next (likely) raise.
Risk Profile:                                                                                                                        High                  Neuralstem spent $3.2 million in the recent quarter. The company has (as of
                                                                                                                                                            September 2012), $9.8 million in cash, (after just having raising proceeds of $7
FYE: December                                                                 EPS                                                   P/E                     million in September). Are we to believe that a company that runs out of
       2012                                                                  ($0.18)                                                nm                      operating capital by the end of Q1-2013, will be able to run clinical trials in the
       2013                                                                  ($0.18)                                                nm                      US, Mexico and China, in ALS, Stroke and develop a small molecule for
       2014                                                                  ($0.14)                                                nm                      depression? The company has stated that Mexico can only move forward if a
                                                                                                                                                            partner is found.
                                                                                                                                                           Lou Gehrig’s disease: Competition on the horizon. While Neuralstem was in a
(CUR)                                                                                                                                                       leadership position a few years ago, other companies such as Brainstorm (BCLI-
$2
$2                                                                                                                                                          $0.25-NR) and Q-Therapeutics (private) are catching up, in our opinion.
$2
$1
                                                                                                                                                            Brainstorm is holding an R&D event, December 11 th, 2012. These companies
$1                                                                                                                                                          have equally viable approaches that are much less invasive (so easier for the
$1                                                                                                                                                          patient and less expensive and risky versus spinal (or brain) injections.
$1
$1
$0
                                                                                                                                                           Valuation. Neuralstem will likely have no meaningful revenues for the next
$0                                                                                                                                                          seven years and we believe it is at least that far away from commercializing a
$0
                                                                                                                                                            therapeutic product. We expect additional capital raises in order to fund the
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                                                                                                                                                            company, and we believe current shareholders will face multiple dilutive rounds
                                                                                                                                                            in the years ahead. As such, we believe the only way to value this company is
                                                                                                                                                            based on its technology value versus out-year projected revenues (which would
Source: Edgar as of 12/20/2012                                                                                                                              assume success based on phase 1 clinical trial data, with very low patient
                                                                                                                                                            numbers and no meaningful prior precedent or proof-of-concept data, in our
Jason Kolbert                                                                                              (212) 895-3516                                   opinion). Based on our sum-of-the-parts models and comparisons to similar
jkolbert@maximgrp.com                                                                                                                                       early-stage biotechnology companies, we see the technology value around $15
                                                                                                                                                            million, which translates into a $0.25 price target.




Maxim Group LLC                                                                                                                                                                                                             13
                                                                                                                                                                                                                                Best Stock Ideas 2013

                                                                                               Neuralstem, Inc. Income Statement
CUR Income Statement
($ in thousands except per share data)                  2011A          2012E       1Q13E        2Q13E       3Q13E       4Q13E          2013E          2014E          2015E          2016E          2017E          2018E          2019E          2020E          2021E          2022E
Revenues:
   Future Product Revenues (ALS)                                                                                                                                                                  $11,462        $34,571         $92,770       $140,132       $176,497       $201,647
   Future Product Revenues (SCI)                                                                                                                                                                   $8,125        $25,528         $53,402        $74,388        $97,036       $121,392
Total Sales                                         $      391 $         578 $       174 $        176 $       178 $       180 $          708 $          736 $          766 $          797         $19,587        $60,099 $      146,172        $214,520       $273,534       $323,039
Revenue from Licenses and Grants                             -             -
Reveneu from Product (lab) sales                             -             -
Total Revenues                                      $      391 $         578 $       174 $        176 $       178 $       180 $          708 $          736 $          766 $          797 $        19,587 $       60,099 $      146,172 $      214,520        $273,534       $323,039
Operating expenses:
COGS (including royalties to others)                                        $0          $0           $0          $0          $0            $0             $0             $0             $0         $3,917        $10,517         $21,926        $32,178        $41,030    $48,456
COGS (%)                                                                  0.0%       0.0%         0.0%        0.0%        0.0%           0.0%           0.0%           0.0%           0.0%          20.0%          17.5%           15.0%          15.0%          15.0%      15.0%
Gross Profit                                                       $      578 $      174 $        176 $       178 $       180 $          708 $          736 $          766 $          797         $15,670 $      49,582 $       124,246 $      182,342        $232,504 $ 274,583
Research & Development                                   7,355          6,007      1,760        1,936       2,130       2,343          8,168         13,452         23,527         36,583         33,573         $26,859         $25,784        $25,784        $29,173    $35,459
Sales, General & Adminastrative                          5,839          4,264      1,010        1,020       1,030       1,041          4,101          4,268          4,441         12,744         25,369         37,142          38,927         40,507         $42,152    $43,864
Depreciation & amortization                                187            252          89           90          91          91           361            375            390            448            532            $578            $601           626            $651       $677
Total costs & operating expenses                        $13,381        $10,523     $2,859       $3,046      $3,250      $3,475        $12,630        $18,095        $28,359        $49,776        $63,391        $75,096         $87,238        $99,095       $113,006   $128,456

Operating Income                                    $   (12,990) $     (9,945) $   (2,685) $    (2,870) $   (3,073) $   (3,295) $     (11,922) $     (17,358) $     (27,592) $     (48,978) $     (43,804) $     (14,997) $      58,934 $      115,425 $      160,528 $ 194,583
Other Income (expense)
Change in fair value of warrant liability                   162             -          -            -           -            -              -              -              -              -              -              -              -              -              $0             $0
Interest Income                                              61            27          5            5           6            6             22             23             24             25             26             27             28             29             30             31
Interest Expense                                             (1)           (2)                                                              -              -              -              -              -              -              -              -
Litigation settlement                                       250             8                                                               -              -              -              -              -              -              -              -             30        31
Income Before Taxes                                 $   (12,519) $     (4,813) $   (2,685) $    (2,870) $   (3,073) $   (3,295) $     (11,922) $     (17,358) $     (27,592) $     (48,978) $     (43,804) $     (14,997) $      58,934 $      115,425 $      160,558 $ 194,614
Income Tax Expense                                            0    $      -    $      -    $       -    $      -    $      -      $       -      $       -      $       -      $       -      $       -      $    (2,250)   $     8,840    $    28,856    $    40,140    $  70,061
Tax Rate                                                   0.0%          0.0%        0.0%         0.0%        0.0%        0.0%           0.0%           0.0%           0.0%           0.0%           0.0%          15.0%          15.0%          25.0%          25.0%        36.0%
Net Income (loss)                                   $   (12,519)   $   (9,912) $   (2,685) $    (2,870) $   (3,073) $   (3,295)   $   (11,922)   $   (17,358)   $   (27,592)   $   (48,978)   $   (43,804)   $   (12,747)   $    50,094    $    86,568    $   120,419    $ 124,553
Basic EPS                                                ($0.26)   $    (0.18)     ($0.05)      ($0.04)     ($0.04)     ($0.04)   $     (0.18)   $     (0.14)   $     (0.16)   $     (0.24)   $     (0.19)   $     (0.05)   $      0.20    $      0.32    $      0.43    $    0.42
Fully Dilluted EPS                                       ($0.26)   $    (0.18)     ($0.05)      ($0.04)     ($0.04)     ($0.04)   $     (0.18)   $     (0.14)   $     (0.16)   $     (0.24)   $     (0.19)   $     (0.05)   $      0.20    $      0.32    $      0.43    $    0.42
Weighted avg. shares, basic (000)                        48,341        55,635      59,242       64,301      74,301      74,376         68,055        122,055        177,002        206,777        228,480        240,624        253,414        266,884        269,553      272,248
Weighted avg. shares, diluted (000)                      48,341        55,635      59,242       64,301      74,301      74,376         68,055        122,055        177,002        206,777        228,480        240,624        253,414        266,884        269,553      272,248
Source: Company reports and Maxim Group estimates




Maxim Group LLC                                                                                                                                                                                                                                                          14
                                                                                                   Best Stock Ideas 2013


Biotechnology                                   Onyx Pharmaceuticals, Inc.                                             Buy
December 20, 2012                               (ONXX – Nasdaq – $79.55)
Closing Price (12/19/12):            $79.55
                                                2013 Best Long Idea: A rising pharmaceutical company with
12-Month Target Price:              $105.00
                                                three drugs on the market
52-Week Range:                $35.73-$93.18
                                                   ONXX is on track to become a profitable specialty pharmaceutical
Market Cap (MM):                      $5,107
                                                    company. ONXX has two new drugs approved by the FDA in 2012,
Shares O/S (MM):                        64.2        Kyprolis (carfilzomib, approved in July 2012) for relapsed/refractory
Float (MM):                             60.2        multiple myeloma (MM) and Stivarga (regorafenib, approved in
Shares Short (MM):                       6.1        September 2012) for second-line metastatic colon rectal cancer (mCRC).
                                                    Together with Nexavar (sorafenib) for hepatocellular carcinoma (HCC,
Avg. Vol. (000)                      1,290.0
                                                    approved in 2005) and advanced renal cell carcinoma (RCC, approved in
Book Value/Share:                     $11.00        2007), the company has three drugs on the market. It is entitled to 100%
Dividend/Yield:                           NA        Kyprolis sales, 50% gross profit of Nexavar and 20% royalty of Stivarga's
Risk Profile:                         Medium        global sales. Revenues from Kyprolis and Stivarga will likely drive
                                                    significant growth in 2013 and beyond.
   Maxim Group          Net Revenues ($M)
  FYE: December     2012E              2013E       We estimate Kyprolis will likely achieve $4B peak global sales.
        1Q          $72.0A            $113.6        Kyprolis was approved under the FDA's accelerated approval protocol.
        2Q          $72.7A            $127.8        Although the approval was based on an overall response rate (ORR),
        3Q          $89.5A            $140.4        while no data demonstrating progression-free (PFS) and overall survival
        4Q           $99.5            $152.6        (OS) benefit, we believe Kyprolis has the potential to penetrate all lines
                                                    of treatment of MM. In the three ongoing phase III trials, ENDEAVOR,
        FY          $333.8            $534.4
                                                    ASPIRE, and FOCUS, ONXX is aiming Kyprolis, respectively, as a first-
   Maxim Group     Current            Current
                                                    line treatment, replacing the current standard (Velcade), a second/third-
  FYE: December       EPS                P/E        line therapy to be used in combination with Revlimid (lenalidomide), and
   2012E: GAAP        ($3.03)            NM         a salvage treatment in later stage of MM. The advantages of Kyprolis
   2013E: GAAP        ($2.69)            NM         include: (1) the drug may be able to achieve a high and durable response
   2014E: GAAP        ($0.91)            NM         as a front-line treatment for MM; (2) Kyprolis has not reported peripheral
   2015E: GAAP         $1.54            51.7        neuropathy as Velcade has; (3) ENDEAVOR is designed to escalate the
LT Earnings Growth       NM                         dose to 56mg/m2, more than doubling the 27mg/m2 used in the Phase II
                   Non-GAAP Quarterly EPS           trial, suggesting there is no dose limiting toxicity of the drug (as well as
   Maxim Group     Current           Current        possible better efficacy results from the trial than previously seen).
  FYE: December      2012E          2013E          Royalty revenue of Stivarga should directly benefit bottom line.
       1Q           ($0.68)A        ($0.77)         Stivarga, a small molecule multi-kinase inhibitor, is also under the FDA
       2Q           ($0.68)A        ($0.68)         review as a second/third-line treatment for metastatic and/or unresectable
       3Q           ($0.79)A        ($0.65)         gastrointestinal stromal tumor (GIST) and could be approved in this
       4Q            ($0.88)        ($0.59)         indication in mid 2013. We believe the drug may add more indication in
       FY            ($3.03)        ($2.69)         oncology fields in the future. In mCRC alone, we expect Stivarga to
    Consensus       Non-GAAP Quarterly EPS          achieve $250M peak global sales, providing ONXX $50M annual royalty
                                                    revenue with no costs.
  FYE: December      2012E          2013E
       1Q           ($0.68)A        ($0.64)        In our view, ONXX's upside is supported by both strong organic
       2Q           ($0.68)A        ($0.51)         growth and potentials of being acquired by large pharmaceutical
       3Q           ($0.79)A        ($0.39)         companies. Nexavar should continue to bring annual revenue of
       4Q            ($0.93)        ($0.29)         approximately $300M in the coming years. We estimate the company to
       FY            ($3.21)        ($1.84)         become profitable in 2015. Our 12-month price target of $105 is based on
                                                    a 10-year DCF analysis with a 11% discount rate. ONXX has a favorable
Echo He, MD, PhD               (212) 895-3718       risk-reward profile at current levels.
ehe@maximgrp.com




Maxim Group LLC                                                                                                15
                                                                                                                                                                              Best Stock Ideas 2013
ONXX – Income Statement
                                           2006       2007    2008    2009      2010    2011     1Q12        2Q12   3Q12      4Q12E 2012E          1Q13E     2Q13E   3Q13E         4Q13E 2013E    2014E    2015E
($'s in millions except per share data)                                                         31-Mar      30-Jun 30-Sep     31-Dec              31-Mar     30-Jun 30-Sep         31-Dec
   Total Nexavar revenue                  (23.9)      54.2   194.3   250.4    265.4    287.0       72.0        72.7   70.7       70.4  285.8         71.2       72.3   71.9           73.0  288.4    299.1    310.3
      y/y growth                                                              6%       8%           7%          7%    -6%        -8%  0%             -1%         0%     2%             4%   1%      4%       4%
   Total Kyprolis revenue                                                                                             18.6       29.0   47.1         42.1       54.9   67.7           78.6  243.3    425.8    602.3
   Stivarga royalty revenue                                                                                            0.1        0.2                 0.4        0.6    0.8            1.0    2.8     11.5     18.1
   Contract revenue from collaboration                           -     1.0
   Licensing revenue                         0.3                                59.2   160.2                                        -
   Total Revenues                       $ (23.7) $ 54.2 $ 194.3 $ 251.4 $ 324.5 $ 447.2         $   72.0 $    72.7 $ 89.4 $ 99.5 $ 333.6          $ 113.6 $ 127.8 $ 140.4 $ 152.6             $ 534.4 $ 731.9 $ 907.0
      y/y growth                                                             29%      38%            7%        7%      19%     -58% -25%             58%      76%      57%      53%            60%      37%     24%
   COGS                                                                                                                (0.5)    (1.4)     (5.7)      (2.9)    (4.9)    (8.1)    (9.4)            (29.2)  (51.1)  (72.3)
   Gross Profit                                                                        447.2     72.0      72.7     88.9      98.1      328.0     110.7    122.9    132.2    143.2              505.2    680.8   834.7
      y/y growth                                                                                                             -58.6%      -27%      53.6%    69.0%    48.8%    46.0%               54%      35%    23%
      Gross margin                                                                                                              99%       98%        97%      96%      94%      94%               95%      93%    92%
   R&D                                    (31.0)    (47.1) (123.8) (128.5) (185.7) (268.1)        (80.7)    (76.4)   (85.7)   (90.8)  (333.5)      (94.4)   (98.2) (102.1) (106.2)             (401.0) (439.9) (389.5)
      % of revenue                      -131%      87%     64%      51%      57%      60%        112%      105%      96%      91%     100%         83%      77%      73%      70%              75%      60%     43%
   SG&A                                   (50.0)    (60.5)   (81.0) (101.1) (114.2) (168.0)       (38.9)    (48.9)   (61.7)   (67.9)  (217.5)      (70.6)   (73.5)   (76.4)   (79.5)           (300.0) (317.8) (329.8)
      % of revenue                      -211%     112%     42%      40%      35%      38%           54%       67%      69%      68%    65%         62%      57%      54%      52%              56%      43%     36%
   Contingent consideration                                           (1.5)   (92.9)    93.5        (3.2)   (53.2)    (9.8)         0   (66.2)           0        0        0        0                -       -       -
   Amortization of acquired intangible assets                                                                         (4.1)
   Lease termination exit costs                                                         (6.3)         0.0       0.0        0   (0.1)      (0.1)      (0.1)      (0.1)      (0.1)      (0.1)      (0.4)     (0.4)      (0.4)
   Operating Expenses                     (81.0) (107.7) (204.7) (231.2) (392.8) (348.9)        (122.8) (178.5) (161.4) (158.8)       (617.3)     (165.2)    (171.8)    (178.6)    (185.8)     (701.4)   (758.2)   (719.7)
Incom e from operations                  (104.7)    (53.4)   (10.4)   20.2    (68.3)    98.3      (50.8) (105.8)     (72.5)   (60.7)  (289.3)       (54.5)     (48.9)     (46.4)     (42.6)    (196.2)    (77.4)     115.1
   Operating Margin                      442%     -99%      -5%      8%     -21%      22%        -70%     -145%     -81%     -61%     -87%         -48%       -38%       -33%       -28%      -37%       -11%       13%
    Restructuring and Other                   -         -        -
    Investment Income                         -       19.3    12.7     4.0       1.3     2.4          0.8       0.6     0.6       0.6      2.6        0.6        0.6        0.6        0.6        2.5       2.5       2.5
    Interest Expense                          -         -        -            (19.4)   (20.2)       (5.3)     (5.4)   (5.5)     (5.6)    (21.7)     (5.6)      (5.7)      (5.8)      (5.9)      (22.8)    (24.0)    (25.2)
    Interest Income (expense), net         12.0         -        -    (6.9)      1.6       -
    Other Income/expense                      -         -        -              (0.8)   (4.1)       (0.9)      4.5    (1.2)     (1.2)      1.2      (1.2)      (1.2)      (1.2)      (1.2)       (4.8)     (4.8)     (4.8)
      adjustment                                                                                                      (0.9)
                                          (23.9)
    Net Expense from Unconsolidated Joint Business -             -
Incom e before Taxes                      (92.7)    (34.2)     2.3    17.4    (85.7)    76.4      (56.2) (106.1)     (78.5)   (66.9) (307.2)    (60.6)   (55.1)   (52.7)   (49.0)   (221.3) (103.7)       87.6
   Tax Rate                               0%        0%     15%       7%      -1%       0%          0%        0%      0%        0%      0%        0%      0%       0%        0%        0%        0%       0%
    Provision (benefit) for Income Tax        -         -     (0.3)   (1.2)     (0.8)    0.3       0.0      (0.0)   (95.8)     0.0      (95.8)   0.0      0.0      0.0      0.0           0.0       0.0    31.3
 Net Incom e (Loss) - GAAP                (92.7)    (34.2)     1.9    16.2    (84.8)    76.1      (56.2) (106.0)       17.3   (66.9)  (211.5)   (60.6)   (55.1)   (52.7)   (49.0)    (221.3) (103.7)      56.2
   Net Margin - GAAP                     392%     -63%       1%      6%     -26%      17%        -78%     -146%      19%     -67%     -63%     -53%     -43%     -38%     -32%      -41%      -14%       6%
 Net Incom e (Loss) -non GAAP                       (20.0)    54.8    54.4      39.2    42.0      (43.5)    (43.6)   (52.0)   (58.1)  (197.1)   (50.9)   (45.4)   (43.0)   (39.3)    (178.7)    (60.9)   105.2
   Net Margin - non GAAP                  0%      -37%     28%      22%      12%       9%        -60%      -60%     -58%     -58%     -59%     -45%     -36%     -31%     -26%      -33%       -8%      12%
Weighted Avg Shares - Diluted              42.2       51.4    56.7    59.5      62.7    64.0        63.7       64.2    65.8      66.0    64.9     66.2     66.4     66.6      66.8      66.5     67.3     68.1
Diluted EPS - GAAP                        (0.49)    (0.67)    0.03    0.27    (1.35)    1.19       (0.88)    (1.65)     0.26   (1.01)  (3.26)    (0.92)   (0.83)   (0.79)   (0.73)     (3.33)   (1.54)    0.83
Diluted EPS - non-GAAP                           $ (0.39) $ 0.97 $ 0.89 $ 0.63 $ 0.66           $ (0.68) $ (0.68) $ (0.79) $ (0.88) $ (3.03) $ (0.77) $ (0.68) $ (0.65) $ (0.59) $ (2.69) $ (0.91) $ 1.54
D&A                                          0.8       1.0     1.3     1.6       3.6     5.5          1.5       1.5      1.5      1.5     6.0       1.7      1.7      1.7      1.7       6.6       7.3     8.0
Stock-based compensation                   14.4       15.6    20.5    22.6      22.8    27.1          6.8      10.9      8.8      8.8    35.3       9.7      9.7      9.7      9.7      38.8     42.7     47.0
Non-cash interest expense                                                                             2.7       2.8
Adjustment to other income                                                                                    (4.5)
Adjusted EBITDA                          (89.5)   (36.8)      11.4    44.4  (41.9)     130.8     (39.7)    (93.4)   (62.2)   (50.4) (248.0)    (43.2)   (37.6)   (35.1)   (31.2)   (150.8)    (27.4)     170.0
   EBITDA Margin                                     -68%      6%     18%      -13%     29%        -55%     -128%     -70%      -51%    -74%     -38%     -29%     -25%      -20%      -28%       -4%     19%

Source: Company report and Maxim Group estimates



Maxim Group LLC                                                                                                                                                                                            16
                                                                                                        Best Stock Ideas 2013

China
December 20, 2012
                                                    Baidu, Inc.                                                             Sell
Closing Price (12/19/12):                $100.58    (BIDU – Nasdaq – $100.58)
12-Month Target Price:                    $80.00
52-Week Range:                  $85.96 - $154.15    2013 Stock to Avoid: China’s top search engine may have
Market Cap (MM):                         $35,183    difficulties maintaining high growth and higher margins
Shares O/S (MM):                           349.8
Float (MM):                                129.4       With 80% revenue and 72% traffic shares in 3Q12, as well as stellar growth
Shares Short (MM):                            8.5
                                                        and margin expansion since its IPO in 2005, we believe the operations of
Avg. Vol. (000)                            5,570
                                                        China’s dominant search engine may have peaked. With continued search
                                                        penetration to the mass market, increasing mobile usage, rising competition,
Book Value/Share:                         $10.54
                                                        and an uncertain economy, BIDU may face difficulties achieving high
Dividend/Yield:                               NA
                                                        growth while maintaining high margins.
Risk Profile:                            Medium
   Maxim Group         Net Revenues ($M)               BIDU’s high margins may not be sustainable going forward. China's
  FYE: December     2012E             2013E             maturing search market will likely push BIDU to increasingly rely on
        1Q          $677A             $952              penetration to the mass market. Given BIDU’s likely concentration on large
        2Q          $859A            $1,179             advertisers, higher price sensitivity and diversified demand of small
        3Q          $995A            $1,322
                                                        businesses should drive down BIDU's margins. On the other hand, rising
                                                        competition from domestic search engines will likely drive up BIDU's
        4Q          $999             $1,351
                                                        channel costs, selling/service expenses, and R&D investments. Thus, we
        FY         $3,540            $4,804
                                                        believe that BIDU's margin decline is likely inevitable, resulting from both
   Maxim Group     Current           Current
                                                        internal and external changing forces.
  FYE: December      EPS               P/E
   2012E: GAAP        $4.81           20.9x            BIDU may also have difficulties growing. We believe that domestic
   2013E: GAAP        $5.64           17.8x             competitors will likely take more market share, slowing down BIDU's
   2014E: GAAP        $6.65           15.1x             growth. Meanwhile, we expect BIDU to make significant efforts in the
   2015E: GAAP        $7.77           12.9x             attempt to lead the industry in mass market and mobile search, which will
LT Earnings Growth          15% - 25%                   likely return lower revenues and profits than BIDU's existing business.
                     GAAP Quarterly EPS                 Thus, BIDU's growth should decelerate regardless of economy. We do not
   Maxim Group        Current          Current
                                                        expect international expansion to become a material growth contributor.
  FYE: December        2012E            2013E          BIDU is destined for change. The company has done an excellent job
       1Q              $0.85A           $1.10           maximizing the financial performance of internet search. For that reason,
       2Q              $1.24A           $1.43           we like BIDU's management and business model. However, it has created a
       3Q              $1.37A           $1.57           nowhere-to-go-but-down situation. Either reinventing itself by going after
       4Q              $1.26            $1.50           the mass and mobile or fending off competitors through cutting prices and
       FY              $4.81            $5.64           increasing investments may dilute its growth and margins. Hence, we are
    Consensus               Quarterly EPS               bearish on BIDU's outlook.
  FYE: December        2012E            2013E
                                                       Valuation may have downside. BIDU's historically high margins led to its
       1Q              $0.85A           $1.18
                                                        2015 P/E multiple of 15% below average, but an EV/revenue multiple of
       2Q              $1.24A           $1.48           40% above average. Margin decline may close the discrepancy. Our 12-
       3Q              $1.37A           $1.68           month price target of $80 represents a 30% discount to 2015 peer-average
       4Q              $1.30            $1.69           P/E, but a 10% premium to 2015 peer-average EV/revenue. Our 2013-2015
       FY              $4.75            $6.02           EPS estimates are 6%, 12%, and 18% below consensus. We expect
                                                        consensus to further revise down.
Echo He, MD, PhD                  (212) 895-3718
ehe@maximgrp.com




Maxim Group LLC                                                                                                       17
                                                                                                                                                                                                                                                Best Stock Ideas 2013

BIDU – Income Statement (in USD)
                                      2005       2006        2007        2008           2009        2010               2011            1Q12            2Q12          3Q12E           4Q12E       2012E          1Q13E           2Q13E           3Q13E           4Q13E           2013E           2014E           2015E
($'s in millions except EPS)         Full Yr    Full Yr     Full Yr     Full Yr        Full Yr     Full Yr            Full Yr         31/Mar          30/Jun         30/Sep          31/Dec      Full Yr        31/Mar          30/Jun          30/Sep          31/Dec          Full Yr         Full Yr         Full Yr

   Online Marketing Revenue         $ 38.1      $ 104.7     $ 231.9     $    465.9 $      650.6    $ 1,199        $ 2,302.2       $     676.5 $         858.1 $        993.8 $         997.8 $ 3,537.0 $           951.1 $ 1,178.0 $ 1,321.5 $ 1,350.1 $ 4,800.7 $ 6,252.2 $ 7,927.1
   Others                              1.5          1.2         0.5            0.5          0.4         0.3             1.8                0.5            0.7            0.7              0.8      2.8                0.7      0.7       0.8        0.9       3.1       3.3       3.5
 Total Gross Revenues                 39.5        105.9       232.4          466.4        650.9     1,199.3         2,303.9             677.1           858.8          994.6           998.7   3,539.8             951.8   1,178.8   1,322.3   1,350.9    4,803.8   6,255.4   7,930.6
  Q/Q Growth                                                                                                                            -4.8%          26.9%          15.8%             0.4%                       -4.7%    23.9%     12.2%       2.2%
  Y/Y Growth                          181%         168%      119.4%         100.7%       39.7%          84.2%           92.1%          82.0%           62.6%          51.9%           40.5%     53.6%             40.6%     37.3%     33.0%     35.3%      35.7%     30.2%     26.8%
 Net Revenue                           37.0         99.3      217.9           437.2       610.6        1,122.8         2,141.1          627.8           797.1          926.6           930.4   3,291.8             885.1   1,096.2   1,229.7   1,256.3    4,467.3   5,817.2   7,375.0
  Y/Y Growth                                     168.7%      119.3%         100.7%       39.6%          83.9%           90.7%          80.6%           62.0%          52.6%           41.2%     53.7%             41.0%     37.5%     32.7%     35.0%      35.7%     30.2%     26.8%
Total Cost of Revenue                  (12.8)      (24.5)      (71.5)        (139.2)     (196.2)        (249.2)         (456.3)        (149.3)         (175.6)        (202.0)         (211.0)   (740.2)           (227.3)   (276.0)   (318.1)   (345.1)  (1,166.6) (1,696.2) (2,315.4)
Gross Profit                            26.7        74.9      146.4           298.0       414.4          873.6         1,684.8          478.5           621.4          724.6           719.4   2,551.7             657.8     820.2     911.5     911.2    3,300.7   4,121.0   5,059.6
  Gross Margin                          72%         75%       67.2%          68.2%       67.9%          77.8%           78.7%          76.2%           78.0%          78.2%           77.3%     77.5%             74.3%     74.8%     74.1%     72.5%      73.9%     70.8%     68.6%
Operating Expenses:
  SG&A                                 (13.9)      (31.6)      (54.7)        (96.1)      (117.7)        (165.0)         (269.0)         (76.0)          (92.5)        (102.3)         (113.5)     (385.4)         (110.6)         (127.2)         (146.3)         (162.1)         (546.2)         (745.7)         (974.6)
  % of Net Revenue                    37.5%       31.8%       25.1%         22.0%        19.3%          14.7%           12.6%          12.1%           11.6%          11.0%           12.2%       11.7%           12.5%           11.6%           11.9%           12.9%           12.2%           12.8%           13.2%
  R&D                                   (4.3)    -18.8%        (18.7)        (41.7)       (61.9)        (108.8)         (212.0)         (70.4)          (85.9)         (97.8)         (107.0)     (362.1)         (115.1)         (125.0)         (135.3)         (148.2)         (523.5)         (715.0)         (948.9)
  % of Net Revenue                      12%          0%        8.6%           9.5%       10.1%            9.7%            9.9%         11.2%           10.8%          10.6%           11.5%       11.0%           13.0%           11.4%           11.0%           11.8%           11.7%           12.3%           12.9%
Total Operating Expenses               (18.1)      (31.8)      (73.5)       (137.8)      (179.5)        (273.8)         (481.0)        (146.4)         (178.4)        (200.1)         (220.5)     (747.5)         (225.7)         (252.1)         (281.6)         (310.3)       (1,069.7)       (1,460.7)       (1,923.5)
  % of revenue                          49%         32%         34%            32%         29%             24%             22%           23%             22%            22%             24%         23%             26%             23%             23%             25%             24%             25%             26%
 Operating Income                        8.6        43.1        72.9         160.2        234.9          599.8         1,203.8          332.1           443.1          524.6           498.9     1,804.1           432.1           568.1           629.9           600.9         2,231.0         2,660.3         3,136.1
  Margin                              23.2%       43.4%       33.5%         36.6%        38.5%          53.4%           56.2%          52.9%           55.6%          56.6%           53.6%       54.8%           48.8%           51.8%           51.2%           47.8%           49.9%           45.7%           42.5%
  Interest income                               1.7         5.4     6.4    6.9              4.8           10.2            53.3            24.9           28.0            32.5            19.9      105.7            20.7            20.7            20.7            20.7            82.7            82.7            82.7
  Forrign exchange loss                        -           (0.0)    -     (0.3)             0.1            0.0             -              (0.0)            0.1           (0.4)           (0.4)       -              (0.4)           (0.4)           (0.4)           (0.4)            -               -               -
  Other income                                  0.0         0.5     2.8    3.2              6.6            6.7             2.0            (0.6)            7.5            4.7             3.2        2.0             4.0             4.0             4.0             4.0             2.0             2.0             2.0
Total Other Income                              1.7         5.9     9.2    9.8             11.5           16.9            55.3            24.4           35.6            36.9            22.7      107.7            24.3            24.3            24.3            24.3            84.7            84.7            84.7
Income before income tax                     10.3         49.0    82.1  170.0            246.4          616.7          1,259.1          356.5           478.7          561.4           521.6     1,911.8          456.4           592.4           654.2           625.2          2,315.7         2,745.0         3,220.9
Provision for income taxes                    (0.2)        (1.5)    1.8  (17.0)           (29.0)         (81.2)         (188.9)          (52.6)         (37.0)          (74.4)          (77.8)    (242.4)          (67.9)          (88.5)          (97.8)          (93.4)         (347.7)         (412.5)         (484.4)
Effective tax rate                           2.3%         3.1%   -2.2%  10.0%            11.8%          13.2%           15.0%           14.8%            7.7%          13.3%           14.9%      12.7%           14.9%           14.9%           15.0%           14.9%           15.0%           15.0%           15.0%
 Net Income                                  10.0         48.0    83.9  153.1            217.4          534.1          1,071.2          296.6           432.6          476.0           437.4     1,671.4          382.0           497.5           550.0           525.4          1,970.0         2,334.5         2,738.5
 Less: net loss attributable to the noncontrolling interest                                                                2.9             2.4             3.4            2.6             2.6       10.9             2.6             2.6             2.6             2.6            10.3            10.3            10.3
 Net income attributable to Baidu                                                                                      1,074.1          299.0           436.0          478.6           440.0     1,682.4          384.6           500.1           552.6           527.9          1,980.3         2,344.8         2,748.8
  Margin                                    27.2%        48.3%   38.5%  35.0%             35.6%         47.6%            50.0%          47.2%           54.3%          51.4%           47.0%       50.8%          43.2%           45.4%           44.7%           41.8%            44.1%           40.1%           37.1%
  Y/Y Growth                                             378%      75%    82%              42%          146%             101%             81%             71%            62%             35%        56%             29%             15%             16%             20%             18%             19%             17%
GAAP EPADS:
   Basic                                  $ 0.05 $ 0.14 $ 0.25 $          0.45 $           0.63    $      1.53    $       3.07    $      0.85     $      1.24    $      1.37     $      1.26 $       4.81   $      1.10     $      1.43     $      1.58     $      1.50     $       5.65    $       6.66    $       7.78
   Diluted                                $ 0.03 $ 0.14 $ 0.24 $          0.44 $           0.63    $      1.53    $       3.06    $      0.85     $      1.24    $      1.37     $      1.26 $       4.81   $      1.10     $      1.43     $      1.57     $      1.50     $       5.64    $       6.65    $       7.77
  Y/Y Growth                                             344%      74%    82%              42%           145%            100%            81%             71%            63%             35%          57%           29%             15%             15%             20%              17%             18%             17%
ADS outstanding:
  Basic                                     198.1        332.9   338.7  342.2             345.7         348.1           348.9           349.2           349.3          349.5           349.8       349.4          350.2           350.5           350.9           351.2            350.7           352.1           353.5
  Diluted                                   320.4        345.1   347.2  347.2             347.8         349.2           349.6           349.7           349.8          349.8           350.1       349.9          350.5           350.8           351.2           351.5            351.0           352.4           353.8

Total D&A                               8.4         8.9        23.6           55.5        109.9          70.1            142.3           53.9            56.3           61.3            63.3       226.2           68.1            73.8            79.5            84.6            317.7           425.9           549.8
Total share-based compensation:        (4.2)        6.1         5.7           12.2         12.6          14.2             24.2             5.6             8.5            9.0             9.0       32.2             9.4             9.4             9.4             9.4            37.5            43.6            50.6
 EBITDA                                12.8        48.9       105.0          214.2        293.9         682.0          1,368.6          387.8           501.3          583.9           558.1     2,037.3          512.6           648.6           710.5           681.4          2,553.1         3,087.8         3,684.4
  Margin                               35%         49%         48%            49%          48%            61%             64%             62%             63%            63%             60%        62%             58%             59%             58%             54%             57%             53%             50%
  Y/Y Growth                                      282%        115%           104%          37%         132.0%          100.7%           83.0%           56.0%          48.4%           33.1%      48.9%           32.2%           29.4%           21.7%           22.1%           25.3%           20.9%           19.3%
Exchange Rate (RMB/USD)                8.07        7.81        7.31           6.82         6.83          6.60             6.29           6.30            6.35           6.28            6.28        6.28           6.28            6.28            6.28            6.28             6.28            6.28            6.28
Source: Company report and Maxim Group estimates




Maxim Group LLC                                                                                                                                                                                                                                                                             18
                                                                           Best Stock Ideas 2013


                  Dialight plc                                                                 Buy
                  (DIA.L – LSE – 1,019p)
                  2013 Best Long Idea: Turning up the dial on growth for this led
                  downstream pure play on heavy industrial lighting demand
                     Best idea. As the dominant supplier of hazardous LED lighting, Dialight is a
                      pure play on industrial LED lighting demand. A downstream fixture maker
                      supplied by the major LED chip manufacturers, DIA.L is in the sweet spot of
                      the LED value chain. We expect it to benefit from a) lower costs from falling
                      LED component prices and the use of fewer but higher power LEDs and (b)
                      rapidly rising LED industrial lighting penetration. DIA.L Represents our Best
                      Long Idea for 2013.
                     “Hazardous” Industrial Lighting Represents $1b in Global Spending:
                      Because of higher installation/maintenance costs and greater daily usage rates,
                      industrial lighting not only offers one of the most immediate opportunities for
                      high LED adoption, in our view, but—at $5b—it represents a large
                      addressable market as well. Focused specifically on a highly specialized
                      niche—hazardous lighting—DIA.L has distinguished itself as the dominant
                      player with the broadest certified LED product portfolio. Assuming DIA.L’s
                      share of the $1b global hazardous lighting segment rises from 4% in 2011 to
                      >15% by 2014, we expect industrial lighting revenue to grow at a 3-year
                      CAGR of 64% to £117m and spearhead DIA.L’s growth in the years ahead.
                     U.S. LED Obstruction Lighting Offers Addressable Market of >$400m:
                      Supplementing its industrial segment, DIA.L is also the only established
                      certified maker of LED obstruction lighting used to warn aircraft of tall
                      structures. With low LED penetration of the U.S. installed base of ~80k cell
                      towers and 1,800 broadcast towers and pricing stable (given low competition
                      and high ROI), we estimate DIA.L’s obstruction revenue is on pace to grow at
                      a 20% CAGR through 2014 to £33m, with margins steady if not rising.
                     First Mover Advantage, Focus, and Certification To Drive Growth: As
                      the first to introduce certified LED lighting for these segments and with a
                      reputation for having some of the best quality, reliability, and durability on the
                      market—backed by a comprehensive 10-year warranty—DIA.L is ideally
                      positioned for the coming wave of industrial LED adoption. With high ROIs
                      and low competition keeping pricing steady and yielding contribution margin
                      of ~45%, we forecast a 3-year CAGR in revenue of 25% and EPS of 35%.
                     High ROIC of 20%+ Demonstrates Earnings Power of Core Business:
                      Perhaps even more important than DIA.L’s attractive growth prospects is the
                      core earnings power it can generate. Driven by ~35% gross margins, 10%-
                      15% operating margins, and low working capital needs of only ~£20m, DIA.L
                      has generated consistently high ROIC (10% in 2009 rising to 25% in 2011).
                     At a 22 P/E, Stock Trades at PEG of 0.6x and 5% Free Cash Flow Yield:
                      At 21x consensus 2013 EPS, DIA.L’s valuation may seem full, but we believe
                      it leaves ample room for gains given its earnings growth outlook. Based on
                      our forecast of an EPS 3-year CAGR of 35%, DIA.L trades with a PEG of
                      only 0.6x, while 2014E free cash flow of £18m translates into a yield of 5%.
                     Price Target of 1,500p Based on 2014 P/E of 18x: Though the stock has
                      performed well YTD and trades at a healthy 2013 P/E of 21x, we expect its
                      steadily ascending earnings to pull the stock higher. At 18x our 2014 estimate,
                      our price target is 1,500p and we view DIA.L as our Best Long Idea for 2013 .


Maxim Group LLC                                                                      19
                                                                                                                                                                                                                       Best Stock Ideas 2013
Dialight plc – Income Statement
Fiscal Year Ending Dec. 31                                                                                           Semi-Annual                                                                                           Annual
                                                      2009                   2010                    2011              2012E                       2013E                   2014         2009      2010      2011      2012E    2013E       2014E      2015E
£ in millions                                 1H              2H      1H             2H      1H              2H      1H          2HE       1HE          2HE       1HE          2HE        FY        FY        FY        FY        FY         FY         FY
Consolidated Reported Revenue               £34.6        £42.7      £46.2       £53.0      £51.7        £61.9       £61.1       £67.8     £73.1        £91.1     £94.8       £109.6     £77.3     £99.2     £113.5    £128.9    £164.1     £204.4     £235.6
- Revenue from Discontinued Operations       £5.2         £7.5       £7.1        £6.6       £4.9         £6.1        £7.9         £-        £-           £-        £-          £-       £12.7     £13.7      £11.0     £7.9       £-         £-         £-
Revenue from Continuing Operations          £29.4        £35.2      £39.1       £46.4      £46.8        £55.7       £53.1       £67.8     £73.1        £91.1     £94.8       £109.6     £64.6     £85.5     £102.5    £120.9    £164.1     £204.4     £235.6
Cost of Sales                               (£27.6)      (£31.0)    (£33.6)     (£38.3)    (£31.7)      (£37.3)    (£34.9)      (£44.1)   (£48.4)      (£59.7)   (£62.3)      (£71.2)   (£58.6)   (£71.9)   (£69.1)   (£79.1)   (£108.2)   (£133.5)   (£151.0)
Gross Profit                                 £7.0        £11.7      £12.6       £14.7      £15.0        £18.4       £18.2       £23.7     £24.6        £31.3     £32.5        £38.4     £18.7     £27.3     £33.4     £41.8     £56.0      £71.0      £84.6
Distribution Costs                          (£3.0)       (£3.1)     (£3.5)      (£3.7)     (£3.8)       (£5.3)      (£5.6)      (£6.8)    (£7.3)       (£9.1)    (£9.5)       (£11.0)   (£6.1)    (£7.2)     (£9.1)   (£12.4)   (£16.4)    (£20.4)    (£22.6)
Administrative Expenses                     (£3.4)       (£3.8)     (£3.8)      (£5.1)     (£7.1)       (£4.9)      (£4.4)      (£5.0)    (£5.3)       (£5.7)    (£6.2)        (£6.6)   (£7.2)    (£8.9)    (£12.0)    (£9.3)   (£11.0)    (£12.7)    (£14.2)
Other Operating Income (Expense)              £-           £-         £-          £-        £2.7        (£0.1)        £-          £-        £-           £-        £-            £-       £-        £-        £2.7       £-       £-         £-         £-
Operating Expenses                          (£6.4)       (£6.8)     (£7.3)      (£8.8)     (£8.2)       (£10.2)    (£10.0)      (£11.7)   (£12.6)      (£14.8)   (£15.6)      (£17.5)   (£13.2)   (£16.1)   (£18.4)   (£21.7)   (£27.4)    (£33.2)    (£36.8)
Operating Income                             £0.6            £4.8   £5.3            £5.9    £6.8            £8.2    £8.2        £11.9     £12.0        £16.5     £16.9        £20.9      £5.5     £11.2     £15.0     £20.1     £28.5      £37.8      £47.8
Financial Income                             £0.9         £0.8       £0.9        £1.1       £0.7         £0.5        £0.1       £0.3      £0.5         £0.8      £1.0         £0.9       £1.7      £1.9      £1.3      £0.4      £1.3       £2.0       £2.0
Financial Expense                           (£1.0)       (£0.9)     (£0.9)      (£0.9)     (£1.4)       (£0.6)      (£0.0)       £-        £-           £-        £-           £-       (£1.9)    (£1.8)    (£1.9)    (£0.0)      £-         £-         £-
Net Financing Income (Expense)              (£0.1)       (£0.1)     (£0.0)       £0.2      (£0.6)       (£0.0)       £0.1       £0.3      £0.5         £0.8      £1.0         £0.9      (£0.2)     £0.1     (£0.7)     £0.3      £1.3       £2.0       £2.0
Pre-Tax Income                               £0.5            £4.8   £5.2            £6.1    £6.2            £8.2    £8.3        £12.2     £12.6        £17.3     £17.9        £21.8      £5.3     £11.3     £14.3     £20.5     £29.9      £39.8      £49.7

Income Tax Provision                        (£0.2)       (£1.8)     (£1.9)      (£2.0)     (£2.2)       (£2.6)      (£2.8)      (£4.0)    (£4.1)       (£5.5)    (£5.7)       (£6.9)    (£2.0)    (£3.8)    (£4.7)    (£6.8)     (£9.6)    (£12.6)    (£15.5)
Net Income                                   £0.3            £3.0   £3.4            £4.1    £4.0            £5.6    £5.5        £8.2      £8.5         £11.8     £12.2        £15.0      £3.3     £7.5       £9.6     £13.7     £20.2      £27.2      £34.2

- Discontinued Operations                    £1.9            £0.2    £-              £-    (£0.5)           £0.1    (£0.1)       £-        £-            £-        £-           £-       £2.1      £-       (£0.3)    (£0.1)      £-         £-         £-
= Net Income from Continuing Operations      £2.3            £3.2   €3.4            €4.1    €3.5            €5.7     €5.4       €8.2      €8.5         €11.8     €12.2        €15.0      £5.4     £7.5       £9.3     £13.5     £20.2      £27.2      £34.2
- Non-Controlling Interest                    £-              £-     £-              £-    (£0.0)       (£0.1)      (£0.1)      (£0.1)    (£0.1)       (£0.1)    (£0.1)       (£0.1)      £-       £-       (£0.1)    (£0.1)    (£0.2)     (£0.3)     (£0.3)
= Net Income Attributable to Shareholders    £2.3            £3.2   €3.4            €4.1    €3.6         €5.8        €5.4        €8.2      €8.6        €11.9     €12.3        €15.1      £5.4     £7.5       £9.4     £13.7     £20.4      £27.5      £34.5

Diluted EPS from Continuing Operations        £7             £10     £11            £13     £12             £18      £17         £25       £26          £36       £38          £46       £17       £23       £31       £42       £62        £84        £104
Basic EPS from Continuing Operations          £7             £10     £11            £13     £13             £19      £17         £26       £27          £37       £38          £47       £18       £24       £31       £43       £64        £85        £105

Reported Diluted EPS                         £13             £11     £11            £13      £9             £19      £16         £25       £26          £36       £38          £46       £24       £23       £28       £42       £62        £84        £104
Reported Basic EPS                           £14             £11     £11            £13     £10             £19      £17         £26       £27          £37       £38          £47       £24       £24       £28       £43       £64        £85        £106
Diluted Shares Outstanding                   31.8            31.7    31.9           32.3    32.5            31.9     32.5        32.6      32.7         32.8      32.8         32.9      31.8      32.1      32.5      32.4      32.7       32.9       33.2
Basic Shares Outstanding                     31.0            31.1    31.0           31.5    31.6            31.2     31.9        32.0      32.0         32.1      32.2         32.3      31.0      31.3      31.7      31.8      32.1       32.2       32.6



Operating Metrics:                                    2009                   2010                    2011                    2012                   2013                   2014         2009      2010      2011      2012E     2013E      2014E      2015E
                                              1H              2H      1H             2H      1H              2H      1H          2HE       1HE          2HE       1HE          2HE        FY        FY        FY        FY        FY         FY         FY
Margins:
 Gross Margin                               23.8%        33.2%      32.2%       31.6%      32.1%        33.0%       34.2%       34.9%     33.7%        34.4%     34.3%        35.1%     28.9%     31.9%     32.6%     34.6%     34.1%      34.7%      35.9%
 EBIT Margin                                 2.1%        13.8%      13.5%       12.7%      14.6%        14.7%       15.5%       17.6%     16.4%        18.2%     17.8%        19.1%      8.4%     13.1%     14.6%     16.7%     17.4%      18.5%      20.3%
 Net Income Margin                           1.1%         8.4%       8.6%        8.8%       8.6%        10.0%       10.3%       12.0%     11.6%        12.9%     12.9%        13.7%      5.1%      8.7%      9.4%     11.3%     12.3%      13.3%      14.5%

Expense Ratios:
 Distribution Costs                         10.3%         8.7%       8.9%        8.0%       8.2%         9.5%       10.5%       10.0%     10.0%        10.0%     10.0%        10.0%      9.4%      8.4%      8.9%     10.2%     10.0%      10.0%       9.6%
 Administrative Expenses                    11.4%        10.8%       9.8%       10.9%      15.3%         8.7%        8.2%        7.3%      7.3%         6.2%      6.5%         6.0%     11.1%     10.4%     11.7%      7.7%      6.7%       6.2%       6.0%
 Other Income (Expenses)                     -%            -%         -%          -%        5.9%        (0.1%)       0.0%         -%        -%           -%        -%           -%        -%        -%       2.6%       -%        -%         -%         -%
 Total Operating Expenses                   21.7%        19.5%      18.7%       18.9%      17.5%        18.3%       18.7%         -%        -%           -%        -%           -%      20.5%     18.8%     18.0%     17.9%     16.7%      16.2%      15.6%
 Tax Rate                                   39.1%        37.5%      36.0%       32.3%      35.0%        31.4%       33.8%       33.0%     32.5%        32.0%     31.8%        31.5%     37.7%     34.0%     32.9%     33.3%     32.2%      31.6%      31.3%
 Non-Controlling Interest                    -%           -%         -%          -%         0.3%         1.2%        1.2%        1.0%      1.0%         1.0%      1.0%         1.0%      -%        -%        0.8%      1.1%      1.0%       1.0%       1.0%

H/H % Growth:
 Revenue                                    (32.1%)      19.6%      11.1%       18.8%       0.7%        19.2%       (4.7%)      27.6%     7.8%         24.6%     4.1%         15.6%
 Cost of Revenue                            (19.0%)      12.2%      8.3%        14.2%      (17.2%)      17.7%       (6.4%)      26.3%     9.7%         23.4%     4.3%         14.2%
 Gross Profit                               (24.1%)      66.9%      7.8%        16.6%       2.3%        22.5%       (1.2%)      30.1%     4.2%         27.0%     3.9%         18.1%
 Distribution Costs                          9.5%         1.4%      13.9%        7.0%       2.3%         38.3%        6.1%      21.2%     7.8%         24.6%     4.1%         15.6%
 Administrative Expenses                     8.0%        12.4%       1.4%       31.8%      41.1%        (31.8%)     (10.3%)     13.5%     7.5%          6.5%     8.5%          6.5%
 Other Income (Expenses)                       -            -          -           -          -            -       (100.0%)       -         -             -        -             -
 Operating Expenses                          8.7%         7.2%       7.0%       20.0%      (6.6%)        24.4%       (2.4%)     17.8%     7.7%         17.0%     5.8%         12.0%
 Operating Income                           (81.7%)      688.4%      9.0%       11.9%      15.4%            20%      0.4%       44.9%     0.8%         37.6%     2.2%         23.8%
 Net Income (Loss)                          (85.1%)      822.4%     12.9%       22.3%      (2.0%)           39%     (1.7%)      48.5%     3.9%         38.8%     3.9%         22.4%
 Diluted EPS                                (34.6%)       40.8%      5.0%       21.0%      (2.4%)           47%     (7.1%)      49.6%     3.6%         38.4%     3.7%         22.1%

Y/Y % Growth
  Revenues                                  (14.8%)      (18.8%)    32.8%       31.9%      19.7%        20.1%       13.6%       21.6%     37.5%        34.3%     29.8%        20.4%     (17.0%)   32.3%     19.9%     18.0%     35.7%      24.6%      15.3%
 COGS                                        0.4%        (9.1%)     21.5%       23.7%      (5.5%)       (2.6%)      10.1%       18.2%     38.6%        35.4%     28.7%        19.1%     (4.8%)    22.6%     (3.9%)    14.5%     36.8%      23.4%      13.2%
 Gross Profit                               (0.6%)       26.7%      80.0%       25.7%      19.3%        25.2%       21.0%       28.6%     35.5%        32.4%     32.0%        22.7%
 Distribution Costs                         26.2%        11.1%      15.4%       21.8%       9.4%        41.4%       46.7%       28.6%     30.7%        34.3%     29.8%        20.4%     18.1%     18.7%     26.0%      36.2%    32.7%      24.6%      10.6%
 Administrative Expenses                    25.9%        21.3%      13.9%       33.6%      86.0%        (3.7%)     (38.8%)       1.9%     22.0%        14.5%     15.6%        15.6%     23.4%     24.3%     35.0%     (22.3%)   18.0%      15.6%      11.5%
 Other Income (Expenses)                       -            -         -           -           -            -           -           -         -           -         -            -         -         -       #DIV/0!      -        -          -          -
 Operating Expenses                         26.0%        16.5%      14.6%       28.4%      12.1%        16.2%       21.4%       15.0%     26.9%        26.0%     23.8%        18.5%     20.9%     21.7%     14.3%      17.8%    26.4%      20.9%      11.0%
 Operating Income                            (69%)           45%    759%            22%     29%             39%      21%         46%       46%          39%       41%          26%       2.5%     105.0%    34.2%     34.2%     41.7%      32.4%      26.4%
 Net Income (Loss)                           (75%)           37%    941%            38%     20%             36%      37%         46%       54%          44%       44%          27%      (5.1%)    126.4%    29.0%     42.1%     48.2%      34.4%      25.7%
 Diluted EPS                                17217%           (8%)    48%            27%     18%             43%      36%         39%       55%          43%       44%          27%      56.9%      35.7%    31.9%     37.9%     48.0%      33.7%      24.5%

Source: Company reports and Maxim Group estimates




Maxim Group LLC                                                                                                                                                                                                       20
                                                                                                        Best Stock Ideas 2013


Solar Power
December 20, 2012
                                                       First Solar, Inc.                                                           Sell
Closing Price (12/19/12):                    $33.03
                                                       (FSLR – Nasdaq – $33.03)
12-Month Target Price:                        $9.00
                                                       2013 Stock to Avoid: Rally fueled by profitability of old projects,
52-Week Range:                      $11.43 - $50.20
Market Cap (MM):                             $2,875
                                                       but depressed book-to-bill and falling system/ppa pricing point
Shares O/S (MM):                               87.0    to deteriorating EPS and cash flow.
Float (MM):                                    60.2
                                                          Stock to avoid. FSLR’s stock has rallied 169% (vs. 12% for the S&P 500)
Shares Short (MM):                             25.9
                                                           since its June 2012 lows due to the perception that it is distinguished as a rare
Avg. Vol. (MM)                                   5.5
                                                           source of profits in an industry wracked by losses, in our view, as well as an
Book Value/Share:                            $39.40
                                                           unwinding of overly negative sentiment. While the stock seems cheap at ~7x
Dividend/Yield:                               $0/0%
                                                           2012E EPS, this is inflated by 1x contracts priced at higher 2009 levels.
Risk Profile:                                  High
                                                           Organically, FSLR’s advantage vs. the Chinese has evaporated; even with
   Maxim Group                 Revenues ($M)               new projects, unsubsidized solar system ASPs of ~$1.50 yield normalized
     FYE: Dec           F2012E             F2013E          EPS of ~$0.30, which on top of a DCF of contracted cash flows (less
        1QA             $497A               $732           liabilities) points to a $9 stock.
        2QA             $957A               $711
        3QA             $839A               $822          Competitive Advantage Evaporated with Poly Settling at $20/kg or Less:
         4Q             $1,249              $923           Just as high poly prices were the driver of FSLR’s spectacular 2007-08 rise, so
         FY             $3,543             $3,188
                                                           have their declines been the cause of its quick demise. With falling production
   Maxim Group          Current            Current
                                                           costs/oversupply pushing poly below $20/kg and leading Chinese non-silicon
     FYE: Dec            EPS                 P/E
                                                           conversion costs <$0.50/W implying a silicon module cost <$0.60/W—below
 F2011A: Non-GAAP         $5.51              6.0
                                                           FSLR’s 2013 target—we believe it has entirely lost its competitive advantage.
 F2012E: Non-GAAP         $4.59              7.2          EPS in 2012-14 Reflects Historic Profitability, Not Current Economics:
   F2013E: GAAP           $3.72              8.9           With EPS estimated at $4.59 in 2012, FSLR seems above the solar fray.
   F2014E: GAAP           $2.45             13.5           However, we believe it is ultimately not positioned for higher profitability
LT Earnings Growth        (24%)                            than global peers. With third-party module sales now unprofitable, FSLR has
  Maxim Group                Quarterly EPS                 transformed into a project developer. While we expect 2012 to 2014 profits to
    FYE: Dec          F2012E             F2013E            be buoyed by contracts signed at higher levels when natural gas prices were
        1Q           ($0.08A)             $0.75            elevated and benefit from a 30% cash grant, we believe pricing for new
        2Q            $1.65A              $0.83            projects suggest gross margin will drop from ~25% in 2012 to 15% by 2015.
        3Q            $1.27A              $0.85
        4Q             $1.75              $1.30
                                                          Unsubsidized $1.50/W Pricing Points to Normalized EPS of Only ~$0.30:
                                                           Though FSLR boasts a strategy targeting “unsubsidized solar markets,” we
       FY              $4.60              $3.72
                                                           question how this is different from every other solar company. At our estimate
Consensus-First Call         Quarterly EPS
                                                           for unsubsidized solar pricing of ~$1.50/W—to achieve $0.15/kWh in
    FYE: Dec          F2012E             F2013E
                                                           markets with >1,200 sun hours—even costs for module production/W of
        1Q           ($0.08A)             $0.92
                                                           $0.50/W, BoS of $0.80/W, and development of $0.10/W point to 15%gross
        2Q            $1.65A              $0.94
                                                           margin. At a 1.7 GW and $350m opex run rate, we estimate normalized EPS
        3Q            $1.27A              $1.01
                                                           of ~$0.30.
        4Q             $1.77              $1.07
       FY              $4.61              $4.12           After Delays, 2013 Guidance Likely to Disappoint: Even as we expect
Aaron Chew                           (212) 895-3568        pricing and profitability of its historic pipeline to continue to help buoy 2013
achew@maximgrp.com                                         EPS, we expect it to come under greater pressure than currently presumed as
                                                           (a) losses from its 3rd party module business deepen. Perhaps flagged in some
Francesco Citro, Ph.D                (212) 895-3809        way by FSLR’s decision to postpone its traditional guidance call from
fcitro@maximgrp.com                                        December until next January/February, we expect guidance for an EPS
                                                           decline of (20%) or more Y/Y to set the stage for the stock’s declines in 2013.
                                                          Value of Contracted Cash Flow + Normalized EBIT at Best $9/Share:
                                                           Using a DCF of $3b contracted “net cash flows” and a $740m terminal value
                                                           less $290m of warranty/restructuring/assumed manufacturing liabilities,
                                                           implying an average 8x EPC multiple of normalized EBIT in 2015, our price
                                                           target remains $9 and we highlight FSLR as our Top Stock to Avoid in 2013.



  Maxim Group LLC
                                                                                                                              21
                                                                                                                                                                                                                                           Best Stock Ideas 2013
First Solar, Inc. – Income Statement
                                                                                                                              Quarterly                                                                                                           Annual
  in $ millions                                                  2010                                      2011                                     2012E                                   2013E                      2010       2011       2012E      2013E      2014E      2015E
                                                 1Q        2Q         3Q         4Q        1Q        2Q         3Q         4Q         1Q         2Q        3Q        4QE       1QE       2QE       3QE       4QE         FY         FY         FY          FY         FY         FY
  Total Revenues                               $568.0    $587.9     $797.9     $609.8    $567.3    $532.8    $1,005.8    $660.4     $497.1     $957.3    $839.1    $1,249.2   $732.3    $710.8    $822.3    $922.6    $2,563.5   $2,766.2   $3,542.8    $3,188.0   $3,211.3   $4,158.3
  - Cost of Goods (x-Warranty Charges)         $285.9    $303.7     $476.0     $313.1    $307.6    $338.0     $626.6     $422.2     $393.4     $726.1    $600.4    $961.1     $550.3    $520.0    $629.6    $681.7    $1,378.7   $1,694.5   $2,681.0    $2,381.6   $2,555.7   $3,562.1
  = Gross Profit                               $282.0    $284.2     $321.9     $296.7    $259.7    $194.8     $379.2     $238.1     $103.6     $231.3    $238.7    $288.1     $182.0    $190.8    $192.7    $240.9    $1,184.8   $1,071.8    $861.7      $806.4     $655.6     $596.1

  SG&A (x-Warranty Charges)                    $66.9      $78.6      $85.0      $91.3     $87.0     $86.9     $112.7      $62.4      $75.8      $67.2     $73.5     $70.0      $69.6     $69.9     $69.3     $68.7    $321.7     $349.0      $286.5     $277.5     $283.6     $282.7
  + R&D                                        $22.9      $22.8      $21.5      $27.6     $31.4     $33.1      $38.2      $37.9      $36.1      $32.4     $32.4     $32.5      $32.7     $32.9     $33.0     $33.2     $94.8     $140.5      $133.4     $131.8     $128.5     $141.4
  + Production Start-Up                         $1.1       $2.3       $3.8      $12.2     $11.9     $10.3       $5.5       $5.9       $4.1       $0.5      $1.6      $1.2       $0.7      $0.7      $0.8      $0.9     $19.4      $33.6       $7.4       $3.2        $-         $-
  = Operating Expenses (x-1x Charges)          $90.9     $103.7     $110.3     $131.1    $130.3    $130.3     $156.4     $106.2     $116.0     $100.1    $107.5    $103.7     $103.0    $103.5    $103.2    $102.8    $435.9     $523.2      $427.3     $412.5     $412.1     $424.1
  Operating Income (x-1x Charges)              $191.1    $180.5     $211.6     $165.7    $129.4    $64.5      $222.7     $131.9     ($12.3)    $131.2    $131.2    $184.4     $78.9     $87.4     $89.5     $138.1    $748.9     $548.6      $434.5     $394.0     $243.5     $172.1
  Foreign Currency Gain (Loss)                 ($0.7)    ($2.6)     ($1.0)      $0.9      $1.0      $1.7      ($1.9)       $0.2      ($1.0)      $1.0     $0.0        $-         $-       $-        $-        $-       ($3.5)      $1.0       $0.0         $-         $-         $-
  Interest Income                               $5.6      $3.0       $2.7       $3.0      $3.0      $3.4       $3.2        $3.7       $2.9       $3.4     $3.4       $2.1       $2.0     $1.9      $2.1      $2.2      $14.4      $13.4      $11.8        $8.2       $8.0       $9.2
  Interest Expense                               $-      ($0.0)       $-         $-        $-        $-         $-        ($0.1)     ($0.9)     ($2.7)   ($2.9)     ($1.3)     ($1.3)   ($1.3)    ($1.3)    ($1.3)     ($0.0)     ($0.1)     ($6.9)      ($5.2)     ($3.4)     ($2.3)
  Other Income (Expense)                       ($0.7)    ($0.4)     ($0.4)      $3.8     ($0.3)     $2.4      ($1.3)       $0.0      ($1.2)     ($1.3)    $3.2        $-         $-       $-        $-        $-        $2.3       $0.7       $0.7         $-         $-         $-
  Non-Operating Income (Expense)                $4.2     ($0.0)      $1.3       $7.7      $3.6      $7.4       $0.0        $3.9      ($0.2)      $0.4     $3.7       $0.8       $0.7     $0.6      $0.8      $0.9      $13.2      $15.0       $5.6        $3.0       $4.7       $6.9
  Pretax Income - Operations (x--1x Charges)   $195.4    $180.4     $212.9     $173.4    $133.0    $72.0      $222.8     $135.8     ($12.5)    $131.5    $135.0    $185.2     $79.7     $88.0     $90.3     $139.0    $762.1     $563.5      $440.1     $397.0     $248.2     $179.0
  Income Tax (Adjusted)                        $23.0     $21.4      $36.0      $17.4     $17.0     $10.8      $26.3      $30.1       ($5.8)    $22.1     $23.4      $31.5     $13.5     $15.0     $15.4     $23.6      $97.9      $84.2      $71.2       $67.5      $49.6      $35.8
  Net Income (Loss) - x-1x Charges             $172.3    $159.0     $176.9     $155.9    $116.0    $61.1      $196.5     $105.7      ($6.7)    $109.5    $111.5    $153.7     $66.1     $73.0     $75.0     $115.4    $664.2     $479.3      $368.9     $329.5     $198.6     $143.2
  - 1x Warranty Charges / Stock Comp Benefit     $-        $-            $-      $-        $-        $-            $-      $-        $41.6     ($25.2)     $-         $-        $-        $-        $-        $-         $-        $-         $16.4        $-         $-         $-
  - Restructuring and Other 1x Charges           $-        $-            $-      $-        $-        $-            $-    $518.8     $401.1      $23.7    $23.6      $12.5      $6.3      $6.3       $-        $-         $-      $518.8      $460.9        $-         $-         $-
  Reported Net Income                          $172.3    $159.0     $176.9     $155.9    $116.0    $61.1      $196.5     ($413.1)   ($449.4)   $111.0    $87.9     $141.2     $59.9     $66.8     $75.0     $115.4    $664.2      ($39.5)    ($108.4)   $329.5     $198.6     $143.2
  Diluted EPS - (x-1x Charges)                 $2.00     $1.84      $2.04      $1.80     $1.33     $0.70      $2.25      $1.22      ($0.08)    $1.65     $1.27      $1.75     $0.75     $0.83     $0.85     $1.30      $7.68      $5.51      $4.59       $3.72      $2.45      $1.60
  Basic EPS (x-1x Charges)                     $2.04     $1.87      $2.08      $1.83     $1.36     $0.72      $2.28      $1.23      ($0.08)    $1.26     $1.28      $1.76     $0.76     $0.83     $0.85     $1.31      $7.82      $5.57      $4.23       $3.75      $2.45      $1.60

  FSLR's Non-GAAP EPS Calculation              $2.00     $1.84      $2.04      $1.80     $1.33     $0.70      $2.25      $1.22      ($0.08)    $1.65     $1.27      $1.75     $0.75     $0.83     $0.85     $1.30      $7.68      $5.51      $4.59       $3.72      $2.45      $1.60

  Diluted GAAP EPS                             $2.00     $1.84      $2.04      $1.80     $1.33     $0.70      $2.25      ($4.78)    ($5.20)    $1.27     $1.00      $1.61     $0.68     $0.76     $0.85     $1.30      $7.68      ($0.49)    ($1.32)     $3.58      $2.45      $1.60

  Basic Shares                                  84.5      84.9          85.1    85.2      85.3      85.3          86.3    85.9        86.5      86.9      87.0       87.2      87.4      87.6      87.9      88.1       84.9       86.1       80.4        88.6       81.2       89.5
  Diluted Shares Outstanding                    86.1      86.4          86.6    86.8      87.1      87.2          87.2    86.4        86.5      87.7      87.8       88.0      88.2      88.4      88.6      88.9       86.5       86.1       80.4        88.5       81.2       89.4


% of Sales:
 Gross Margin                                  49.7%     48.3%      40.3%      48.7%     45.8%     36.6%      37.7%      36.1%       20.9%     24.2%     28.4%      23.1%     24.9%     26.8%     23.4%     26.1%      46.2%      38.7%      24.3%       25.3%      20.4%      14.3%
 Operating Income Margin                       33.7%     30.7%      26.5%      27.2%     22.8%     12.1%      22.1%      20.0%       (2.5%)    13.7%     15.6%      14.8%     10.8%     12.3%     10.9%     15.0%      29.2%      19.8%      12.3%       12.4%       7.6%       4.1%
 Net Income Margin                             30.3%     27.1%      22.2%      25.6%     20.4%     11.5%      19.5%      16.0%       (1.4%)    11.4%     13.3%      12.3%      9.0%     10.3%      9.1%     12.5%      25.9%      17.3%      10.4%       10.3%       6.2%       3.4%
  SG&A                                         11.8%     13.4%      10.6%      15.0%     15.3%     16.3%      11.2%       9.4%       15.3%      7.0%      8.8%      5.6%       9.5%      9.8%      8.4%      7.4%      12.5%      12.6%       8.1%       8.7%       8.8%       6.8%
  R&D                                           4.0%      3.9%       2.7%       4.5%      5.5%      6.2%       3.8%       5.7%        7.3%      3.4%      3.9%      2.6%       4.5%      4.6%      4.0%      3.6%       3.7%       5.1%       3.8%       4.1%       4.0%       3.4%
  Production Start-Up                           0.2%      0.4%       0.5%       2.0%      2.1%      1.9%       0.5%       0.9%        0.8%      0.1%      0.2%      0.1%       0.1%      0.1%      0.1%      0.1%       0.8%       1.2%       0.2%       0.1%        -%         -%
  Tax Rate                                      12%       12%           17%     10%       13%       15%           12%     22%         46%       17%       17%        17%       17%       17%       17%       17%        13%        15%        16%         17%        20%        20%

Q/Q % Growth:
  Revenues                                     (11.4%)    3.5%      35.7%      (23.6%)    (7.0%)    (6.1%)     88.8%     (34.3%)     (24.7%)     92.6%   (12.3%)    48.9%     (41.4%)   (2.9%)    15.7%     12.2%
  COGS                                         (23.8%)    6.2%      56.8%      (34.2%)    (1.7%)     9.9%      85.4%     (32.6%)      (6.8%)     84.6%   (17.3%)    60.1%     (42.7%)   (5.5%)    21.1%      8.3%
  Gross Profit                                   5.9%     0.8%      13.3%       (7.8%)   (12.5%)   (25.0%)     94.6%     (37.2%)     (56.5%)    123.1%     3.2%     20.7%     (36.8%)    4.9%      1.0%     25.0%
  Operating Expenses                           (25.2%)   14.1%       6.3%       18.9%     (0.6%)    (0.0%)     20.1%     (32.1%)       9.2%    (13.7%)     7.4%     (3.5%)     (0.7%)    0.4%     (0.3%)    (0.4%)
  Operating Income                              32.1%    (5.6%)     17.3%      (21.7%)   (21.9%)   (50.1%)    245.2%     (40.8%)    (109.3%)   (1165%)     0.1%     40.5%     (57.2%)   10.7%      2.5%     54.3%

Y/Y % Growth:
  Revenues                                     35.8%      11.8%      65.9%      (4.9%)    (0.1%)    (9.4%)    26.1%        8.3%      (12.4%)    79.7%    (16.6%)    89.2%       47.3%   (25.8%)    (2.0%)   (26.1%)    24.1%       7.9%       28.1%     (10.0%)      0.7%      29.5%
  COGS                                         56.3%      33.3%     101.8%     (16.5%)     7.6%     11.3%     31.6%       34.9%       27.9%    114.8%     (4.2%)   127.6%       39.9%   (28.4%)     4.9%    (29.1%)    34.9%      22.9%       58.2%     (11.2%)      7.3%      39.4%
  Gross Profit                                 19.9%      (4.7%)     31.4%      11.5%     (7.9%)   (31.5%)    17.8%      (19.7%)     (60.1%)    18.7%    (37.0%)    21.0%       75.6%   (17.5%)   (19.3%)   (16.4%)    13.4%      (9.5%)     (19.6%)     (6.4%)    (18.7%)     (9.1%)
  Operating Expenses                           35.2%      10.3%      34.1%       7.9%     43.3%     25.6%     41.9%      (19.0%)     (11.0%)   (23.2%)   (31.3%)   (2.3%)     (11.1%)     3.4%     (4.0%)    (0.9%)    19.4%      20.0%      (18.3%)     (3.5%)     (0.1%)      2.9%
  Operating Income                             13.7%     (11.6%)     30.0%      14.5%    (32.3%)   (64.2%)     5.2%      (20.4%)    (109.5%)   103.3%    (41.1%)    39.8%      (741%)   (33.4%)   (31.8%)   (25.1%)    10.2%     (26.7%)     (20.8%)     (9.3%)    (38.2%)    (29.4%)
  Net Income (Loss)                             4.7%     (11.9%)     15.3%      10.1%    (32.7%)   (61.6%)    11.1%      (32.2%)    (105.8%)    79.1%    (43.2%)    45.4%     (1080%)   (33.3%)   (32.8%)   (24.9%)     3.8%     (27.8%)     (23.0%)    (10.7%)    (39.7%)    (27.9%)
  Diluted EPS - (x-1x Items)                    0.5%     (12.7%)     14.4%       9.1%    (33.5%)   (61.9%)    10.4%      (31.9%)    (105.9%)   135.2%    (43.6%)    42.8%     (1061%)   (50.0%)   (33.4%)   (25.7%)     2.0%     (28.2%)     (16.7%)    (19.0%)    (34.2%)    (34.6%)

Source: Company reports and Maxim Group estimates




Maxim Group LLC                                                                                                                                                                                                                                                                  22
                                                                    Best Stock Ideas 2013


                  Ellington Financial LLC                                              Buy
                  (EFC – NYSE – $22.24)
                  2013 Best Long Idea: Trading at only 93% of book value,
                  despite strong prospects for non-agency MBS (EFC’s
                  specialty) in 2013; value should be unlocked through stock
                  price appreciation and/or special dividend
                     EFC Is a Non-Agency Specialist. In our view, EFC’s manager has a
                      more extensive non-Agency infrastructure than any hybrid mortgage
                      REIT (with more than 60 mortgage professionals), as well as a 17-year
                      track record of success in deep-credit, non-Agency RMBS.

                     EFC’s Non-REIT Structure Is a Plus. In our view, EFC’s ability to
                      actively trade, go short, and put on credit hedges without the limitations
                      imposed by a REIT structure is a major plus, especially given EFC’s
                      focus on non-Agency RMBS.

                     EFC’s Non-Agency RMBS Portfolio Has Upside. EFC took advantage
                      of the weakness in non-Agency RMBS prices in 2H11 to reposition its
                      non-Agency portfolio toward deep-discount subprime RMBS. With
                      housing prices having seemingly bottomed, this portfolio could start to
                      appreciate more quickly, in our view, thus driving a higher dividend.
                     We Expect a Special Dividend. Through three quarters of 2012, EFC
                      had earnings of $72.4 million (EPS of $4.15) and paid out $32.8 million
                      in dividends, which equates to $1.90 per share of undistributed earnings.
                      EFC just announced its book value per share as of November 30, 2012
                      ($24.02, after its “regular” 4Q12 dividend of $0.70), which implies
                      cumulative EPS of $4.91 and cumulative undistributed earnings of $2.04.
                      On EFC’s 3Q12 conference call, management indicated that EFC would
                      pay out at least 50% of EPS as dividends, and could pay out as much as
                      100% of EPS, as a special dividend. Since “regular” dividends of $2.80
                      exceed 50% of $4.91, a special dividend is not a certainty, but we expect
                      one (which could be more than $2.00 per share).
                     We Expect Value to be Unlocked. With EFC shares trading at only 93%
                      of November 30, 2012 book value and at only 91% of our estimated year-
                      end 2013 book value (that is, $2.09 under book value), versus relevant
                      peers trading above book value, and with more than $2.00 of
                      undistributed earnings, we expect stock price appreciation and/or a
                      special dividend to add at least 12% of return to EFC’s 12.6% “regular”
                      dividend yield in 2013. See next page for our earnings model.




Maxim Group LLC                                                                   23
                                                                                                                                                                                                   Best Stock Ideas 2013


ELLINGTON FINANCIAL LLC
Income Statement
                                          1Q11A        2Q11A        3Q11A        4Q11A        1Q12A        2Q12A       3Q12A       4Q12E         1Q13E         2Q13E         3Q13E         4Q13E         2011A         2012E         2013E
Leverage (Preferred Stock as debt)               2.3         2.1          2.3           2.4          2.3         2.2         1.3           1.4           1.4           1.4           1.4           1.4           2.3           1.8           1.4
Yield on Av Interest-Earning Assets           5.42%       5.40%        5.36%         5.01%        5.40%       5.19%       5.90%
Cost of Av Interest-Bearing Liabilities       0.64%       0.64%        0.71%         0.78%        0.78%       0.80%       1.01%
Net Interest Rate Spread                      4.78%       4.76%        4.65%         4.23%        4.62%       4.39%       4.89%
Net Interest Rate Margin                      3.83%       4.21%        4.02%         3.93%        4.17%       4.36%       4.35%       4.25%         4.23%         4.23%         4.23%         4.23%         4.00%         4.28%         4.23%

Interest Income                              15.849       16.652       15.597       15.442       15.733      16.045      15.426
Interest Expense                              1.543        1.603        1.627        1.874        1.832       1.992       1.936
Net Interest Income                          14.306       15.049       13.970       13.568       13.901      14.053      13.490      13.587        13.523        13.523        13.523        13.523         56.893        55.031        54.092

Realized Gain on Investments                   8.236     -11.021        1.570        11.739        8.147     -2.734       8.130                                                                             10.524        13.543         0.000
Realized Gain on Swaps                         3.739       7.453        6.779        -0.571      -19.928     -8.537      -3.172                                                                             17.400       -31.637         0.000
Realized Gain on Futures                      -0.371      -0.348       -0.375         0.001       -0.008     -0.009      -0.015                                                                             -1.093        -0.032         0.000
Unrealized Gain on Investments                -9.251      -4.302       -9.003       -16.766       18.130     10.300      26.526       9.100         8.000         8.000         8.000         8.000        -39.322        64.056        32.000
Unrealized Gain on Swaps                      -2.163      -5.380      -11.477        -3.760       14.817      2.928      -2.631                                                                            -22.780        15.114         0.000
Unrealized Gain on Futures                     0.319       0.202        0.369         0.012       -0.063     -0.002      -0.033                                                                              0.902        -0.098         0.000
Total Other Income                             0.509     -13.396      -12.137        -9.345       21.095      1.946      28.805       9.100         8.000         8.000         8.000         8.000        -34.878        60.946        32.000

Management Fee                                1.481        1.449        1.418        1.396        1.492       1.497       1.913       1.870         1.881         1.887         1.893         1.900          5.744         6.772         7.560
Incentive Fee                                 0.612            0            0            0            0       2.312       9.491       2.000         2.000         2.000         2.000         2.000          0.612        13.803         8.000
Other Operating Expenses                      1.615        1.526        1.575        1.126        1.449       1.422       1.354       1.354         1.354         1.354         1.354         1.354          5.842
Total G&A Expenses                            3.708        2.975        2.993        2.522        2.941       5.231      12.758       5.224         5.235         5.241         5.247         5.254         12.198        26.154        20.976

GAAP Net Income                              11.107       -1.322       -1.160        1.701       32.055      10.768      29.537      17.463        16.288        16.282        16.276        16.269         10.326        89.823        65.115
Core Net Income                              10.598       12.074       10.977       11.046       10.960      11.134      10.223      10.363        10.288        10.282        10.276        10.269         44.695        42.680        41.115

Shares Outstanding (EOP)                     16.448       16.448       16.448       16.448       16.448      16.448      20.484      20.484        20.484        20.484        20.484        20.484         16.448        20.484        20.484
Shares Outstanding (Average)                 16.838       16.838       16.838       16.838       16.838      16.838      18.600      20.863        20.863        20.863        20.863        20.863         16.838        18.285        20.863
GAAP EPS                                       0.66        -0.08        -0.07         0.10         1.90        0.64        1.59        0.84          0.78          0.78          0.78          0.78           0.61          4.91          3.12
Core EPS                                       0.63         0.72         0.65         0.66         0.65        0.66        0.55        0.50          0.49          0.49          0.49          0.49           2.65          2.33          1.97

Dividends per Share                            0.40          0.40         0.40        0.40         0.70        0.70        0.70        0.70          0.70          0.70          0.70          0.70           1.60          2.80          2.80
Return on Average Common Equity             11.11%        -1.36%       -1.22%       1.82%       33.47%      10.87%      26.43%      13.97%        12.97%        12.92%        12.87%        12.83%          2.76%        20.05%        12.88%
Common Shareholders Equity                  392.833      384.854      376.674      370.916      396.264     395.275     498.650     501.509       503.193       504.871       506.543       508.208        370.916       501.509       508.208
Book Value per Share                          23.26         22.78        22.32       22.03        23.53       23.47       23.88       24.01         24.09         24.17         24.25         24.33          22.03         24.01         24.33
Source: Company reports and Maxim Group Estimates




Maxim Group LLC                                                                                                                                                                                                                         24
                                                                  Best Stock Ideas 2013


                  Anworth Mortgage Asset Corp.                                       Hold
                  (ANH – NYSE – $5.83)
                  2013 Stock to Avoid: Even though it is already depressed;
                  arm–focused strategy delivers low spread at short end of
                  yield curve; better mortgage REIT opportunities should act
                  as further depressant
                     2013 Stock to Avoid. In choosing a best-to-avoid idea, the obvious
                      candidates are stocks that are over-valued (and are likely to decline to
                      more “normal” levels), or stocks that are under-valued for good reason –
                      and therefore are unlikely to bounce. We regard Anworth as falling in
                      the latter category.
                     Under-Valued for Bad Reasons. Anworth is an Agency mortgage
                      REIT (mREIT). Stocks of all Agency mREITs have been under pressure
                      since the national elections, on fears that incremental economic
                      weakness (caused by going over the “fiscal cliff”) and/or a new Obama
                      Administration mortgage refinancing initiative would trigger a massive
                      refinancing wave that would reduce book values (as RMBS bought at a
                      premium are refinanced at par) and reduce dividends (due to lower
                      yields on re-investment of refinancing proceeds). We do not believe that
                      this will happen.
                     Under-Valued for Good Reason. However, mREITs that focus on
                      ARM collateral, such as Anworth, are at the shorter end of the yield
                      curve, where there is less net interest rate spread, so there is more
                      pressure on earnings and dividends. This is a major reason why Anworth
                      has lowered its dividend in four of the past six quarters and why we
                      expect Anworth to lower its dividend by at least 20% more.
                     Better Mortgage REIT Opportunities. Even with further dividend
                      cuts, Anworth shares could still yield 8.2% (based on our 2013 dividend
                      estimate of $0.48 per share and on the current price of ANH shares).
                      Should not that be sufficient to boost ANH shares (closer) to book value
                      (from their current 78% of book value)? Not necessarily, in our view,
                      since investors who desire to invest in mREITs should have numerous
                      opportunities that are superior; namely: (1) Agency mREITs that focus
                      on fixed-rate collateral, and (2) hybrid mREITs (that focus their Agency
                      investments on fixed-rate collateral, and also invest in non-Agency
                      RMBS, which should benefit from improving home values in 2013).
                      These superior opportunities could act as a depressant on ANH shares.
                      See next page for our earnings model.




Maxim Group LLC                                                                 25
                                                                                                                                                                                         Best Stock Ideas 2013
ANWORTH MORTGAGE ASSET CORP
Income Statement
                                          1Q11A        2Q11A       3Q11A       4Q11A        1Q12A        2Q12A       3Q12A       4Q12E         1Q13E         2Q13E         3Q13E         4Q13E         2011A         2012E         2013E
Leverage (Preferred Stock as debt)               8.2         8.0         8.2          8.3          7.9         8.0         7.6           7.7           7.7           7.7           7.7           7.7           8.2           7.8           7.7
Yield on Av Interest-Earning Assets           3.11%       3.01%       2.72%        2.60%        2.52%       2.35%       2.17%
Cost of Av Interest-Bearing Liabilities       1.39%       1.30%       1.15%        1.18%        1.09%       1.08%       1.08%
Net Interest Rate Spread                      1.72%       1.71%       1.57%        1.42%        1.43%       1.27%       1.09%
Net Interest Rate Margin                      1.70%       1.73%       1.54%        1.43%        1.45%       1.29%       1.11%       1.10%         0.94%         0.94%         0.94%         0.94%         1.60%         1.24%         0.94%

Interest Income                              56.957       59.028      54.482      53.713       53.263      50.343      47.191
Interest Expense                             22.431       23.047      21.330      22.457       20.919      21.009      21.747
Net Interest Income                          34.526       35.981      33.152      31.256       32.344      29.334      25.444      25.480        21.773        21.773        21.773        21.773        134.915       112.602        87.094

Recoveries on Non-Agency MBS                  0.218        0.678       0.830       0.499        0.623       0.350       0.299       0.299         0.299         0.299         0.299         0.299          2.225         1.571         1.196
Total Other Income                            0.218        0.678       0.830       0.499        0.623       0.350       0.299       0.299         0.299         0.299         0.299         0.299          2.225         1.571         1.196

Management Fees                                   0            0           0           0        2.821       2.890       2.892       2.892         2.892         2.892         2.892         2.892          0.000        11.495        11.568
Compensation and Benefits                     2.861        2.959       2.641       2.518            0           0           0           0             0             0             0             0         10.979         0.000         0.000
General and Administrative                    0.723        0.922       0.792       0.848        1.024       0.942       0.900       0.900         0.900         0.900         0.900         0.900          3.285         3.766         3.600
Total G&A Expenses                            3.584        3.881       3.433       3.366        3.845       3.832       3.792       3.792         3.792         3.792         3.792         3.792         14.264        15.261        15.168

GAAP Net Income before Dividends             31.160       32.778      30.549      28.389       29.122      25.852      21.951      21.987        18.280        18.280        18.280        18.280        122.876        98.912        73.122
Core Net Income before Dividends             30.942       32.100      29.719      27.890       28.499      25.502      21.652      21.688        17.981        17.981        17.981        17.981        122.876        98.912        73.122

Preferred Dividends                           1.503        1.461       1.461       1.460        1.461        1.46       1.423       1.423         1.423         1.423         1.423         1.423          5.885         5.767         5.692

GAAP Net Income                              29.657       31.317      29.088      26.929       27.661      24.392      20.528      20.564        16.857        16.857        16.857        16.857        116.991        93.145        67.430
Core Net Income                              29.439       30.639      28.258      26.430       27.038      24.042      20.229      20.265        16.558        16.558        16.558        16.558        116.991        93.145        67.430

Shares Outstanding (EOP)                    124.089      129.747     133.003     134.115      136.073     138.078     141.666     141.666       141.666       141.666       141.666       141.666        134.115       141.666       141.666
Shares Outstanding (Average)                126.205      131.402     136.099     137.566      139.292     137.064     139.209     139.209       139.209       139.209       139.209       139.209        132.759       138.694       139.209
GAAP EPS                                       0.24         0.24        0.22        0.20         0.20        0.18        0.15        0.15          0.12          0.12          0.12          0.12           0.90          0.67          0.48
Core EPS                                       0.23         0.23        0.21        0.19         0.19        0.18        0.15        0.15          0.12          0.12          0.12          0.12           0.90          0.67          0.48

Dividends per Share                            0.25         0.25        0.23        0.21         0.21        0.18     0.15     0.15     0.12     0.12     0.12     0.12                                     0.94     0.69     0.48
Return on Average Common Equity             13.82%       14.12%      12.66%      11.61%       11.59%       9.91%    8.02%    7.80%    6.40%    6.40%    6.40%    6.40%                                   12.89%    9.14%    6.40%
Common Shareholders Equity                  858.572      916.144     921.729     933.849      976.004     993.042 1055.798 1053.070 1053.070 1053.070 1053.070 1053.070                                  933.849 1053.070 1053.070
Book Value per Share                           6.92         7.06        6.93        6.96         7.17        7.19     7.45     7.43     7.43     7.43     7.43     7.43                                     6.96     7.43     7.43
Source: Company reports and Maxim Group Estimates




Maxim Group LLC                                                                                                                                                                                                        26
                                                                                                        Best Stock Ideas 2013


Industrials & Infrastructure                       Quanta Services, Inc.                                                    Buy
December 20, 2012
                                                   (PWR – NYSE – $27.27)
Closing Price (12/19/12):               $27.27
12-Month Target Price:                     $34     2013 Best Long Idea: The divestiture of the Telecom business
52-Week Range:                   $20.21-$27.70     allows PWR to focus its efforts and resources on the
Market Cap (MM):                        $5,813     Transmission and the Pipeline segments
Shares O/S (MM):                         213.2        Investment conclusion. We continue to recommend that investors purchase
Float (MM):                              210.4         shares of Quanta as we enter 2013. For 2013 we expect all the segments to
Shares Short (MM):                          2.4        grow and to contribute to the company profitability.
Avg. Vol. (MM)                              2.0
                                                      Long-haul pipelines likely to be major growth drivers in 2013. Pipeline
Cash/Share:                              $0.60
                                                       Infrastructure segment turned positive in 2Q12 for the first time since 4Q10,
Book Value/Share:                       $17.18         and we expect it to remain profitable in 2013 as well. Although delayed
Dividend/Yield:                               na       with respect to our initial forecasts, we expect the long-haul pipeline
Risk Profile:                             High         business to pick-up in this coming year. We believe the sector should
   Maxim Group          Quarterly Revenue ($M)         recover in mid-2013, tightening industry capacity and improving pricing
  FYE: December         2012E           2013E          and margins, especially considering that Quanta owns ~1/3 of the existing
        1Q             $1,425A          $1,446         spreads. In the meantime, small, quick book-and-burn projects as well as
                                                       gathering activities, especially in the Marcellus shale and Eagle Ford shale,
        2Q             $1,517A          $1,654
                                                       should support growth.
        3Q             $1685A           $1,992
        4Q             $1,602           $1,767        Large scale transmission projects are starting to pick up. In the Electric
                                                       Power segment, we have recently seen several large-scale transmission
        FY             $6,229           $6,859
                                                       projects awarded. Quanta has announced three projects in North America,
   Maxim Group         Current Prior Current
                                                       totaling $400M, all scheduled to be completed in 2013: (1) with Atco
  FYE: December          EPS      EPS      P/E         Electric in Alberta, Canada; (2) in California, where Southern California
   2011A: GAAP          $0.63       -     43.3         Edison selected PWR to build the Eldorado-Ivanpah transmission project
   2012E: GAAP          $1.37       -     19.9         and the Red Bluff substation; finally (3) American Electric Power [AEP -
   2013E: GAAP          $1.61       -     16.9         $43.51 – NR] selected PWR to rebuild a 66-mile, 345-kV line in Corpus
   Maxim Group           Quarterly GAAP EPS            Christi, TX. In addition, Quanta has voiced it may be awarded the other
  FYE: December         2012E           2013E
                                                       four phases of this last project, which have a final completion date of March
                                                       2016.
        1Q              $0.22A           $0.27
        2Q              $0.31A           $0.40        Divestiture of the Telecom segment may help focus resources. On
        3Q              $0.45A           $0.52         December 3, 2012, PWR sold to Dycom Industries [DY – $19.53 – NR] all
        4Q              $0.39            $0.43         of its domestic wire-line telecommunication infrastructure subsidiaries, as
                                                       well as the wireless telecommunication subsidiaries that provide services to
        FY              $1.37            $1.61         utilities. The transaction should be completed by the end of 2012 for $275M
 Consensus-Firstcall      Quarterly GAAP EPS           in cash plus an estimated $25M-$40M related to working capital and other
  FYE: December         2012E           2013E          adjustment. We see this divestiture positively, as it allows the company to
        1Q              $0.22A           $0.27         better focus its time and resources on its two largest businesses, which in
        2Q              $0.31A           $0.36         our opinion have the strongest growth opportunities.
        3Q              $0.45A           $0.44        Dark Fiber segment should continue to support bottom line growth.
        4Q              $0.36            $0.40         Although revenues represent only 2% of the total, the segment, with its 50%
        FY              $1.34            $1.51         operating margins, is a significant contributor to the bottom-line, and we
William Bremer                 (212) 895-3835          expect it to continue to grow in 2013.
                               (516) 396-3121         Valuation. PWR currently trades at an EV/EBITDA multiple of 7.9x our
wbremer@maximgrp.com                                   2013 estimates. Our $34 price target reflects a 9.9x EV/EBITDA multiple
                                                       on our 2013 estimates –a premium to its average peer EV/EBITDA of 6.7x,
Francesco Citro, Ph.D.         (212) 895-3809          but a discount to its historical average of 11.4x. Given Quanta’s national
                                                       presence, its ability to scale, and the company’s exceptionally strong
fcitro@maximgrp.com
                                                       balance sheet, we believe it deserves a premium valuation.




Maxim Group LLC                                                                                                       27
                                                        Best Stock Ideas 2013
Quanta Services, Inc. Income Statement




Source: Company filings and Maxim Group LLC estimates




    Maxim Group LLC                                                    28
                                                                                                  Best Stock Ideas 2013

Industrials & Infrastructure
December 20, 2012
                                                Robbins & Myers, Inc.                                                Hold
Closing Price (12/19/12):             $59.42    (RBN – NYSE – $59.42)
12-Month Target Price:                   N/A
52-Week Range:                 $37.90-$60.19    2013 Stock to Avoid: All the spotlights are focused on the
Market Cap (MM):                      $2,506    closing of the acquisition, which should materialize in
Shares O/S (MM):                        42.2    CY1Q13, but with no reward, any risk would be too high to
Float (MM):                             36.4    bear.
Shares Short (MM):                        2.9
Avg. Vol. (000)                           0.5      Investment conclusion. We continue to recommend that investors
Cash/Share:                            $3.94        remain on the sidelines as we enter 2013. With the announced
Book Value/Share:                     $25.76        acquisition already fully priced in the stock, there is virtually no upside
Annual Dividend                        0.34%        left for investors to be taken.
Risk Profile:                       Moderate       The company acquisition by NOV has been pushed out to 2013, but
  Maxim Group         Quarterly Revenue ($M)        it should not be at risk. On August 9, 2012 RBN announced that
   FYE: August         2012A         2013E          National Oilwell Varco [NOV – $68.69 – NR] should acquire all the
       1Q              $237.3        $256.5         outstanding shares of Robbins & Myers for $60/share, or ~$2.55B. The
       2Q              $255.9        $272.3         transaction, which should be an all-cash deal, was unanimously
       3Q              $266.3        $287.1         approved by the Board of Directors of RBN and M.H.M. & Co., Ltd.
       4Q              $275.2        $296.5         (the largest holder of RBN, owning 12.2% of the outstanding shares)
       FY              $1,035        $1,113         immediately followed suit approving the acquisition. The agreement
                                                    was initially expected to close during CY4Q12, but it is now very
  Maxim Group         Current Prior Current
                                                    likely to shift to CY1Q13 owing to supplemental information requested
   FYE: August          EPS    EPS     P/E
                                                    by the Canadian Competition Bureau. However, presently there is no
  2011A GAAP           $3.24     -    18.3
                                                    indication of any issues that might jeopardize the acquisition.
  2012A GAAP           $3.39     -    17.5
  2013E GAAP           $3.80     -    15.6         With no benefits left to be gained we see no reason to buy the stock.
  Maxim Group         Quarterly GAAP EPS            At this point, business outlook and results are not really important for
   FYE: August         2012A         2013E          RBN, since all the attention gravitates around the closing of the deal.
       1Q             $0.77         $0.86           Although the longer this transaction takes to materialize the higher the
       2Q             $0.84         $0.94           chance that it doesn’t happen, we believe this delay is just a small
       3Q             $1.02         $0.99           hiccup and should not pose any risk to the deal. The stock has already
       4Q             $0.76         $1.02
                                                    fully priced in the benefits of the acquisition, and although very remote,
                                                    if the acquisition doesn’t fall through the stock should very likely
       FY             $3.39         $3.80
                                                    plummet given the underlying capacity in the field. Therefore, with no
Consensus-Firstcall   Quarterly GAAP EPS
                                                    reward, no matter how small the risk is, we suggest investors not to buy
  FYE: August         2012A         2013E
                                                    shares of the company.
       1Q             $0.77         $0.86
       2Q             $0.84         $0.94          Valuation. Currently, shares of RBN are trading at 8.6x our FY13
       3Q             $1.02         $1.00           EV/EBITDA estimate of $276M, below its peer group of 9.5x. We
       4Q             $0.76         $1.03           believe that considering the NVO acquisition the stock is fully valued
       FY             $3.39         $3.82           at these levels and therefore maintain our Hold rating.

William Bremer                 (212) 895-3835
wbremer@maximgrp.com           (516) 396-3121
wbremer@maximgrp.com

Francesco Citro, Ph.D.         (212) 895-3809
fcitro@maximgrp.com




Maxim Group LLC                                                                                                 29
                                                        Best Stock Ideas 2013

Robbins & Myers, Inc. Income Statement




Source: Company filings and Maxim Group LLC estimates



    Maxim Group LLC                                                    30
                                                                                                     Best Stock Ideas 2013

Communications Infrastructure                  Arris Group, Inc.                                                         Buy
December 20, 2012
                                               (ARRS – Nasdaq – $14.54)
Closing Price (12/19/12):             $14.54
12-Month Target Price:                $17.00   2013 Best Long Idea: ARRS continues to solidify its leading
52-Week Range:               $10.36 - $14.60   cable equipment supplier position
Market Cap (MM):                      $1,648      Bottom line. We recommend that investors buy shares of ARRS. Our 12-
Enterprise Value (MM):                $1,320       month target price of $17 is based on ARRS trading at an EV/sales multiple of
Shares O/S (MM):                      113.37       1.2x our 2013 revenue outlook. Shares currently trade at EV/sales multiples of
                                                   0.9x and a P/E of 12.3x our 2013 estimate, below the group’s average of an
Float (M):                            110.03       EV/sales of 1.3x and a P/E of 14.7x. We expect multiples to expand as ARRS
Avg. Vol. (000)                       703.29       likely shows margin stability together with a stronger top-line growth outlook
Dividend/Yield:                 $0.00/0.00%        in 2H12 and 2013.
Risk Profile:                           High      The cable industry’s trusted arms merchant. Arris supplies broadband
  Maxim Group             Revenues ($M)            network infrastructure primarily to cable operators worldwide. The company
 FYE: December 2011A                 2012E         often develops products in partnership with its large customers, making it a
                                                   strategic vendor to the cable industry, in our view.
        1Q            $267           $303A
        2Q            $266           $349A        Favorable upgrade cycle roadmap. Over the last four years, Arris
                                                   successfully rode the DOCSIS 3.0 cable network upgrade wave, populating
        3Q            $274           $357A         the cable networks with well over 7,500 C4 and related Cable Modem
        4Q            $281            $354         Termination System (CMTS) chassis shipped to cable head-ends worldwide.
        FY           $1,082          $1,358        Today, this upgrade activity is in its later stages of growth in the United
                                                   States, but it is being augmented with a growing demand for DOCSIS 3.0
                                                   customer premise modems and terminal adapters. Additionally, the cable
  Maxim Group           Adjusted EPS
                                                   industry’s adoption of the Converged Cable Access Platform (CCAP)
 FYE: December      2011A          2012E           standards and architecture (which Arris co-developed) gives the company a
      1Q            $0.16         $0.19A           competitive advantage to secure a
      2Q            $0.24         $0.25A          CPE focus has depressed margins in 2H12, but we see a rebound in 2013.
      3Q            $0.21          0.22A           Arris’ revenue mix has continued to shift towards lower-margin CPE
      4Q            $0.21          $0.27           hardware (modems and home gateways), putting gross margin in a downtrend
      FY            $0.82          $0.92           in 2012. We believe, however, that gross margins will again begin to expand
                                                   starting in 4Q, as more head-end upgrade activity contributes to the revenue
                                                   mix. We are modeling a rebound in gross margin starting in 4Q of 2012.
  Maxim Group Adj. EPS           P/E
 FYE: December                  Multiple          Valuation. Our $17 target price is based on ARRS shares trading at an
   FY 2012E    $0.92                15.8x          EV/sales multiple of 1.2x our 2013 revenue estimate of $1,458M, a 8%
                                                   discount to the peer group’s average multiple of 1.3x. We apply this
   FY 2013E    $1.19                12.2x
                                                   discount, noting that ARRS shares have historically traded at a discount to
   FY 2014E    $1.31                11.1x          its peers due to the company’s below-average product margins. Shares of
                                                   ARRS currently trade at EV/sales multiples of 1.0x and 0.9x our 2012 and
  Maxim Group                   EV/Rev.            2013 revenue estimates; however, the stock has historically traded at over
                Revs.
 FYE: December                  Multiple           1.2x forward Street revenue estimates. ARRS shares currently trade at a
   FY 2012E    $1,363.9              1.0x          P/E of 11.8x our 2013 adjusted EPS estimate of $1.19, compared to the
   FY 2013E    $1,457.9              0.9x          peer group median of 18.5x.
   FY 2014E    $1,581.8              0.8x




Greg Mesniaeff          (212) 895-3533
gmesniaeff@maximgrp.com




Maxim Group LLC                                                                                                31
                                                                                                                                                                    Best Stock Ideas 2013

ARRIS GROUP, INC.
STATEMENT OF EARNINGS

Fiscal Year Ends December 31                                        Mar-12      Jun-12      Sep-12      Dec-12                   Mar-13      Jun-13     Sep-13     Dec-13
($ in thousands, except per share)        2010A         2011A       1Q12A       2Q12A       3Q12A       4Q12E        2012E       1Q13E       2Q13E      3Q13E      4Q13E       2013E        2014E

BCS (Broadband Communications Systems)     841,253       827,000    244,500     280,600     283,500     283,325     1,091,925    266,553     290,640    305,962    303,157    1,166,312     1,233,812
 % of Sales                                  77.3%         76.5%      80.7%       80.3%       79.3%       80.0%         76.5%      80.0%       80.0%      80.0%      80.0%        76.5%         78.0%
ATS (Access, Transport & Supplies)         181,143       189,100     44,100      52,200      56,700      56,665       209,665     53,311      58,128     61,192     60,631      233,262       268,908
 % of Sales                                  16.7%         17.0%      14.6%       14.9%       15.9%       16.0%         17.0%      16.0%       16.0%      16.0%      16.0%        17.0%         17.0%
MCS (Media & Communications Systems)        65,201        65,600     14,300      16,500      17,300      14,166        62,266     13,328      14,532     15,298     15,158       58,316        79,091
 % of Sales                                   6.0%          6.0%       4.7%        4.7%        4.8%        4.0%          6.0%       4.0%        4.0%       4.0%       4.0%         6.0%          5.0%

TOTAL REVENUE                            1,087,597     1,081,700    302,901     349,327     357,432     354,156     1,363,856    333,191     363,300    382,452    378,947    1,457,890    1,581,811

  Cost of Products & Services              661,520       677,178    193,993     230,801     245,480     228,430       898,704    216,574     232,512    244,769    238,736      932,592         996,541
Pro-forma Gross Profit                     426,077       404,522    108,908     118,526     111,952     125,725       465,151    116,617     130,788    137,683    140,210      525,298         585,270
  Gross Margin                               39.2%         37.4%      36.0%       33.9%       31.3%       35.5%         34.1%      35.0%       36.0%      36.0%      37.0%        36.0%           37.0%

Pro-forma Operating Expenses:
  R&D                                      140,468       146,519     44,147      42,881      42,978      42,499       172,505     43,315      45,413     45,894     45,474      180,095         189,817
   % of Sales                                12.9%         13.5%      14.6%       12.3%       12.0%       12.0%         12.6%      13.0%       12.5%      12.0%      12.0%        12.4%           12.0%
  SG&A                                     137,693       149,230     39,543      40,135      37,866      38,957       156,501     38,317      41,780     43,217     41,684      164,998         173,999
   % of Sales                                12.7%         13.8%      13.1%       11.5%       10.6%       11.0%         11.5%      11.5%       11.5%      11.3%      11.0%        11.3%           11.0%
  Stock Comp                               (19,931)      (21,061)    (6,649)     (7,867)     (6,678)     (7,500)      (28,694)    (7,500)     (7,500)    (7,500)    (7,500)     (30,000)        (28,694)
  Goodwill Amortization/Intangibles         35,957        33,352      7,379       7,444       7,742       7,742        30,307      7,379       7,379      7,379      7,379       29,516          30,307
  Restructuring Charges/Other One-Time          65        89,651      6,147           -         243           -         6,390      6,147           -          -          -        6,147               -
  Provision for Doubtful Accts.                  -             -          -           -           -           -             -          -           -          -          -            -               -
  Equity Compensation/Other Non-Cash             -             -          -           -           -           -             -          -           -          -          -            -               -
  Total Operating Expenses                 258,230       274,688     77,041      75,149      74,166      73,956       300,312     74,132      79,692     81,611     79,658      315,093         335,122

Pro-forma Operating Income                 167,847       129,834     31,867      43,377      37,786      51,769       164,839     42,485      51,096     56,071     60,553      210,205         250,148
  Operating Margin                           15.4%         12.0%      10.5%       12.4%       10.6%       14.6%         12.1%      12.8%       14.1%      14.7%      16.0%        14.4%           15.8%

Other Income (expense)
  Interest Income (expense)                  (6,006)      (8,535)     (6,441)     (1,531)     (3,715)     (5,000)     (16,687)     (6,441)      (500)      (500)      (500)      (7,941)        (20,000)
  Other Income (expense)                      1,683          830         436        (226)       (129)        200          281         436        200        200        200        1,036             800

Income Before Taxes & Extra. Items         163,524       122,129     25,862      41,620      33,942      46,969       148,433     36,480      50,796     55,771     60,253      203,300         230,948
  Taxes                                     53,924        24,549      3,752      12,729       2,982      15,735        35,198     12,038      16,763     18,405     19,883       67,089          76,213
    Tax Rate %                               33.0%         20.1%      14.5%       30.6%        8.8%       33.5%         23.7%      33.0%       33.0%      33.0%      33.0%        33.0%           33.0%

Pro-forma Net Income (Loss)                109,600        97,580     22,110      28,891      25,462      31,235       113,236     24,442      34,033     37,367     40,369      136,211         154,735
Extraordinary Items                         45,380       113,095     16,311      13,890       7,598       7,598        45,397     16,311      16,311     16,311     16,311       65,244          12,843
GAAP Net Income                             64,220       (15,515)     5,799      15,001      17,864      23,637        67,839      8,131      17,722     21,056     24,058       70,967         141,892

Shares Outstanding (Diluted)               128,515       122,572    119,409     115,111     116,346     116,146       116,753    114,611     114,411    114,211    114,011      114,311         118,500
Per Common Share:
  Pro Forma EPS                              $0.85        $0.82       $0.19       $0.25       $0.22       $0.27        $0.92       $0.21       $0.30      $0.33      $0.35       $1.19           $1.31
  GAAP Earnings                              $0.50         $0.43      $0.05       $0.13       $0.15       $0.20         $0.43      $0.07       $0.15      $0.18      $0.21        $0.43           $1.20

Source: Company reports and Maxim Group estimates




Maxim Group LLC                                                                                                                                                                            32
                                                                                                      Best Stock Ideas 2013

Communications Infrastructure                    ADTRAN, Inc.                                                           Hold
December 20, 2012
                                                 (ADTN – Nasdaq – $20.14)
Closing Price (12/19/12):               $20.14
12-Month Target Price:                      NA   2013 Stock to Avoid: Growth prospects challenged by soft
52-Week Range:                 $15.38 - $38.95   carrier capex environment as well as competitive pressure
Market Cap (MM):                        $1,262   among enterprise connectivity suppliers
Enterprise Value (MM):                  $1,060
Shares O/S (MM):                         62.67      We expect headwinds to persist through 2013. Although ADTRAN has
Float (M):                               62.37       significantly lessened its dependency on Tier One telco carriers in recent
Avg. Vol. (MM)                            1.59       quarters and has strengthened its position among Tier Two and Tier three
Dividend/Yield:                   $0.36/1.78%        carriers, carrier spending priorities among carriers for wireline access and
Risk Profile:                             High       for wireless backhaul are likely remain less than favorable for ADTRAN
   Maxim Group             Revenues ($M)             in 2013, we believe. The company has also lessened its dependency on the
  FYE: December        2011A           2012E         legacy HDSL products which continue to decline (HDSL product
         1Q             $166           $135A         revenues for 3Q’12 were $12.9 million, compared to $25.3 million a year
         2Q             $184           $184A         earlier). Finally, carrier Ethernet and enterprise connectivity products were
         3Q             $192          $162.1A        also soft in 3Q’12. Taken together, these negative sector fundamentals
         4Q             $175            $135         lead us to continue recommending that investors avoid ADTN shares in
         FY             $717            $615         the near term.
   Maxim Group            Adjusted EPS              ADTRAN’s post-NSN margin profile is likely to remain challenged.
  FYE: December      2011A           2012E           In our June 11, 2012 initiation report, we noted concerns about the
       1Q            $0.54           $0.25A          recently acquired Nokia Siemens Networks (NSN) broadband division’s
       2Q            $0.59           $0.38A          likely negative impact on the company’s margin profile. Gross margin in
       3Q            $0.59           $0.20A          3Q12 was down 770 bps vs. a year ago, while OpEx levels were up.
       4Q            $0.52           $0.07           Although management indicated that longer-term cost trends would
       FY            $2.22           $0.90           moderate, we expect normalized margins after 1H13 to be below historical
                                                     averages.
   Maxim Group      Adj. EPS      P/E               Multiple competitive challenges. The company faces significant
  FYE: December                  Multiple            competition in both the carrier access market from the likes of Alcatel-
    FY 2012E         $0.90           22.4x           Lucent (ALU--$1.45-NR), and in the enterprise markets from companies
    FY 2013E         $1.01           19.9x           like Cisco Systems (CSCO-$20.27-NR). Additionally, we believe that
    FY 2014E         $1.21           16.6x           competitive pressure from China-based suppliers Huawei and ZTE Corp.
                                                     has become far more meaningful in recent quarters.
   Maxim Group                   EV/Rev.
  FYE: December
                     Revs.
                                 Multiple           Limited addressable market. Although ADTRAN has expanded its
    FY 2012E         $615.4           1.7x           addressable market geographically via the NSN acquisition into Europe,
    FY 2013E         $652.3           1.6x           its products still primarily target the wireline “last mile” of carrier-
    FY 2014E         $690.9           1.5x           enterprise connectivity, as well as some wireless backhaul. We view this
                                                     as a potentially limiting factor in that cross-selling opportunities to large
                                                     carrier and enterprise customers are more limited.
                                                    Remain on the sidelines. We maintain our Hold rating on ADTN shares
Greg Mesniaeff                 (212) 895-3533        and recommend that investors remain on the sidelines at this time, as we
gmesniaeff@maximgrp.com                              see little – if any – catalysts in the near term to drive shares higher. ADTN
                                                     shares currently trade at ~19.1x our revised 2013 EPS estimate of $1.01,
                                                     consistent with peer group averages, and in our opinion are not
                                                     undervalued. That said, we currently view ADTN shares to be a value
                                                     story that’s currently priced for growth.




Maxim Group LLC                                                                                                 33
                                                                                                                                                                                                                            Best Stock Ideas 2013

ADTRAN, Inc. (ADTN - Nasdaq)
GAAP Basis, except where noted
Fiscal Year Ends December 31                         Mar-11        Jun-11        Sep-11        Dec-11                       Mar-12        Jun-12        Sep-12        Dec-12
($ in thousands, except per share data)              1Q11A         2Q11A         3Q11A         4Q11A         2011A          1Q12A         2Q12A         3Q12A         4Q12E         2012E          2013E          2014E


Broadband Access (included in Carrier Systems)      51,782        77,100        86,954        74,029        289,865        49,482        83,442        64,464        51,571        248,959        266,386        293,025
Optical Access (included in Carrier Systems)        20,916        22,000        22,298        17,300        82,514         14,255        14,003        11,160         8,928        48,346         51,247         56,371
Internetworking (included in Business Networking)   32,883        33,000        42,506        43,100        151,489        40,974        34,935        35,411        30,099        141,419        149,905        167,893
  Growth Products                                   105,581       132,100       151,758       134,429       523,868        104,711       132,380       111,035       90,599        438,725        467,538        517,289
    % of Total Revenue                               63.8%         71.7%         79.0%         76.7%         73.0%          77.7%         71.9%         68.5%         67.3%         71.3%          71.7%          74.9%


HDSL (included in Loop Access)                      40,945        34,000        25,297        26,700        126,942        18,959        19,465        12,926         9,695        61,045         36,627         21,976
Other Products                                      18,996        18,127        15,139        14,157        66,419         11,065         9,553         8,164         8,271        37,053         68,011         66,651
  Traditional Products                              59,941        52,127        40,436        40,857        193,361        30,024        29,018        21,090        17,965        98,097         104,637        88,627
    % of Total Revenue                               36.2%         28.3%         21.0%         23.3%          27%           22.3%         15.8%         13.0%         13.4%          16%            16%            13%



  NSN Broadband Division                                                                                                      0          22,600        30,000        26,000        78,600         80,172         84,982


Total Revenue                                       165,522       184,227       192,194       175,286       717,229        134,735       183,998       162,125       134,564       615,422        652,347        690,898

  Cost of Revenue                                   66,727        77,400        82,718        76,066        302,911        60,648        88,797        82,153        71,319        302,917        319,650        331,631
Gross Profit                                        98,795        106,827       109,476       99,220        414,318        74,087        95,201        79,972        63,245        312,505        332,697        359,267
  Gross Margin                                       59.7%         58.0%         57.0%         56.6%         57.8%          55.0%         51.7%         49.3%         47.0%         50.8%          51.0%          52.0%

Operating Expenses:
  Research & Development                            23,637        24,619        26,894        25,151        100,301        24,795        32,458        35,582        32,295        125,130        130,469        138,180
    % of Total Revenue                               14.3%         13.4%         14.0%         14.3%         14.0%          18.4%         17.6%         21.9%         24.0%         20.3%          20.0%          20.0%
  Selling, general and administrative expenses      29,552        30,898        31,475        32,954        124,879        33,111        35,905        34,114        30,950        134,080        136,993        138,180
    % of Total Revenue                               17.9%         16.8%         16.4%         18.8%         17.4%          24.6%         19.5%         21.0%         23.0%         21.8%          21.0%          20.0%
  Other                                                0             0             0             0             0              0             0             0             0             0              0              0
Total Operating Expenses                            53,189        55,517        58,369        58,105        225,180        57,906        68,363        69,696        63,245        259,210        267,462        276,359


Operating Income (EBIT)                             45,606        51,310        51,107        41,115        189,138        16,181        26,838        10,276          (0)         53,295         65,235         82,908
  Operating Margin                                   27.6%         27.9%         26.6%         23.5%         26.4%          12.0%         14.6%         6.3%          0.0%          8.7%           10.0%          12.0%

  Interest income, net                               1,789         2,003         2,037         1,813         7,642          1,861         1,926         1,864         1,864         7,515          7,642          8,253
  Interest expense, net                              (602)         (594)         (599)         (603)         (2,398)        (588)         (581)         (587)         (587)         (2,343)        (2,460)        (2,583)
  Net gains (losses)                                 2,767         3,372         2,982         3,333        12,454          2,467         4,109         2,530         2,593        11,699         12,765         13,404
  Other Income (Expense), net                        (125)         (117)         (155)         (297)         (694)           141           492          (368)         (387)         (122)          1,500          1,500
Income (Loss) before Taxes                          49,435        55,974        55,372        45,361        206,142        20,062        32,784        13,715         3,483        70,044         84,682         103,482


Provision for income taxes                          15,177        19,031        19,159        14,198        67,565          7,102        11,714         4,443         1,149        24,408         27,945         34,149
  Effective Tax Rate                                 30.7%         34.0%         34.6%         31.3%         32.8%          35.4%         35.7%         32.4%         33.0%         34.8%          33.0%          33.0%


Dividends on Preferred Stock                                  -             -             -             -              -             -             -             -             -              -              -              -
GAAP Net Income to Common                           34,258        36,943        36,213        31,163        138,577        12,960        21,070         9,272         2,334        45,636         56,737         69,333
Stock option compensation                            1,649         1,800         1,800         2,411         7,660          1,920         1,909         2,038         2,038         7,905          7,905          8,300
Acquisition-related expenses                                                                                                1,261         1,193         1,523                       3,977
Pro-forma Net Income to Common                      35,907        38,743        38,013        33,574        146,237        16,141        24,172        12,833         4,372        57,518         64,642         77,633


Shares outstanding - diluted                        65,957        66,135        64,961        64,586        65,410         64,849        64,393        63,304        63,404        63,988         63,704         63,904


Per Common Share (Fully Diluted):
GAAP EPS                                             $0.52         $0.56         $0.56         $0.48         $2.11          $0.20         $0.33         $0.15         $0.04         $0.71          $0.89          $1.08
Pro Forma EPS                                        $0.54         $0.59         $0.59         $0.52         $2.22          $0.25         $0.38         $0.20         $0.07         $0.90          $1.01          $1.21
Source: Company reports and Maxim Group estimates


Maxim Group LLC                                                                                                                                                                                                                             34
                                                                                                        Best Stock Ideas 2013


Media                                                     The Madison Square Garden Co.                                      Buy
December 20, 2012
                                                          (MSG – Nasdaq – $45.27)
Closing Price (12/19/12):                       $45.27    2013 Best Long Idea: “Dominant NYC entertainment
12-Month Target Price:                          $52.00    provider”
52-Week Range:                         $27.95 - $45.80
                                                             MSG is the only pure play publicly quoted Regional Sports Network
Market Cap (MM):                                $3,521        with the additional benefits of Knicks/Rangers team ownership and the
Shares O/S (MM):                                  77.8        Garden facility. In a fragmented viewing world, live sports are one of
Float (MM):                                        60.0       the few guaranteed audience winners.
Avg. Vol. (000)                                   277.1      Recapitalization - The $900M Transformation, scheduled to complete
Book Value/Share:                                $17.27       at the end of next summer, is already a success and has generated
Dividend/Yield:                             $0.00/0.00%       increased team admissions ticket prices and box sales. Assuming a $45
                                                              per share buyback price - applying 3x FY14E EBITDA of $352M to
Risk Profile:                                      High       net debt should generate about $1.1B equivalent to ~30% of the stock;
                                                              applying 4x generates $1.4B and buy back ~40% of the stock.
Maxim Group                 Revenue          EBITDA
                                                             Management could also lever its skill set and move into another sports
FYE: June                     all numbers in $ millions
                                                              vertical and perhaps acquire a baseball team.
     FY 11 A                $1,187.8          $207.5
                                                             Growth Drivers - FY13/FY14 revenue estimate is $1.3B (up 2.9%
     FY 12 A                $1,283.9          $283.2
                                                              y/y) and $1.5B (up 14.6% y/y). Our FY13/FY14 EBITDA estimate is
     FY 13 E                $1,321.0          $279.2          $279.2M (down 1.4% y/y) and $352M (up 26.2% y/y) respectively as
     FY 14 E                $1,514.2          $352.4          27 more Madison level suites with the remaining 31 to open by
                                                              January 2013. The Madison Club is also gearing up. Season tickets for
Maxim Group                   EV          EV/EBITDA           the Knicks renewed at 95% and the Rangers at 90% following 4.9%
     FY 12 A                $3,267.7         11.5x            and 9.5% price increase.
     FY 13 E                $3,358.2         12.0x           Another key driver is its built-in affiliate fee increases from both
     FY 14 E                $3,165.1          9.0x            Cablevision (CVC, $14.94, NR) and Time Warner Cable (TWC,
                                                              $95.65, NR). TWC had dropped carriage of the Madison Square
Consensus First Call          Estimates                       Garden Networks as an attack on a small programmer in order to try
                                                              and control rising programming costs failed due to "Linsanity". The
FYE: June            Revenue    EBITDA                        recently purchased 17,000 seat LA Forum should reopen in a couple of
     FY 11 A         $1,187.8    $207.5                       years providing a new source of revenue.
     FY 12 A         $1,283.9    $283.2
                                                             Risk - Our current FY13 estimates could fall by $30M if the NHL
     FY 13 E         $1,340.9    $288.4                       lockout continues into 2013
                                                             Price target. Our FY13 asset value is $64/share and price target is
MSG changed their fiscal year from December to June
                                                              $52, based on a 20% discount to asset value, lower than previous
                                                              discounts that we have used as the Transformation risk is lessened.
John Tinker
(212) 895-3735
jtinker@maximgrp.com

Nirav Modi
(212) 895-3595
nmodi@maximgrp.com




Maxim Group LLC                                                                                                      35
                                                                                                                                                               Best Stock Ideas 2013

Figure 1: The Madison Square Garden Company quarterly income statement

The Madison Square Garden Company
Income Statement               FY10                                         1Q          2Q          3Q          4Q         FY12           1Q           2Q           3Q           4Q      FY13 E        FY14 E
(Figures in $ millions)                           Mar-11     Jun-11      Sep-11      Dec-11      Mar-12      Jun-12                  Sep-12 E     Dec-12 E     Mar-13 E     Jun-13 E
Revenues
  MSG Media                             $551.5     $147.6     $139.5      $138.6      $142.4      $166.2       $167.0      $614.2       $159.5       $183.7       $178.4       $165.7         $687.4     $771.0
  MSG Entertainment                       304.0      42.8        36.0        27.6       151.2       34.3         50.8       264.0         30.8        143.7         36.4         49.3          260.1      284.5
  MSG Sports                              372.2     157.7        75.4        28.8        88.6      216.1        131.2       464.7         31.6        110.8        190.5        101.6          434.5      520.0
  Inter-segment eliminations             (70.5)     (17.7)     (17.0)      (17.4)        (9.2)     (16.3)      (16.0)       (59.1)       (17.7)       (16.4)      (10.6)       (16.3)         (61.0)      (61.3)
  Total Revenues                    1,157.1       330.4       233.9       177.6       373.0      400.4        332.9      1,283.8       204.2        421.8        394.7        300.4      1,321.0       1,514.2
% y/y change
Total revenues % change y/y                8.9%      7.8%        3.0%       (6.9)%     (13.8)%     21.2%        42.3%                    14.9%        13.1%        (1.4)%       (9.8)%          2.9%      14.6%
  Consensus estimates                                                                                                                                429.8        402.5        290.9      1,340.9        1500.8
Expenses
  MSG Media                               224.2      64.1        52.1        40.6        60.4       75.8         63.9       240.7         41.3         85.1         75.5         57.1          258.9      304.2
  MSG Entertainment                       240.4      37.4        30.7        22.5        87.3       35.4         35.5       180.7         21.6         90.5         35.7         33.5          181.3      192.3
  MSG Sports                              266.2     116.2        49.2        15.9        83.1      140.4         70.4       309.8         15.0        110.7        133.4         60.0          319.0      367.9
  Inter-segment eliminations             (38.8)     (10.0)       (8.2)       (7.6)       (5.8)     (11.0)        (8.5)      (32.9)        (7.7)       (10.6)        (6.1)        (9.0)        (33.4)      (35.2)
 Total Direct Operating Expenses        692.0      207.6      123.7         71.5      224.9       240.7       161.3        698.3         70.3        275.6        238.4        141.5          725.9      829.1
y/y % change                               1.4%      5.7%       (0.6)%     (11.8)%     (22.5)%     15.9%        30.4%                    (1.7)%       22.5%        (0.9)%      (12.2)%          3.9%      14.2%
S,G&A excluding stock based comps
  MSG Media                                96.1      21.0        29.2        34.2        18.5       25.0         37.2       114.9         41.5         22.8         23.2         37.3          124.8      131.3
  MSG Entertainment                        89.1      12.2        17.2        18.9        26.8       11.7         20.7        78.0         21.7         25.7         14.6         23.7           85.6       87.2
  MSG Sports                               94.2      38.0        27.6        13.4        25.5       46.4         41.0       126.2         15.1         21.0         47.6         39.7          123.5      130.3
  Inter-segment eliminations             (17.0)      (3.3)       (4.6)       (6.4)       (1.8)      (3.6)        (4.9)      (16.7)        (7.7)        (3.2)        (1.9)        (5.0)        (17.9)      (16.1)
                                     262.4
 Total S,G&A excluding stock based comps            67.9        69.3        60.1        68.9       79.5         93.9       302.4         70.6         66.4         83.4         95.7          316.0      332.7
y/y % change                               1.1%     10.4%       15.1%      (11.1)%      (5.6)%     17.0%        35.4%                    17.5%        (3.8)%        5.0%         1.9%           4.5%       5.3%
Reconciliation to company reported S,G&A
  Stock based comps                       11.3        3.3         2.6         3.3         7.1        4.4          3.4        18.2          3.4          5.6          4.4          3.6          17.0        17.7
 Selling, General and Administrative    273.7       71.2       71.9        63.4        76.0        83.8        97.3        320.6        74.0         72.0         87.8         99.2        333.0         350.4
EBITDA
  MSG Media                               231.3      62.6        58.2        63.8        63.6       65.3         65.9       258.6         76.7         75.9         79.7         71.4          303.7      335.5
  MSG Entertainment                      (25.5)      (6.8)     (11.9)      (13.8)        37.2      (12.8)        (5.3)        5.3        (12.6)        27.5       (13.8)         (7.9)         (6.8)        5.0
  MSG Sports                               11.7       3.5        (1.3)       (0.5)     (19.9)       29.3         19.8        28.7          1.5        (20.9)         9.5          1.9          (8.0)       21.8
  Inter-segment eliminations             (14.7)      (4.5)       (4.2)       (3.5)       (1.7)      (1.7)        (2.6)       (9.4)        (2.3)        (2.5)        (2.6)        (2.2)         (9.7)      (10.0)
                                   202.8
  Total EBITDA, excludes stock based comp           54.9        40.9        46.1        79.1       80.2         77.8       283.2         63.3         79.9         72.8         63.2          279.2      352.4
EBITDA % y/y change
  MSG Media                               38.2%      1.3%      (6.3)%       14.6%       22.9%       4.4%        13.1%                    20.2%        19.4%        22.0%         8.3%       17.4%         10.5%
  MSG Entertainment                       17.1%   (46.7)%     (40.5)%       26.2%      104.8%      88.2%      (55.3)%                   (8.9)%      (26.1)%         8.4%        48.2%    (228.9)%      (173.3)%
  MSG Sports                           (165.2)%      3.9%    (136.5)%    (129.7)%    (722.9)%    728.1%     (1628.9)%                 (415.6)%         5.1%      (67.5)%           nm    (127.9)%      (372.3)%
  Inter-segment eliminations             110.8%     12.5%       30.9%     (13.7)%     (52.5)%    (62.6)%      (38.5)%                  (34.1)%        53.4%        57.2%      (13.7)%        3.2%          2.8%
Total EBITDA % y/y change                 68.1%     13.1%      (3.7)%        9.0%       13.8%      46.2%        90.4%      36.5%         37.4%         0.9%       (9.2)%      (18.8)%      (1.4)%         26.2%
EBITDA margins
  MSG Media                              41.9%      42.4%       41.7%       46.0%       44.6%      39.3%        39.5%      42.1%         48.1%        41.3%        44.7%        43.1%         44.2%      43.5%
  MSG Entertainment                      (8.4)%   (15.8)%     (33.1)%     (50.0)%       24.6%    (37.2)%      (10.5)%       2.0%       (40.8)%        19.1%      (38.0)%      (16.0)%         (2.6)%      1.8%
  MSG Sports                               3.1%      2.2%      (1.7)%      (1.6)%     (22.5)%      13.6%        15.1%       6.2%          4.6%      (18.9)%         5.0%         1.9%         (1.8)%      4.2%
   Total EBITDA margins                  17.5%      16.6%       17.5%       25.9%       21.2%      20.0%        23.4%      22.1%         31.0%        18.9%        18.4%        21.0%         21.1%      23.3%
  Consensus estimates                                                                                                                                105.3          75.0         59.8         288.4       337.6
Estimated FY11 (June 2011) EBITDA                              207.5
  Total Depreciation and Amortization    56.9       21.2        23.8        16.4        24.1       22.5         24.5        87.5         19.7         23.0         23.2         29.2           95.1      102.6
  Total Stock Based Compensation         11.3        3.3         2.6         3.3         7.1        4.4          3.4        18.2          3.4          5.6          4.4          3.6           17.0       17.7
  Operating Income (expense)            134.5       30.4        14.5        26.4        48.0       53.3         49.9       177.5         40.2         51.2         45.2         30.5          167.1      232.1
y/y % change                             198.7%      0.9%      (43.7)%       0.4%       (8.6)%     75.4%       244.6%                    52.4%         6.8%       (15.2)%      (39.0)%        213.3%      38.9%
Interest, net                            (3.5)      (1.1)      (1.2)       (1.2)       (1.3)       (1.1)       (1.2)        (4.8)       (1.1)          0.1          0.1          0.1        (0.9)           0.3
Miscellaneous Income                       3.9        5.6        0.0         0.0         0.0         6.6         0.5          7.1         0.0          0.0          6.9          0.5          7.5           7.8
Income before taxes                     135.0        34.9      13.3        25.2         46.6        58.8        49.2       179.8         39.1         51.3         52.2         31.0       173.6         240.2
Income tax benefit (expense)            (51.6)     (15.8)      (4.8)       (3.9)      (21.0)      (27.8)      (20.7)       (73.3)      (18.5)       (18.0)       (18.3)       (10.9)       (65.6)        (84.1)
Net Income                                83.4       19.1        8.5       21.3         25.6        31.1        28.6       106.5         20.6         33.3         33.9         20.2       108.1         156.1
y/y % change                             201.6%      9.8%      (39.1)%      10.5%      (21.7)%     62.8%       235.0%                    (3.2)%       30.2%         9.2%       (29.4)%        247.7%      44.5%
  Consensus estimates                                                                                                                                  34.1         28.7         19.1         104.6       138.7


Basic EPS                              1.13         0.26        0.11        0.29        0.34       0.41         0.38        1.42         0.27         0.44         0.45         0.27           1.43       2.06
Diluted EPS                            1.08         0.25        0.11        0.28        0.33       0.40         0.37        1.38         0.26         0.43         0.44         0.26           1.39       2.01
                                       74.0
Basic weighted average shares outstanding           74.2        74.4        74.5        74.6       75.0         75.6        74.9         75.6         75.6         75.6         75.6           75.6       75.6
                                       77.0
Diluted weighted average shares outstanding         77.2        77.2        77.2        77.4       77.6         77.7        77.5         77.8         77.8         77.8         77.8           77.8       77.8



Source: Company reports, Maxim Group estimates, Thomson One and CapitalIQ.



Maxim Group LLC                                                                                                                                                                          36
                                                                                                      Best Stock Ideas 2013

Information Technology
December 20, 2012
                                                 3D Systems Corp.                                                        Buy
                                                 (DDD – NYSE – $51.41)
Closing Price (12/19/12):               $51.41
12-Month Target Price:                  $60.00   2012 Best Long Idea: Positive secular trends and end-market
52-Week Range:                   $14.30-$53.04   exposure to consumer and healthcare fuel long-term growth
Market Cap (MM):                      $2,848.1   prospects.
Shares O/S (MM):                          55.4
                                                    Tailwinds from increased awareness: The increased adoption of 3D
Float (MM):                               50.3
                                                     printing for manufacturing, prototyping and consumer applications is
Avg. Vol. (K)                          1,373.8
                                                     helping drive demand. 3D Systems is a beneficiary of the virtuous cycle
Book Value/Share:                        $6.92
                                                     from an expanding hardware base, which in turn pulls in high margin
Dividend/Yield:                        $0.0/0%       material sales. The company continues to expand its hardware platform
Risk Profile:                           Medium       and, recently released at the EuroMold conference, professional printers
                                                     based on its new Multi-Jet Modeling print technology. Advances in
   Maxim Group                Revenues ($M)          materials enable the company to now offer performance parity with
    FYE: March              F2011A     F2012E        injection-molded plastic. The annual consumption of proprietary materials
       1Q                   $47.9A     $77.9A        per platform spans from about $3,000 for low-end commercial printers to
       2Q                   $55.1A     $83.6A        almost $20,000 at the high-end. The growth in annuity high margin material
       3Q                   $57.5A     $90.5A        sales supports earnings leverage.
       4Q                   $69.9A     $105.0E
                                                    Service bureaus remain an engine of growth: 3D Systems has been
       FY                   $230.4     $337.6
                                                     selectively growing its service footprint – both organically and through
   Maxim Group              Current    Current       acquisitions – in Asia and Europe. GE Aviation’s recent acquisition of
    FYE: March               EPS         P/E         digital manufacturing service bureaus (Morris Technologies and Rapid
     F2011A: PF             $0.81       63.5         Quality Manufacturing) is a validation of 3D System’s strategy. The
                                                     company has been able to generate significant earnings leverage from the
    F2012E: PF              $1.21       42.6
                                                     roll up of print service bureaus by sharing the cost structure across multiple
    F2013E: PF              $1.57       32.8         verticals. We expect this trend to continue.
LT Earnings Growth           13%
                                                    Acquisition pipeline continues to remain active: The Company recently
   Maxim Group              Quarterly PF EPS         announced the acquisition of Rapidform, a South Korean 3D software
                            Current    Current       company, for $35 million in cash and this transaction is expected to
    FYE: March              F2011A     F2012E        contribute about $15 million in sales in C13 and up to $0.09 in earnings.
       1Q                    $0.14      $0.25A       The company demonstrated the efficacy of Rapidform platform at
       2Q                    $0.26      $0.27A       Euromold by showcasing the use of 3D scanners to instantaneously
       3Q                    $0.14      $0.32A       translate physical objects to 3D models. This acquisition helps expand the
       4Q                    $0.16      $0.37        company’s geographic and customer footprint.
       FY                    $0.71      $1.21       Market continues to expand for 3D printing: Historically, modeling and
Consensus-First Call        Quarterly PF EPS         prototyping have been the primary end markets for additive manufacturing.
   FYE: March               F2011A     F2012E        More recently 3D Systems has seen success in new verticals – aerospace,
       1Q                    $0.14      $0.25A       consumer, dental and medical. Wohlers Associates, an independent market
       2Q                    $0.26      $0.27A       research firm, tabulated that the 3D printing markets was up almost 30% to
       3Q                    $0.14      $0.32A       reach $1.7 billion in 2011 with 3D Systems and Stratasys (SSYS, $74.95,
       4Q                    $0.16      $0.34        NR) as the dominant players. Wohlers forecasts this market to reach $3.7
       FY                    $0.71      $1.18        billion by 2015, which represents a 3-year CAGR of 30%. 3D Systems is
Ashok Kumar, CFA                (650)-823-4745       likely to continue to generate bulk of its profitability from materials and
akumar@maximgrp.com                                  services.
                                                    Bottom Line: Strong unit growth and high margin material sales can
                                                     support organic revenue growth in the mid-teens and operating income
                                                     growth in the mid-20s. Our 2014 forecast calls for organic revenue growth
                                                     of about 15% and non GAAP EPS of $2.02.
                                                    Our price target of $60 reflects a 25x on our pro-forma CY14 operating
                                                     income estimate ($148.1M) plus cash/share of $3.23 or a PEG of 1. This
                                                     multiple is inline with peer group average valuation and forecasted growth
                                                     rate.


Maxim Group LLC                                                                                                   37
                                                                                                                                                                                                                                          Best Stock Ideas 2013

                                                                                                                  3D Systems (DDD)
                                                                                                             Income Statement 2009-2013E
                                                                                                         (In USD ‘MMs, except per share data)
Financial Year Ending December                     Mar-10     Jun-10     Sep-10   Dec-10                 Mar-11   Jun-11     Sep-11     Dec-11                 Mar-12     Jun-12     Sep-12     Dec-12                Mar-13     Jun-13     Sep-13     Dec-13
                                                                                             FY2010A                                               FY2011A                                                 FY2012E                                                FY2013E FY2014E
($ in million, except per share data)              1Q10        2Q10       3Q10     4Q10                  1Q11     2Q11E      3Q11E      4Q11E                  1Q12        2Q12       3Q12      4Q12E                 1Q13E      2Q13E      3Q13E      4Q13E
 Revenue:
   Products                                          22.4       24.6       28.7     37.3       113.1       29.1     32.6       33.3       41.9       137.0       37.9       52.3       59.6       70.3       220.0       66.8      74.1       79.3       88.0       308.2     356.9
   Services                                           9.2       10.5       12.8     14.3        46.8       18.8     22.5       24.3       27.9        93.5       20.6       31.3       31.0       34.7       117.6       33.0      36.3       38.1       41.9       149.2     169.9
 Total Revenue                                       31.6       35.1       41.5     51.6       159.9       47.9     55.1       57.5       69.9       230.4       77.9       83.6       90.5      105.0       337.6       99.7     110.4      117.4      129.9       457.3     526.8
 Cost of Revenue:                                                                                                                                          -                                                      -
   Products                                          11.0       12.6       14.8     17.7        56.0       13.8     15.2       15.5       19.1        63.5       17.9       23.8       26.7       28.8        97.3                                                        -         -
   Services                                            6.3        6.6       7.9       9.1       29.9       11.7     13.5       15.1       17.2        57.4       12.9       16.8       16.9       19.8        66.4                                                        -         -
 Total Cost of Revenue                               17.3       19.2       22.7     26.7        85.9       24.7     29.9       29.8       37.0       121.4       39.1       40.6       43.7       48.6       172.0      45.9       50.2       52.8       55.9       204.7     227.6
 Selling, General and Administrative                   9.2        9.8      11.0     12.4        42.3       13.0     14.2       15.1       17.6        59.8       24.0       24.0       22.9       28.9        99.8      26.9       29.2       30.5       30.5       117.2     121.8
 Research and Development, net                         2.5        2.8       2.7       2.7       10.7        2.8       3.0        3.9        4.6       14.3         4.9        4.9        5.5        6.5       21.9        6.0        6.6        7.0        7.1        26.8      29.3
 Operating Income                                      2.7        3.4       5.2       9.7       20.9        7.4       8.0        8.8      10.7        34.9       10.0       14.0       18.4       21.0        63.4      20.9       24.3       27.0       36.4       108.6     148.1
 Interest and Other Income (Expense), net             (0.4)      (0.4)      0.5      (0.8)       (1.2)      0.3       0.1       (0.7)      (2.0)       (2.2)      (2.7)      (3.7)      (2.2)      (2.2)     (10.8)      (3.0)      (2.8)      (2.7)      (2.8)      (11.3)    (11.3)
 Pre-tax Income                                        2.3        3.0       5.7       8.8       19.7        7.7       8.1        8.1        8.7       32.7         7.3      10.3       16.3       18.8        52.7      17.9       21.5       24.3       33.6         97.3    136.8
 Provision for Income Taxes                            0.2        0.2       0.3      (0.6)        0.2       0.9      (5.5)       0.9        0.7        (3.0)       1.1        1.9        2.8        3.0        8.8        5.4        6.4        7.3      10.1         29.2      41.0
 Net Income (Loss)                                     2.0        2.7       5.4       9.4       19.6        6.8     13.6         7.2        8.0       35.6         6.2        8.3      13.5       15.8        43.9      12.6       15.0       17.0       23.5         68.1      95.7
 Income Attributable to Non-Controlling Interest        -          -         -         -           -         -         -          -          -           -          -          -          -          -          -          -          -          -          -           -         -
GAAP EPS ($)                                         0.04       0.06       0.11     0.20        0.42       0.14     0.26       0.14       0.16        0.71       0.12       0.16       0.24       0.28        0.81      0.22       0.26       0.30       0.41         1.19      1.65
Non-GAAP EPS ($)                                                                    0.20        0.48                                      0.27        0.81       0.25       0.27       0.32       0.37        1.21      0.32       0.35       0.40       0.50         1.57      2.02
 Shares Outstanding                                  46.2       46.7       46.9     47.7        46.9       48.6     51.3       50.8       50.9        50.4       51.7       52.6       56.6       56.8        54.4      57.0       57.2       57.4       57.6         57.3      58.1

 Margin Analysis
Gross Margin                                        45.3%      45.4%      45.4%    48.2%       46.3%      48.4%    45.7%      48.3%      47.0%       47.3%      49.9%      51.4%      51.8%      53.7%       49.1%     54.0%      54.5%      55.0%      57.0%       55.2%     56.8%
Selling, General and Administrative                 29.0%      27.8%      26.4%    24.1%       26.5%      27.1%    25.7%      26.2%      25.2%       26.0%      30.7%      28.8%      25.3%      27.5%       29.5%     27.0%      26.5%      26.0%      23.5%       25.6%     23.1%
Research & Development, net                          7.9%       7.9%       6.5%     5.3%        6.7%       5.9%     5.5%       6.7%       6.6%        6.2%       6.3%       5.9%       6.1%       6.2%        6.5%      6.0%       6.0%       6.0%       5.5%        5.9%      5.6%
Operating Margin                                     8.4%       9.7%      12.4%    18.8%        13%       15.5%    14.5%      15.3%      15.3%        15%       12.8%      16.7%      20.4%      20.0%       18.8%     21.0%      22.0%      23.0%      28.0%       23.7%     28.1%
Pretax Margin                                        7.1%       8.5%      13.6%    17.2%        12%       16.1%    14.7%      14.2%      12.5%        14%        9.4%      12.3%      18.0%      17.9%       15.6%     18.0%      19.5%      20.7%      25.8%       21.3%     26.0%
Tax Rate                                             0.7%       0.7%       0.7%    -1.2%          0%       1.8%    -9.9%       1.6%       1.0%         -1%       1.4%       2.3%       3.0%      16.0%        2.6%     30.0%      30.0%      30.0%      30.0%        6.4%      7.8%
Net Margin                                           6.4%       7.8%      12.9%    18.3%        12%       14.2%    24.6%      12.6%      11.5%        15%        7.9%      10.0%      14.9%      15.1%       13.0%     12.6%      13.6%      14.5%      18.1%       14.9%     18.2%

Ann. Growth Analysis:
Total Revenue                                       31.6%      42.3%      50.0%    41.6%        42%       51.4%    56.8%      38.6%       35.4%       44%        62.7%     51.7%      57.3%      50.3%        47%      28.0%      32.0%      29.6%      23.7%        35%       15%
Gross Profit                                          37%        47%        53%      54%        49%       62.0%    57.9%      47.5%       32.1%       47%        67.5%       71%        69%       72%         52%        39%       40%        38%        31%         52%       18%
Operating Income                                    -265%      -505%       373%     119%       581%        179%     134%      70.5%       10.4%       67%        34.5%       75%       110%       96%         82%       110%       73%        46%        73%         71%       36%
Net Income                                          -194%      -301%       476%     151%      1671%        221%     351%      24.2%      -20.6%       69%       -14.6%      -40%        68%       77%         14%        84%       66%        24%        46%         48%       39%

Seq. Growth Analysis
 Product Revenues                                    -19%       10%        17%      30%
 Services Revenue                                      7%       14%        22%      12%
Revenues                                             -13%       11%        18%      24%                     -7%      15%        4.4%     21.4%                   11.5%        7%         8%        16%                  -5.0%       11%         6%        11%
Gross Profit                                         -11%       11%        18%      32%                     -7%       9%       10.2%     18.3%                   18.2%       11%         9%        20%                  -4.5%       12%         7%        15%
Operating Income                                     -40%       28%        51%      88%                    -24%       8%       10.1%     21.6%                   -6.8%       40%        32%        14%                  -0.3%       16%        11%        35%
Net Income                                           -45%       34%        95%      73%                    -29%      89%      -46.2%     10.6%                  -23.9%       32%        51%        17%                 -20.9%       19%        13%        38%



Note: Expenses are modeled on a Non-GAAP basis; Our Non-GAAP EPS excludes non-recurring merger-related charges; discontinued operations and other non-recurring charges; As Reported non-GAAP
EPS excludes non-recurring merger-related charges, discontinued operations, other non-recurring charges, and amortization of intangibles;
Source: Company reports and Maxim Group estimates




Maxim Group LLC                                                                                                                                                                                                                                                                 38
                                                                                                     Best Stock Ideas 2013

Information Technology
December 20, 2012
                                               Mellanox Technologies, Ltd.                                              Buy
                                               (MLNX – Nasdaq – $63.40)
Closing Price (12/19/12):             $63.40
12-Month Target Price:                $90.00
                                               2013 Stock to Avoid: Reacceleration of growth not in the cards
52-Week Range:              $30.00 - $120.05      Past performance not indicative of future results: Was Mellanox’s record
Market Cap (MM):                    $2,682.5       results in the preceding quarters a short-term phenomenon, or is there a
Shares O/S (MM):                        42.3       fundamental market shift? The recent results were driven by a combination
Float (MM):                             31.2       of events. First, the delay in the launch of Intel’s Romley platform created a
Avg. Vol.                            1,332.3       burst of demand for InfiniBand components. Second, Mellanox is enjoying
                                                   increased success in storage systems—mostly at the expense of Fibre
Book Value/Share:                     $13.98
                                                   Channel. Third, Mellanox sales got a boost from selected deployment of
Dividend/Yield:                         0/0%
                                                   InfiniBand in Web 2.0 data centers. The confluence of three drivers that
Risk Profile:                        Medium
                                                   fueled the earnings will not repeat. Furthermore, the Xeon processors volume
                                                   ramp (from Romley) has moderated as the platform moves later into its
   Maxim Group             Revenues ($B)           upgrade cycle.
     FYE: Dec           F2011A      F2012E
        1Q              $55.1A      $88.7A        A window of opportunity: Fueled by greater bandwidth than Ethernet and
                                                   industry-leading latency, InfiniBand has a window of opportunity near-term.
        2Q              $63.3A      $133.5A
                                                   For high-end systems, at 56Gbps InfiniBand leads Ethernet, which is
        3Q              $68.2A      $156.5A
                                                   primarily deployed at 10Gbps for high-end systems and in a few cases at
        4Q              $72.7A      $148.0E
                                                   40Gbps. On the basis of its significantly lower latency, InfiniBand will
        FY              $259.3      $526.7
                                                   continue to be the Interconnect of choice in HPC applications. Intel (INTC,
   Maxim Group          Current     Current        $20.53, Buy, PT $29), which acquired QLogic’s (QLGC, $8.86, NR)
     FYE: Dec             EPS         P/E          InfiniBand business, is expected to field a competitive product line by early
  F2011A: GAAP           $1.13       56.1          2014.
   F2012E: GAAP          $3.90       16.2
                                                  Looming competition: Intel plans to enter with an updated product line for
   F2013E: GAAP          $4.20       15.1
                                                   InfiniBand at 100Gbps. InfinBand will continue to lead Ethernet until it
LT Earnings Growth        13%
                                                   reaches 100Gbps cost effectively. Both of these events are likely by late
   Maxim Group           Quarterly PF EPS
                                                   2013. Thus, sales for Mellanox should continue to increase into the middle of
                        Current     Current        2013. By 2014, sustaining growth will become more challenging for
     FYE: Dec           F2011A      F2012E         Mellanox as it faces new competition from Intel and Ethernet technologies.
       1Q                $0.24      $0.51A
       2Q                $0.27      $0.99A
                                                  Guidance reflects ability to maintain share. Management indicates that the
                                                   guidance going forward would only include Mellanox’s core business and
       3Q                $0.31      $1.37A
                                                   exclude any one-time deals. The quarterly run rate of $150mm indicates
       4Q                $0.31       $1.03
                                                   2013 annual growth in the mid-teens (versus the more-than-doubling annual
       FY                $1.13       $3.90
                                                   growth expected for 2012). The issue with this is the company’s ability to
Consensus-First Call     Quarterly PF EPS          maintain market share going forward. Intel has made a number of
     FYE: Dec           F2011A      F2012E         acquisitions in the interconnect business over the past 2 years (from QLogic,
       1Q                $0.24      $0.51A         Fulcrum and Cray) and should be able to deliver a 100Gbps standalone
       2Q                $0.27      $0.99A         InfiniBand chip in early 2014; Mellanox has indicated similar timing for its
       3Q                $0.31      $1.37A         100Gbps product. In the best case scenario, Mellanox may be able to stay
       4Q                $0.31       $1.07         slightly ahead of Intel on speed and latency, but the incremental cost will
       FY                $1.13       $3.94         relegate the company to serving the upper echelon of the market with Intel
Ashok Kumar, CFA             (650)-823-4745        splitting the market and taking the lion’s share. In other words, Mellanox will
akumar@maximgrp.com                                be able to sustain moderate growth until the end of 2013, but all bets are off
                                                   after that.
                                                  Bottom Line: Sequential revenue growth likely peaked in mid-40s in the
                                                   June quarter and is expected to stabilize over the next year in the mid-to-high
                                                   single digit range.




Maxim Group LLC                                                                                                            39
                                                                                                                                                                   Best Stock Ideas 2013



                                                                           Mellanox Technologies, Ltd.(MLNX)
                                                                              Income Statement 2010-2013E
                                                                           (In USD ‘MMs, except per share data)
Financial Year Ending, December         Mar-11     Jun-11     Sep-11     Dec-11               Mar-12     Jun-12      Sep-12   Dec-12                 Mar-13      Jun-13      Sep-13      Dec-13
                                                                                  FY2011A                                              FY2012E                                                  FY2013E
($ in million, except per share data)   1Q11       2Q11       3Q11       4Q11                  1Q12        2Q12       3Q12    4Q12E                  1Q13E       2Q13E       3Q13E       4Q13E
Total Revenue                            55,057      63,345     68,160    72,689    259,251   88,738   133,472    156,471   148,000    526,681    150,000     155,000     157,500     160,000    622,500
Cost of Goods Sold                       17,170      19,708     21,657    24,004     82,539   26,646    39,380     46,090    44,400    156,516    45,000      46,500      47,250      48,000     186,750
R&D                                      18,041      20,685     20,309    21,651     80,686   24,777    33,139     31,346    33,744    123,006    34,200      35,340      35,910      36,480     141,930
Sales & Marketing                         7,449       8,253      8,790     9,578     34,070   10,724    13,310     13,536    14,800    52,370     15,750      16,275      16,538      16,800      65,363
G&A                                       3,289       3,755      3,546     3,153     13,743    3,767    4,912      4,608     5,624     18,911      6,000       6,200       6,300       6,400      24,900
Operating Income                          9,108      10,944     13,858    14,303     48,213   22,824    42,731     60,891    49,432    175,878    49,050      50,685      51,503      52,320     203,558
Interest & Other Income (Expense)             48         88        416       207        759      184     221        585       440       1,430       440         440         440         440       1,760
Pretax Income                             9,156      11,032     14,274    14,510     48,972   23,008    42,952     61,476    49,872    177,308    49,490      51,125      51,943      52,760     205,318
Provision for Income Taxes                     3        719      1,226     1,427      3,375      968     100       1,386     4,488      6,942      4,454       4,601       4,675       4,748      18,479
Net Income                                9,153      10,313     13,048    13,083     45,597   22,040    42,852     60,090    45,384    170,366    45,036      46,524      47,268      48,012     186,839
Non-GAAP EPS                                0.24       0.27       0.31       0.31      1.13     0.51     0.99       1.37      1.03      3.90       1.02        1.05        1.06        1.07        4.20
Shares Outstanding                       38,068      38,459     42,419    41,800     40,187   43,038    43,468     43,742    43,942    43,548     44,142      44,342      44,542      44,742      44,442

Margin Analysis
Gross Margin                              68.8%      68.9%      68.2%      67.0%     68.2%    70.0%      70.5%      70.5%     70.0%       70.3%      70.0%       70.0%       70.0%      70.0%      67.5%
R&D                                       32.8%      32.7%      29.8%      29.8%     31.1%    27.9%      24.8%      23.0%     22.8%       23.4%      22.8%       22.8%       22.8%      22.8%      25.2%
Sales & Marketing                         13.5%      13.0%      12.9%      13.2%     13.1%    12.1%      10.0%       9.0%     10.0%        9.9%      10.5%       10.5%       10.5%      10.5%      11.8%
G&A                                        6.0%       5.9%       5.2%       4.3%      5.3%     4.2%       3.7%       4.0%      3.8%        3.6%       4.0%        4.0%        4.0%       4.0%       4.2%
Operating Margin                          16.5%      17.3%      20.3%      19.7%     18.6%    25.7%      32.0%      38.9%     33.4%       33.4%      32.7%       32.7%       32.7%      32.7%      32.7%
Pretax Margin                             16.6%      17.4%      20.9%      20.0%     18.9%    25.9%      32.2%      39.3%     33.7%       33.7%      33.0%       33.0%       33.0%      33.0%      33.0%
Tax Rate                                   0.0%       6.5%       8.6%       9.8%      6.9%     4.2%       0.2%       3.0%      9.0%        3.9%       9.0%        9.0%        9.0%       9.0%       7.9%
Net Margin                                16.6%      16.3%      19.1%      18.0%     17.6%    24.8%      32.1%      38.4%     30.7%       32.3%      30.0%       30.0%       30.0%      30.0%      30.0%

Ann. Growth Analysis
Revenues                                  52.0%      58.5%      80.4%      78.6%     67.6%     61.2%    110.7%     129.6%    103.6%      103.2%      69.0%       16.1%        0.7%       8.1%      18.2%
Gross Profit                              -8.6%      -7.8%      -8.0%      -9.7%     -8.6%      1.7%      2.3%       3.4%      4.5%        3.1%       0.0%       -0.7%       -0.8%       0.0%      17.7%
Operating Income                         -14.5%      -0.9%      65.4%      71.6%     25.6%    150.6%    290.5%     339.4%    245.6%      264.8%     114.9%       18.6%      -15.4%       5.8%      15.7%
Net Income                               -17.6%      -6.3%      39.5%      51.2%     12.3%    113.0%    267.6%     346.6%    230.0%      245.8%      99.2%        6.4%      -22.8%       3.9%       7.7%

Seq. Growth Analysis
Revenues                                  35.3%      15.1%       7.6%       6.6%              22.1%      50.4%      17.2%     -5.4%                 -71.5%        3.3%        1.6%       1.6%      18.2%
Gross Profit                              -7.2%      15.2%       6.6%       4.7%               4.5%      51.5%      17.3%     -6.1%                 -71.6%        3.3%        1.6%       1.6%      17.7%
Operating Income                           9.3%      20.2%      26.6%       3.2%              59.6%      87.2%      42.5%    -18.8%                 -72.1%        3.3%        1.6%       1.6%      15.7%
Net Income                                16.1%      11.5%      14.7%       1.8%              63.6%      92.5%      39.3%    -24.8%                 -73.9%        2.8%        1.1%       1.1%       7.7%
Note: Expenses are modeled on a GAAP basis; Our Non-GAAP EPS excludes non-recurring merger-related charges; discontinued operations and other non-recurring charges; As Reported non-GAAP
EPS excludes non-recurring merger-related charges, discontinued operations, other non-recurring charges, and amortization of intangibles;
Source: Company reports and Maxim Group estimates




Maxim Group LLC                                                                                                                                                                           40
                                                                                                 Best Stock Ideas 2013


                                              Maxim Group Coverage Universe
                Published as of                                       Price        52-Week             Market     Target
                  12/19/2012                     Ticker   Rating   12/18/2012       Range             Cap ($M)    Price

 HEALTHCARE

 Anthony Vendetti (212-895-3802)
 Medical Devices                                                                                       CAP
  Bacterin International Holdings, Inc.+         BONE      Buy       $1.40       $3.54   -   $0.94      $60       $6.00
  Cutera Inc.+                                   CUTR      Buy       $8.98       $9.90   -   $6.33     $127      $12.00
  Cynosure, Inc. +                               CYNO      Buy      $23.20      $28.00   -   $10.95    $437      $39.00
  Palomar Medical Technologies Inc.+             PMTI      Buy       $9.24      $11.20   -   $7.06     $181      $13.00
  PhotoMedex, Inc. +                             PHMD      Buy      $14.93      $19.18   -   $9.85     $321      $19.00
  Syneron Medical Ltd.+                          ELOS      Buy       $8.19      $11.77   -   $7.21     $290      $18.00
  Solta Medical Inc.+                            SLTM      Buy       $2.75       $3.53   -   $2.30     $189       $5.00
 Healthcare IT & Services
  Allscripts Healthcare Solutions Inc. +         MDRX     Buy       $10.74      $21.66   -   $8.84     $1,844     $15.00
  athenahealth Inc.+                             ATHN     Hold      $76.50      $97.37   -   $46.50    $2,774       NA
  Catamaran corporation+                         CTRX     Buy       $50.25      $53.13   -   $27.76   $10,307     $66.00
  Cerner Corporation+                            CERN     Hold      $79.98      $88.32   -   $56.16   $13,722       NA
  Express Scripts, Inc+                          ESRX     Buy       $55.28      $66.06   -   $43.02   $45,131     $70.00
  Laboratory Corp. of America Holdings+           LH      Buy       $88.11      $95.30   -   $81.28    $8,335    $106.00
  LCA-Vision Inc.+                               LCAV     Buy        $3.11       $9.24   -   $2.74      $59        $8.00
  Quality Systems Inc.+                           QSII    Hold      $18.00      $45.00   -   $15.04    $1,069       NA
  Quest Diagnostics, Inc.+                       DGX      Hold      $60.56      $64.87   -   $53.25    $9,627       NA

 Bryan Brokmeier, CFA (212-895-3845)
 Healthcare and Life Sciences
  Affymetrix Inc. +                              AFFX     Buy        $3.38       $5.50   -   $2.96      $239      $7.00
  Exact Sciences Corp.+                          EXAS     Sell      $10.58      $12.30   -   $7.83      $675      $7.00
  Given Imaging Ltd.+                            GIVN     Buy       $17.62      $19.95   -   $12.14     $542     $26.00
  Illumina, Inc.+                                ILMN     Hold      $51.85      $55.39   -   $26.09    $6,397      NA
  Life Technologies +                             LIFE    Buy       $51.79      $51.87   -   $37.97    $8,911    $60.00
  Pacific Biosciences of California, Inc. +      PACB     Buy        $1.64       $5.27   -   $1.06       $92      $3.00
  PerkinElmer, Inc.+                               PKI    Buy       $32.29      $32.41   -   $18.38    $3,706    $37.00
  Sequenom, Inc.+                                SQNM     Buy        $4.64       $5.83   -   $2.65      $533      $7.00

 Jason Kolbert (212-895-3516)
 Biotechnology
  Aastrom Biosciences +                          ASTM     Buy        $1.40       $2.72   -   $1.11       $61      $6.00
  Achillion Pharmaceuticals, Inc. +              ACHN     Buy        $8.64      $12.95   -   $5.42      $687     $23.00
  Aeterna Zentaris Inc.                          AEZS     Buy        $2.22      $13.00   -   $1.75       $56      $9.00
  Athersys Corporation +                         ATHX     Buy        $1.03       $2.33   -   $0.95       $55      $6.00
  Cytori Therapeutics, Inc.                      CYTX     Buy        $2.79       $4.93   -   $1.90      $164     $10.00
  Dendreon Corp. +                               DNDN     Hold       $5.39      $17.04   -   $3.69      $832       NA
  Gilead Sciences, Inc. +                        GILD     Buy       $75.85      $77.12   -   $36.98   $57,468    $83.00
  Idenix Pharmaceuticals, Inc.+                   IDIX    Hold       $5.19      $15.25   -   $3.35      $695      $5.00
  ImmunoCellular Therapeutics, Inc. *            IMUC     Buy        $2.05       $4.00   -   $0.98      $105     $18.00
  Keryx Biopharmaceuticals, Inc. + *             KERX     Buy        $2.86       $5.19       $1.28      $206      $4.00
  Medivation+                                   MDVN      Buy       $55.35      $58.83   -   $22.47    $4,112    $66.00
  Mesoblast Limited                             MSB-AU    Buy        $5.57       $8.11   -   $4.22     $1,599    $12.00
  Neuralstem, Inc.                                CUR     Sell       $1.16       $1.96   -   $0.42       $79      $0.25
  Omeros Corporation +                           OMER     Buy        $6.60      $13.45   -   $3.64      $171     $25.00
  Pluristem Therapeutics Inc. +                   PSTI    Buy        $3.65       $5.00   -   $2.02      $210      $8.00
  Stem Cells, Inc.                               STEM     Buy        $1.73       $2.67   -   $0.59       $65      $2.50
  Vertex Pharmaceuticals +                       VRTX     Buy       $43.33      $66.10   -   $32.00    $9,395    $62.00

Maxim Group LLC                                                                                                  41
                                                                                             Best Stock Ideas 2013

              Published as of                                   Price           52-Week              Market        Target
                12/19/2012                Ticker    Rating   12/18/2012          Range              Cap ($M)       Price

Echo He, Ph.D., M.D., (212-895-3718)
Biotechnology
  ARIAD Pharmaceuticals, Inc.+            ARIA       Buy      $20.18        $25.40    -   $11.27     $3,363         $26.00
  EXELIXIS Inc. +                         EXEL       Buy       $4.82         $6.95    -   $4.17       $885           $6.00
  Galena Biopharma, Inc. +^*              GALE       Buy       $1.57         $3.54    -   $0.36       $106           $5.00
  Medgenics, Inc. +                       MDGN       Buy       $8.77        $16.43    -   $2.14       $105           $8.00
  Oculus Innovative Sciences, Inc. ^      OCLS       Buy       $0.66         $1.45    -   $0.59        $24           $2.80
  Onyx Pharmaceuticals, Inc. +            ONXX       Buy      $80.83        $93.18    -   $35.73     $5,428        $105.00
  Provectus Pharmaceuticals Inc. +        PVCT       Buy       $0.57         $1.04    -   $0.43        $64           $3.50
  Threshold Pharmaceuticals, Inc. ^       THLD       Buy       $4.39         $9.28    -   $1.18       $247          $10.00

CHINA

Echo He, Ph.D., M.D., (212-895-3718)
China
 Asia Entertainment & Resources Ltd. +    AERL      Buy        $3.13         $7.24    -   $2.40      $121          $12.00
 Baidu, Inc. +                            BIDU      Sell      $98.55       $154.15    -   $85.96    $35,094        $80.00
 China Gerui Advanced Materials^+         CHOP      Buy        $1.89         $4.24    -   $1.06      $110           $4.00
 Qihoo 360 Technology Co. Ltd. +          QIHU      Buy       $26.38        $28.16    -   $13.71    $3,149         $28.00
 Renren Inc. +                            RENN      Hold       $3.43         $7.87    -   $3.00     $1,351           NA
 SINA Corporation +                       SINA      Sell      $48.64        $80.80    -   $41.14    $3,236         $44.00
 Youku.com Inc. +                         YOKU      Hold      $19.24        $32.75    -   $13.82    $3,134           NA
 Zhongpin Inc. +                          HOGS      Buy       $12.58        $12.73    -   $8.11      $470          $13.50

CLEANTECH

Aaron Chew (212-895-3568)
Alternative Energy
 First Solar, Inc. +                       FSLR     Sell      $32.00        $50.20    -   $11.43     $2,785         $9.00
 GCL-Poly Energy Holdings, Ltd            3800-HK   Sell       $1.49         $3.24    -   $1.11      $3,201        HK$.75
SolarCity Corporation                      SCTY     Hold      $11.59        $13.00    -   $9.20       $109         $11.00
 STR Holdings +                             STRI    Buy        $2.77        $11.49    -   $1.93       $115          $7.00
 Suntech Power Holdings Co., Ltd. +         STP     Sell       $1.07         $4.40    -   $0.71       $194          $0.00
 Trina Solar Ltd. +                         TSL     Hold       $3.99        $12.19    -   $2.04       $325           NA
 Yingli Green Energy Holding Co. Ltd. +     YGE     Hold       $2.26         $6.27    -   $1.25       $354           NA
Energy Efficiency
 American Superconductor Corp. +           AMSC      Buy       $3.06          $6.05   -   $2.40       $167        $7.00
 AIXTRON SE +                              AIXG      Sell     $11.89         $19.44   -   $11.21     $1,199    $8.00/€6.00
 Cree, Inc. +                              CREE      Buy      $34.45         $35.00   -   $20.25     $4,006      $38.00
 Dialight plc + *                         DIA-LN     Buy      $999.50     $1,249.00   -   $670.29     $321       1,500p
 Tesla Motors Inc. +                       TSLA      Buy      $34.59         $39.95   -   $22.64     $3,936      $50.00
 Veeco Instruments, Inc. +                 VECO      Sell     $29.94         $38.39   -   $20.35     $1,172      $21.00




Maxim Group LLC                                                                                               42
                                                                                                      Best Stock Ideas 2013

                Published as of                                      Price         52-Week              Market    Target
                  12/19/2012                   Ticker    Rating   12/18/2012        Range              Cap ($M)   Price

   FINANCIAL SERVICES/REITS

   Michael Diana (212-895-3641)
   BDCs
    Fifth Street Finance Corp. +^                 FSC     Buy      $10.53       $11.08   -   $8.99       $959     $11.50
    Medley Capital Corporation +                  MCC     Buy      $14.00       $14.74   -   $9.64       $242     $15.00
    THL Credit, Inc.                             TCRD     Buy      $14.34       $14.74   -   $11.36      $377     $15.00
    TICC Capital Corp.                            TICC    Buy       $9.94       $11.09   -   $8.22       $411     $11.00
   REITS
    AG Mortgage Investment Trust+                MITT    Buy       $24.46       $25.24   -   $18.74      $566     $26.00
    American Capital Agency Corp. +              AGNC    Buy       $31.13       $36.77   -   $27.61     $10,634   $37.50
    American Capital Mortgage Investment Corp. + MTGE    Buy       $25.45       $26.62   -   $18.11      $923     $27.50
    Anworth Mortgage Asset Corp.                  ANH    Hold       $5.76        $7.08   -   $5.41       $822       NA
    Apollo Residential Mortgage, Inc.            AMTG    Buy       $21.95       $23.59   -   $15.14      $531     $23.00
    Arlington Asset Investment Corp.                AI   Buy       $20.98       $25.49       $17.84      $203     $23.50
    ARMOUR Residential REIT, Inc. +               ARR    Buy        $6.57        $7.98   -   $5.70      $2,030     $8.00
    Capstead Mortgage Corporation +               CMO    Hold      $11.90       $14.59   -   $10.81     $1,178      NA
    CYS Investments, Inc. +                       CYS    Buy       $11.99       $15.03   -   $11.45     $2,259    $15.50
    Dynex Capital, Inc.+                           DX    Buy        $9.81       $10.98   -   $8.66       $533     $11.50
    Ellington Financial LLC +^*                   EFC    Buy       $22.22       $24.01   -   $16.98      $456     $24.00
    Hatteras Financial Corp.                      HTS    Buy       $24.86       $29.68   -   $23.85     $2,526    $30.50
    Javelin Mortgage Investment Corp.+*^           JMI   Buy       $18.64       $19.96       $15.71      $140     $20.00
    New York Mortgage Trust, Inc.+^              NYMT    Buy        $6.59        $7.69   -   $5.51       $327      $7.00
    Redwood Trust, Inc.                          RWT     Buy       $16.43       $17.00   -   $10.14     $1,339    $17.00
    Two Harbors Investment Corp.+*                TWO    Buy       $11.52       $12.20       $9.03      $3,403    $13.00


   INDUSTRIALS & INFRASTRUCTURE

   William Bremer (212-895-3835; 516-396-3121)
   Industrials & Infrastructure
     Acorn Energy, Inc. +                      ACFN      Buy        $7.74       $13.20   -   $5.51       $139     $13.00
     A.O. Smith Corporation +                   AOS      Buy       $62.95       $63.74   -   $38.07     $2,906    $68.00
     Darling International Inc. +               DAR      Hold      $16.99       $18.82   -   $12.27     $2,001      NA
     EnerSys +                                  ENS      Buy       $36.82       $39.61   -   $23.42     $1,785    $46.00
     Exide Technologies +                      XIDE      Buy        $3.23        $4.15   -   $2.25       $256      $5.50
     Flowserve Corporation +                    FLS      Hold      $144.69     $147.10   -   $96.16     $7,232      NA
     Gardner Denver, Inc. +                     GDI      Buy       $73.68       $84.46   -   $45.54     $3,618    $76.00
     MasTec Inc. +                              MTZ      Buy       $24.07       $24.40   -   $12.86     $1,829    $30.00
     Met-Pro Corporation +                      MPR      Buy        $9.72       $10.97   -   $8.30       $143     $13.00
     MYR Group Inc.                            MYRG      Buy       $21.53       $23.50   -   $13.94      $445     $24.00
     PowerSecure International, Inc. +         POWR      Buy        $7.52        $7.54   -   $4.00       $138      $9.00
     Quanta Services Inc. +                     PWR      Buy       $27.59       $27.72   -   $20.21     $6,212    $34.00
     Robbins & Myers Inc. +                     RBN      Hold      $59.50       $60.19   -   $37.90     $2,510      NA
     Woodward +                                WWD       Hold      $36.95       $46.00   -   $30.16     $2,528      NA

   TELECOM / MEDIA / TECHNOLOGY

   Greg Mesniaeff (212-895-3533)
   Communications Infrastructure
    Acme Packet, Inc. +                        APKT      Hold      $22.59       $36.27   -   $13.26     $1,524      NA
    ADTRAN, Inc. +                             ADTN      Hold      $19.84       $38.95   -   $15.38     $1,243      NA
    ARRIS Group, Inc.+                         ARRS      Buy       $14.58       $14.60   -   $10.08     $1,653    $17.00
    Cogent Communications Group, Inc.          CCOI      Buy       $22.59       $23.00   -   $14.50     $1,066    $26.00
    Harmonic, Inc.+                            HLIT      Hold       $4.98        $6.81   -   $3.76       $577       NA
    NeuStar, Inc.+                              NSR      Buy       $43.20       $43.85   -   $30.08     $2,864    $50.00
    SeaChange International, Inc. +*           SEAC      Buy        $9.71       $10.50   -   $6.29       $314     $11.00
    Tellabs, Inc. +                            TLAB      Buy        $3.35        $4.41   -   $2.70      $1,231     $4.50

Maxim Group LLC                                                                                                     43
                                                                                                Best Stock Ideas 2013

                 Published as of                               Price         52-Week              Market    Target
                   12/19/2012             Ticker   Rating   12/18/2012        Range              Cap ($M)   Price

   MEDIA

   John Tinker (212-895-3735)
   Media
    AMC Networks Inc.                     AMCX     Hold      $50.60       $55.38   -   $34.78     $3,628       NA
    Barnes & Noble Inc. +                   BKS    Buy       $15.88       $26.00   -   $9.35       $951      $30.00
    Carmike Cinemas, Inc.+                 CKEC    Buy       $13.73       $15.80   -   $5.98       $244      $21.50
    Comcast Corporation +                 CMCSA    Buy       $38.05       $38.15   -   $22.71    $100,374   $46.00
    Digital Cinema Destinations Corp. +    DCIN    Buy        $6.00        $8.08   -   $3.66        $33      $8.00
    Liberty Media Corporation+            LMCA     Buy       $115.06     $116.17   -   $74.09     $13,828   $155.00
    Live Nation Entertainment, Inc.+        LYV    Buy        $9.46       $10.99   -   $8.01      $1,804     $14.00
    Madison Square Garden, Inc.+           MSG     Buy       $44.79       $45.13   -   $27.95     $3,388     $52.00
    Pandora Media, Inc. +                    P     Buy        $9.18       $15.25   -   $7.08      $1,561     $17.00
    Sirius XM Radio Inc. +                  SIRI   Buy        $2.96        $3.01   -   $1.78      $15,413     $3.80
    Viacom Inc.                            VIAB    Buy       $53.80       $56.91   -   $41.98     $27,044    $59.00
    Vringo, Inc. +                         VRNG    Buy        $3.08        $5.73   -   $0.68       $247      $10.00

   TECHNOLOGY

   Ashok Kumar, CFA (212-895-3656)
   Technology
     3D Systems Corp. +                    DDD      Buy      $51.76       $51.96   -   $14.30     $2,952    $52.00
    Allot Communications +                 ALLT     Buy      $18.31       $29.05   -   $14.55      $580     $27.00
    Atmel Corporation +                   ATML      Buy       $6.08       $10.74   -   $4.37      $2,673     $7.00
    Cavium Inc. +                         CAVM      Buy      $33.42       $38.67   -   $22.30     $1,682    $37.00
    ClickSoftware Technologies Ltd. +     CKSW      Buy       $7.55       $13.07   -   $6.81       $238      $9.00
    Dell Inc. +                            DELL     Buy      $10.56       $18.36   -   $8.69      $18,346   $13.00
    Intel Corp. +                          INTC     Buy      $20.96       $29.27   -   $19.23    $104,297   $29.00
    InvenSense Inc. *                      INVN     Buy      $10.94       $22.35   -   $9.06       $909     $14.00
    LSI Corporation +                       LSI     Buy       $6.86        $9.20   -   $5.39      $3,796     $8.00
    Magic Software Enterprises Ltd.       MGIC      Buy       $4.76        $7.32   -   $3.76       $174      $5.50
    Mellanox Technologies Ltd +           MLNX      Buy      $61.87      $120.05   -   $30.00     $2,618    $90.00
    Radware Ltd. +                        RDWR      Buy      $33.00       $40.83   -   $26.76      $675     $42.00
    Tower Semiconductor Ltd.              TSEM      Buy       $8.19       $15.30   -   $6.75       $176      $9.50
    Ultratech Inc.                        UTEK      Buy      $34.82       $35.18   -   $22.65      $941     $40.00


   Spotlight Companies
   Advanced Cell Technology, Inc.         ACTC      NR        $0.06        $0.20   -   $0.05       $124
   BioHeart, Inc.                         BHRT      NR        $0.01        $0.08   -   $0.01        $3
   BioTime                                 BTX      NR        $3.52        $6.35   -   $2.67       $179
   BrainStorm Cell Therapeutics           BCLI      NR        $0.24        $0.38   -   $0.17        $35
   CalAmp Corp.                           CAMP      NR        $8.27        $9.72   -   $4.00       $245
   Clean Coal Technologies, Inc.          CCTC      NR        $0.05        $0.17   -   $0.03        $38
   Coffee Holding Co., Inc.                JVA      NR        $7.80       $14.93   -   $4.88        $50
   Cytomedix                              CMXI      NR        $0.73        $1.80   -   $0.57       $116
   Echo Therapeutics, Inc.                ECTE      NR        $0.98        $2.49   -   $0.92        $39
    FluoroPharma Medical, Inc.            FPMI      NR        $0.80        $1.19   -   $0.51        $18
   IsoRay, Inc.                            ISR      NR        $0.66        $1.60   -   $0.35        $23
   NanoViricides Inc.                     NNVC      NR        $0.50        $0.95   -   $0.45        $79
   Neostem, Inc. +                         NBS      NR        $0.64        $0.90   -   $0.30       $101
   Neuralstem, Inc.                        CUR      NR        $1.16        $1.96   -   $0.42        $79
   Opexa Therapeutics, Inc.               OPXA      NR        $1.76        $4.60   -   $1.16        $11
   Organovo Holdings, Inc.                ONVO      NR        $2.13       $10.90   -   $1.24       $100
   Osiris Therapeutics, Inc. +            OSIR      NR       $10.06       $14.46   -   $4.38       $331
   ReNeuron Group                         RENE      NR        $0.18           NA   -   NA           NA
   Rexahn Pharmaceuticals, Inc.            RNN      NR        $0.29        $0.81   -   $0.28        $28
   Tengion, Inc. +                        TNGN      NR        $1.03       $10.70   -   $0.87        $3

Maxim Group LLC                                                                                               44
                                                                                                         Best Stock Ideas 2013

              Published as of                                              Price               52-Week            Market       Target
                12/19/2012                      Ticker     Rating       12/18/2012              Range            Cap ($M)      Price

Suspended Companies
 InfuSystem Holdings, Inc.                     INFU       Suspended
 Hologic, Inc.                                HOLX        Suspended
 AVI Biopharma Inc.^+                          AVII       Suspended
 China Automotive Systems Inc.+               CAAS        Suspended
 China Ming Yang Wind Power Group Limited + MY            Suspended
 CorMedix Inc.                                CRMD        Suspended
                                              CCSC
 Country Style Cooking Restaurant China Co., Ltd.         Suspended
 Deyu Agriculture Corp.                       DEYU        Suspended
 E-House (China) Holdings Ltd. +                 EJ       Suspended
 Hemispherx Biopharma, Inc.                    HEB        Suspended
 Micromet, Inc. +                              MITI       Suspended
 NeoStem, Inc.                                  NBS       Suspended
 Nile Therapeutics, Inc. +                    NLTX        Suspended
 NovaBay Pharmaceuticals^+                     NBY        Suspended
 Questcor Pharmaceuticals, Inc.               QCOR        Suspended
 SORL Autoparts, Inc.+                        SORL        Suspended
 United Therapeutics Corp.+                   UTHR        Suspended
 ViroPharma Inc.+                             VPHM        Suspended
 XenoPort, Inc+                               XNPT        Suspended
 Mindray Medical International+                 MR        Suspended
 Winner Medical Group Inc.                    WWIN        Suspended


Research Associates
Benjamin Black (212-895-3509)
Francesco Citro, PH.D (212-895-3809)
Nirav Modi (212-895-3595)
Victor Zajdel (212-895-3814)



+ Maxim Group LLC makes a market in this security.                                                       *Estimate for Fiscal Year
^ Within the last 12 months, Maxim Group LLC has managed, or co-managed, a public offering of this (1) In millions
  company's securities, and/or has performed or is performing other banking/financial advisory services.
* Maxim Group expects to receive or intends to seek compensation for investment banking services
  from the subject company in the next 3 months




Maxim Group LLC                                                                                                           45
                                                                                                      Best Stock Ideas 2013



                                                       DISCLOSURES

 To receive full disclosures for the companies under Maxim Group coverage that are mentioned in this report, please
                                                                                           nd
     send your request to: Maxim Group c/o Nikki Reed, 405 Lexington Avenue, 2 Floor, New York, NY 10174.

The analysts attest that the views expressed in this research report accurately reflect their personal views about the subject
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                     ADDITIONAL INFORMATION AVAILABLE UPON REQUEST




Maxim Group LLC                                                                                                        46
                                                                                                                Best Stock Ideas 2013

    EQUITY RESEARCH DEPARTMENT                                 CAPITAL MARKETS / SYNDICATE
    Anthony Vendetti                                           Christopher Fiore                                          212-895-3743
    Director of Research                        212-895-3802    President & Head of Capital Markets

    Todd Klein                                                 Paul LaRosa                                                212-895-3695
    Associate Director of Research              212-895-3562    Senior Managing Director - Chief Mark et Technician
                                                               Andrew Rosen                                               212-895-3685
    CHINA                                                      Director
    Echo Yinghui He Ph.D., M.D.                 212-895-3718
                                                               INSTITUTIONAL SALES & INSTITUTIONAL SALES TRADING
    CLEANTECH
    Aaron Chew                                  212-895-3568   Jamie Barker                                                212-895-3755
                                                                Managing Director - Institutional Equity Sales & Sales Trading
    FINANCIAL SERVICES / REITS
    Michael K. Diana                            212-895-3641   INSTITUTIONAL SALES                                        800-628-4005

    HEALTHCARE                                                 Ian Burgess                                                212-895-3548
    Healthcare IT, Services & Medical Devices                  David Circle                                               212-895-3691
    Anthony Vendetti                            212-895-3802   Ken Epstein                                                212-895-3872
                                                               Gerry Fershtman                                            516-396-3311
    Healthcare & Life Science Tools                            Michael Fenton                                             212-895-3698
    Bryan Brok meier, CFA                       212-895-3845   Chris Fetchet                                              212-895-3681
                                                               Scott Hughes                                               617-217-2444
    Biotechnology                                              Seitaro Kuno                                               212-895-3880
    Jason Kolbert                               212-895-3516   Erik Moquist                                               561-465-2496
                                                               Anthony Musto                                              212-895-3824
    Biotechnology                                              Gene Napolitano                                            212-895-3827
    Echo He Ph.D., M.D.                         212-895-3718   Amanda Nozaki                                              212-895-3570
                                                               Gerry Oberrender                                           212-895-3615
    INDUSTRIALS & INFRASTRUCTURE                               Alessandro Profita                                         212-895-3795
    William D. Bremer                           212-895-3835   Jason Sardo                                                212-895-3630
                                                               Jeff Sklar                                                 212-895-3780
    TELECOM / MEDIA / TECHNOLOGY                               Dirk van Erp                                               925-954-1194
    Communications Infrastructure                              Rick Snyder - Retail Sector Specialist                     212-895-3674
    Greg Mesniaeff                              212-895-3533

    Enterprise Software                                        INSTITUTIONAL SALES TRADING                                800-628-4005
    Brad Sills                                  212-895-3759
                                                               Todd Bodine                                                212 895-3806
    Media                                                      Phil Buchanan                                              212-895-3746
    John Tink er                                212-895-3735   Robert Benedickson                                         732-784-1903
                                                               Adam Cheek                                                 212-895-3878
    Technology                                                 Steve Dora                                                 212-895-3868
    Ashok Kumar, CFA                            650-823-4745   David Haraburda                                            415-677-1518
                                                               Jon Huzarsky                                               212-895-3629
    Research Associates                                        Peter Kaufman                                              561-465-2493
    Benjamin Black                              212-895-3509   Josh Levy                                                  212-895-3897
    Francesco Citro, Ph.D.                      212-895-3809   Rich Levy                                                  212-895-3820
    Nirav Modi                                  212-895-3595   Mitch Martin                                               212-895-3831
    Victor Zajdel                               212-895-3814   Mike Massimino                                             212-895-3544
                                                               Joseph Matura                                              212-895-3892
    Supervisory Analyst/Research Assistant                     Mark Milton                                                212-895-3752
    Nik k i Reed                                212-895-3736   Michael Pizzo                                              213 895-3643
                                                               Eugene Polt                                                732-784-1906
                                                               Alex Povalski                                              732-784-1904
                                                               Hany Sabet                                                 650 587 8585
                                                               Clint Schoen                                               212-895-3893
                                                               Ed Shopkorn                                                212-895-3601
                                                               Brian Schroetter                                           732-784-1918
                                                               Kevin Schweitzer                                           516-396-3012
                                                               Toni Stabile                                               212-895-3853
                                                               Gary Tritto                                                212-895-3842
                                                               Richard Vaughn                                             212-895-3676
                                                               Cass Waller                                                212-895-3740
                                                               Reed Werbit                                                212-895-3634


    FIXED INCOME TRADING                                       EQUITY TRADING
    Jamie Terranova                             212-895-3875   Bill Vitale                                                732-784-1905
    Jon Good                                    212-895-3607   Keith Arner                                                212-895-3891
    Jon Kattouf                                 212-895-3573   Ricardo Barquero                                           212-895-3781
    Justin Rabinowitz                           212-895-3839   Ralph Calabro                                              212-895-3586
    Anthony Marciano                            212-895-3613   William Doyle                                              212-895-3724
    Sean Meehan                                 212-895-3621   Robert Lynch                                               732-784-1910
    Frantisek Kovac                             212-895-3606   Joseph Matura                                              212-895-3892
                                                               Jared Rabinowitz                                           212 895 3729
                                                               Robert Sayegh                                              212-895-3680
    GLOBAL EQUITY TRADING                                      John Viteritti                                             212-895-3541
    Charles Ferrera                             212-895-3770
    Tom Giordano                                212 895-3837
    Peter Murgolo                               212-895-3612   INSTITUTIONAL OPTIONS TRADING
    John Palmieri                               732-784-1929
    Eric Skibo                                  212-895-3776   Leonard Greenbaum                                          212-895-3791
    Jackson Platsky                             212-895-3561
    Chris Valvo                                 732-784-1916
    Rory Gourlay                                732-784-1936   WEALTH MANAGEMENT

    PRIME BROKERAGE                                            John Garrity
    Kristi Marvin                               212-895-3769    Executive Managing Director                               212-895-3624


    CORPORATE FINANCE
    Clifford A. Teller
     Director of Investment Bank ing            212-895-3773




Maxim Group LLC                                                                                                                           47

				
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