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					                                          Americas Morning Summary
                                          August 11, 2010



The Goldman Sachs Group, Inc.
                                           Focus Items
This document contains comments
related to the following stocks:           S&P 500 Beige Book: 2Q Earnings themes: Managing to margins, cautious on
                                                                                                                                                                                1
                                           recovery
A123 Systems, Inc. (AONE)                  Americas: Retail: What's on our Back-to-School 2010 GS Fashion Plate                                                                 2
Abercrombie & Fitch (ANF)                  Tractor Supply Company (TSCO) Sell: Downgrade to Sell; sector-relative call on
AECOM Technology Corporation                                                                                                                                                    3
(ACM)                                      price, slower growth
Aeropostale (ARO)                          The Walt Disney Company (DIS): Broad upturn overwhelms mixed trends at
ALL America Latina Logistica                                                                                                                                                    4
                                           parks
(ALLL11.SA)
American Eagle Outfitters Inc.             AECOM Technology Corporation (ACM): Solid global infrastructure story, but
(AEO)                                                                                                                                                                           5
                                           austerity tempers enthusiasm
Ann Taylor Stores Corp. (ANN)
B2W (BTOW3.SA)                             United States: Utilities: Power - Electric Utilities: Highlights from 2Q, macro
                                                                                                                                                                                6
Baxter International, Inc. (BAX)           outlook sends mixed signals for utilities
BJ's Wholesale Club, Inc. (BJ)
Boston Scientific Corp. (BSX)
Caterpillar, Inc. (CAT)                    Key Data Changes
Cisco Systems, Inc. (CSCO)
                                           Investment List Additions
Community Health Systems, Inc.
(CYH)                                      Company                                             Ticker                          Investment List Additions
Companhia Siderurgica Nacional             Tractor Supply Company                              TSCO                                Americas Sell List
(SID)
Deere & Co. (DE)                           Initiations
The Walt Disney Company (DIS)                                                                 Rating/
Gap Inc. (GPS)                             Company                              Ticker                         Price Target       Current Year          Next Year    Fiscal y/e
                                                                                           Coverage view
Health Management Associates               AECOM Technology Corporation         ACM               N/N               $28.00              $2.05            $2.28         Sep
(HMA)
The Home Depot, Inc. (HD)                  Rating and price target changes
Kohl's Corp. (KSS)                                                                        Rating/
LifePoint Hospitals, Inc. (LPNT)                                                         Coverage                Price Target                            Estimates
Localiza Rent a Car S.A.                                                                   view
(RENT3.SA)                                                                               New       Old     New         Old      % chg
                                                                                                                                            Current          Next      Fiscal
Lojas Americanas (LAME4.SA)                Company                          Ticker                                                           Year            Year       y/e
Lowe's Companies, Inc. (LOW)               AECOM Technology
                                                                             ACM         N/N       --     $28.00        --        --            $2.05       $2.28       Sep
lululemon athletica inc. (LULU)            Corporation
Magna International, Inc. (MGA)            B2W                             BTOW3.SA      N/N      unch   ↓ R$32.70 R$33.10 (1.2%)           R$0.50         R$0.58       Dec
Medtronic, Inc. (MDT)                      Localiza Rent a Car S.A.        RENT3.SA      B/N      unch   ↑ R$28.00 R$27.30       2.6%       R$1.13         R$1.32       Dec
Nordstrom, Inc. (JWN)
NuVasive, Inc. (NUVA)                      Lojas Americanas                LAME4.SA      N/N      unch   ↑ R$15.30 R$14.50       5.5%       R$0.29         R$0.37       Dec
Quicksilver Resources, Inc. (KWK)          Magna International, Inc.         MGA         S/A      unch   ↑ $75.00     $63.00    19.0%           $7.40       $8.13       Dec
St. Jude Medical, Inc. (STJ)
                                           Medtronic, Inc.                   MDT         N/N      unch   ↓ $40.00     $43.00    (7.0%)          $3.22       $3.46        Apr
Standard Motor Products, Inc.
(SMP)                                      Standard Motor Products, Inc.     SMP         N/A      unch   ↑ $11.00     $9.00     22.2%           $0.81       $1.08       Dec
Stryker Corp. (SYK)                        Tractor Supply Company           TSCO      ↓ S/N       N/N     $72.00       unch       --            $4.10       $4.49       Dec
SunPower Corp. (SPWRA)
For further product information,
contact:

New York Investment Research
(212) 902-1000
                                           The Goldman Sachs Group, Inc. does and seeks to do business with companies covered in its research
Analysts employed by non-US                reports. As a result, investors should be aware that the firm may have a conflict of interest that could
affiliates are not registered/qualified    affect the objectivity of this report. Investors should consider this report as only a single factor in making
as research analysts with FINRA in         their investment decision. For Reg AC certification, see the end of the text. Other important disclosures
the U.S.                                   follow the Reg AC certification, or go to www.gs.com/research/hedge.html. This report is intended for
                                           distribution to GS institutional clients only.
Global Investment Research
Taleo Corporation (TLEO)          TRW Automotive Holding Corp.      TRW      N/A     unch    ↑ $43.00    $32.00    34.4%        $5.00           $5.46     Dec
Target Corporation (TGT)
Tenet Healthcare Corp. (THC)      Zimmer Holdings, Inc.             ZMH      B/N     unch    ↓ $65.00    $67.00    (3.0%)       $4.28           $4.77     Dec
Tractor Supply Company (TSCO)
TRW Automotive Holding Corp.      Estimate changes
(TRW)                                                                         Rating/            Current Year                       Next Year             Fiscal
                                                                             Coverage                                                                      y/e
Universal Health Services, Inc.   Company                          Ticker      view           New        Old    % chg       New         Old     % chg
(UHS)
                                  A123 Systems, Inc.               AONE        N/N          ↓ ($1.20) ($1.13) (6.3%)      ($1.00)     unch        --      Dec
Urban Outfitters Inc. (URBN)
Zimmer Holdings, Inc. (ZMH)       AECOM Technology
                                                                    ACM        N/N           $2.05       --        --       $2.28       --        --      Sep
                                  Corporation
                                  B2W                             BTOW3.SA     N/N          ↓ R$0.50 R$0.52 (3.4%) ↓ R$0.58 R$0.64              (9.6%)    Dec
                                  The Walt Disney Company           DIS        B/A          ↑ $2.13     $2.01     6.0%   ↑ $2.54      $2.50      1.3%     Sep
                                  Localiza Rent a Car S.A.        RENT3.SA     B/N          ↑ R$1.13 R$1.12       0.4%   ↑ R$1.32 R$1.26         5.0%     Dec
                                  Lojas Americanas                LAME4.SA     N/N          ↓ R$0.29 R$0.30 (3.4%)       R$0.37       unch        --      Dec
                                  Magna International, Inc.         MGA        S/A          ↑ $7.40     $5.33   38.7%    ↑ $8.13      $6.21     31.0%     Dec
                                  Medtronic, Inc.                   MDT        N/N           $3.22      unch       --    ↓ $3.46      $3.51     (1.4%)     Apr
                                  NuVasive, Inc.                   NUVA        N/N          ↓ $1.51     $1.55   (2.5%)   ↓ $1.46      $1.49     (2.0%)    Dec
                                  Quicksilver Resources, Inc.       KWK        S/N          ↑ $0.73     $0.72     1.4%   ↓ $0.42      $0.51     (17.2%)   Dec
                                  St. Jude Medical, Inc.            STJ        N/N          ↓ $2.91     $2.92   (0.1%)   ↑ $3.28      $3.26      0.4%     Dec
                                  Standard Motor Products, Inc.     SMP        N/A          ↑ $0.81     $0.72   12.5%    ↑ $1.08      $1.06      2.5%     Dec
                                  Stryker Corp.                     SYK        N/N           $3.23      unch       --    ↓ $3.59      $3.60     (0.1%)    Dec
                                  SunPower Corp.                   SPWRA       N/N           $1.50      unch       --    ↑ $1.85      $1.80      2.6%     Dec
                                  TRW Automotive Holding Corp.      TRW        N/A          ↑ $5.00     $3.92   27.7%    ↑ $5.46      $4.58     19.2%     Dec
                                  Zimmer Holdings, Inc.             ZMH        B/N           $4.28      unch       --    ↓ $4.77      $4.80     (0.4%)    Dec


                                  Other Headlines
                                  Options Research
                                  Weekly Options Watch: WOW August 11 - August 17, 2010                                                                            7

                                  Basic Materials
                                  Companhia Siderurgica Nacional (SID): CSN reported strongest 2Q results among Latam
                                                                                                                                                                   8
                                  steelmakers

                                  Consumer Cyclicals
                                  Brazil: Retail: B2W/ LAME: Updating estimates after mixed quarter, stay Neutral                                                  9
                                  Localiza Rent a Car S.A. (RENT3.SA) Buy: Raising estimates for new capex plan, lower interest
                                                                                                                                                                 10
                                  rates
                                  Americas: Automobiles: Parts: Updating TRW, MGA and SMP post 2Q10 results                                                      11

                                  Energy
                                  Quicksilver Resources, Inc. (KWK): Continue to see more attractive upside among other E&Ps                                     12
                                  A123 Systems, Inc. (AONE): Investing in capacity to build credibility - still Neutral                                          13
                                  SunPower Corp. (SPWRA): SunPower tracking on plan for 2010/2011 after solid 2Q2010 result                                      14

                                  Healthcare
                                  Americas: Healthcare Services: Hospitals: June update: Markets' recovery stalls, supporting
                                                                                                                                                                 15
                                  tough outlook
                                  United States: Healthcare: Medical Technology: Weak utilization trends drove stock
                                                                                                                                                                 16
                                  underperformance during 2Q2010

                                  Technology
Taleo Corporation (TLEO): Meetings set positive tone; Secular winner at reasonable valuation   17

Transportation
ALL America Latina Logistica (ALLL11.SA): Record EBITDA margin despite weak grains, positive
                                                                                               18
2H outlook

Reports Published
Americas Morning Summary                                                                                                           August 11, 2010




Focus Items

S&P 500 Beige Book: 2Q Earnings themes: Managing to margins, cautious on recovery                                                               1

                                 David J. Kostin (New York): david.kostin@gs.com, (212) 902-6781
                                 Goldman Sachs & Co.
                                 Stuart Kaiser, CFA (New York): stuart.kaiser@gs.com, (212) 357-6308
                                 Goldman Sachs & Co.
                                 Amanda Sneider (New York): amanda.sneider@gs.com, (212) 357-9860
                                 Goldman Sachs & Co.
                                 Yi Zhang (New York): yi.g.zhang@gs.com, (212) 357-6003
                                 Goldman Sachs & Co.

                                 Unemployment remains a top risk for corporate managements
                                 Managements indicated a generally positive 2H outlook tempered by caution regarding the US consumer.
                                 Views differed across sectors, with Industrials and Materials more positive and Health Care more
                                 conservative.
                                 Managements continue to focus on margin improvement
                                 Many firms guided to flat or slightly higher sequential margins in 2H and seemed to place a higher priority on
                                 attaining target margin levels relative to other performance metrics. Managements indicated that large
                                 portions of previous cost cuts are likely to remain “permanent”.
                                 Large cash balances used for buybacks and debt reduction
                                 Free cash flow generation has been strong and boards are authorizing fresh repurchases. Many previous
                                 authorizations have been exhausted. Debt reduction has been more prevalent than in prior quarters.



Americas: Retail: What's on our Back-to-School 2010 GS Fashion Plate                                                                            2

                                 Adrianne Shapira (New York): adrianne.shapira@gs.com, (212) 357-4174
                                 Goldman Sachs & Co.
                                 Michelle Tan, CFA (New York): michelle.tan@gs.com, (212) 902-3099
                                 Goldman Sachs & Co.
                                 Nicole Shevins (New York): nicole.shevins@gs.com, (212) 902-9884
                                 Goldman Sachs & Co.
                                 Scott Kaufman-Ross (New York): scott.kaufman-ross@gs.com, (212) 934-4206
                                 Goldman Sachs & Co.

                                 Back-to-School: What's on the GS Fashion Plate
                                 On our Fifth Annual Back-to-School field trip we visited Natick, MA, where we hosted tours at off-mall retailers
                                 BJ’s, Kohl’s, and Target as well as Abercrombie & Fitch, Aeropostale, Ann Taylor, lululemon, Anthropologie,
                                 Gilly Hicks, Hollister, and Nordstrom at the Natick Mall. This season’s Back-to-School fashions featured new
                                 trends of military styles and jeggings and carried over prints and plaids from last year.
                                 Broadlines: Hot temps deliver a cool start; inventory could back up
                                 This year’s B2S season kicks off the opposite of last year’s 2H trends with tough year-ago comparisons and
                                 building inventory levels. Given persistent hot weather, sales of classic B2S long denim have been soft. While
                                 on and off-mall retailers entered B2S season with clean inventory levels, weather needs to cool to heat up
                                 demand, or else inventory could begin to build and pressure margins. Key takeaways: (1) KSS – emphasis
                                 on cross-shop across categories to drive up ticket and cross-channel with new in-store online kiosks; (2) TGT
                                 – 2H sales hinge on P-Fresh reinvention of food, beauty, footwear, home and CE with softlines inventory
                                 planned up; and (3) BJ – 2Q’s soft sales coupled with margin pressure from WMT’s early rollback efforts
                                 could pressure quarterly results.
                                 Specialty: Do teen promos foreshadow a competitive fall?
                                 At the mall, we saw the agwgressive back to school promotions that are pressuring AURs across teen.
                                 Universal bets behind denim are adding to the pressure, given unfavorable weather and signs of category
                                 softness. Adult chains have been less promotional than teen all year, and that relative trend seems to be
                                 generally true in August. However, we question whether adult pricing will also get more aggressive once




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                    August 11, 2010



                                           bigger deliveries start to arrive in Sept, particularly if warm weather persists.
                                           From a stock perspective, we remain focused on select stories with specific drivers amid a potentially weak
                                           sector backdrop. While coming at a price, we were very encouraged by traffic trends at ANF (Buy, $38.81)
                                           and continue to believe stabilizing the domestic business will unlock greater value from international growth.
                                           We also remain positive on LULU (Buy, $39.30) which has substantial comp-store and footage growth
                                           potential and should be much less vulnerable to weather and competitive pressures this fall.



Tractor Supply Company (TSCO) Sell: Downgrade to Sell; sector-relative call on price, slower growth                                                         3

TSCO, $71.13                               Matthew J. Fassler (New York): matt.fassler@gs.com, (212) 902-6740
Market cap                  $2,582 mn
                                           Goldman Sachs & Co.
                                           Robert Higginbotham, CFA (New York): robert.higginbotham@gs.com, (212) 902-4611
Target price                     $72.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Ryan Brinkman (New York): ryan.brinkman@gs.com, (917) 343-9516
EPS ($)                   4.10     4.49    Goldman Sachs & Co.
                                           Mark-Andre Saucier-Nadeau (New York): mark-andre.saucier-nadeau@gs.com, (212) 902-3668
P/E                    17.3X      15.8X
                                           Goldman Sachs & Co.
EPS Quarter/Interim*      0.73     0.60    Jonathan Baucom (New York): jonathan.baucom@gs.com, (212) 934-4213
Investment Lists                           Goldman Sachs & Co.
                   Americas Sell List

Coverage view                    Neutral   Source of opportunity
*Current and a year ago
                                           We are downgrading TSCO to Sell, from Neutral, as the combination of valuation, inflation, and peak margins
                                           suggests limited upside vs. the hardlines sector. Management has improved consistency of performance, and
                                           the stock has attained a premium multiple following two sizable earnings beats. From here, it faces
                                           deceleration in sales and earnings trends. We view the recent surge in grain prices as a concern; historically,
                                           the stock has underperformed in inflationary environments. Our estimates and price target are unchanged,
                                           but we are below consensus for 2011 and 2012. With this note Matt Fassler assumes primary coverage.
                                           Catalyst
                                           We still view TSCO as an important long-term growth footage story, with opportunities for structural
                                           improvements as it improves buying and logistics. Near-term, we see limited appreciation as deceleration in
                                           sales and earnings trends materialize. Our $72 12-month price target implies flattish stock performance, one
                                           of the softer return profiles in our coverage universe. On the inflation front, the company’s LIFO accounting
                                           results in an almost immediate hit to margins from higher costs, while any positive impact to the top-line takes
                                           time to flow through.
                                           Valuation
                                           Our 12-month price target of $72 is based on a blend of PE and DCF valuation. TSCO currently trades at a
                                           26% premium to the market, above its 5-yr average of 20%, and is operating at above peak margins whereas
                                           most firms within our coverage that are trading at premiums to history are operating significantly below peak
                                           margins.
                                           Key risks
                                           Risks to our negative call include a good footage story (stores growing 8%) and margin upside driven by
                                           improving execution.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   August 11, 2010




The Walt Disney Company (DIS): Broad upturn overwhelms mixed trends at parks                                                                              4

DIS, $35.29                                 James Mitchell, CFA (New York): james.mitchell@gs.com, (212) 357-1849
Market cap                  $69,627 mn
                                            Goldman Sachs & Co.
                                            Drew Borst (New York): drew.borst@gs.com, (212) 902-7906
Target price                      $42.00
                                            Goldman Sachs & Co.
Fiscal y/e Sep            2010E   2011E     Brian Karimzad (New York): brian.karimzad@gs.com, (212) 357-1745
EPS ($)                    2.13     2.54    Goldman Sachs & Co.
                                            Grace Huan (New York): grace.huan@gs.com, (212) 357-8280
P/E                       16.6X    13.9X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        0.67     0.53

Investment Lists
                                            What's changed
                      Americas Buy List     Disney reported 3QFY10 revenue of $10.0 bn, 8% ahead of our forecast; total segment OI of $2.54 bn, 23%
Coverage view                 Attractive    above our forecast, and EPS of $0.67, 16% above our forecast. About half the beat ($0.05 of the $0.09) was
                                            due to earlier recognition of ESPN affiliate revenue. The company bought back $2 bn of stock year-to-date,
*Current and a year ago
                                            including $500 mn in July alone. We raise our FY10/11/12E EPS estimates by 6%/1%/0% to
                                            $2.13/$2.54/$2.74 due to broadcasting and studio revenue and margins.
                                            Implications
                                            (1) Excluding accelerated ESPN revenue recognition, results still exceeded our forecasts, thanks to
                                            broadcast, studio, and consumer products.
                                            (2) Underlying cable net trends improved, with 17% advertising growth ex-World Cup/NBA finals, and cost
                                            growth slowing to 9% yoy from 15% in 2QFY10. Cable net costs may remain controlled in 4QFY10 on fewer
                                            World Cup/Premier League games.
                                            (3) Investor concern may shift from cable network costs to parks costs. 7% yoy domestic parks expense
                                            growth outstripped 3% revenue growth, which we attribute largely to a full impact from higher pension
                                            expenses, healthcare costs, and wage increases, and partly to Disney adding assets such as the World of
                                            Colors attraction and Disney Dream cruise ship. More positively, international parks saw a sharp profit
                                            improvement, which we expect to continue versus easy H1N1 comps.
                                            Valuation
                                            We believe Disney is under-earning versus its potential. We expect the Time Warner Cable contract renewal
                                            in August, park additions adding to revenue, and the studio feeding the consumer products division to
                                            support earnings and the stock. Our 12-m price target of $42 is based on 16X our CY2011E EPS of $2.60.
                                            Key risks
                                            Theme park attendance as prices increase, box office performance.



AECOM Technology Corporation (ACM): Solid global infrastructure story, but austerity tempers                                                              5
enthusiasm

ACM, $25.37                                 Joe Ritchie (New York): joseph.ritchie@gs.com, (212) 357-8914
Market cap                   $2,906 mn
                                            Goldman Sachs & Co.
                                            Chaitra Purushotham (Bangalore): chaitra.purushotham@gs.com, (212) 934-6330
Target price                      $28.00
                                            Goldman Sachs India SPL
Fiscal y/e Sep            2010E   2011E     Gregory Elek (New York): gregory.elek@gs.com, (212) 357-7503
EPS ($)                    2.05     2.28    Goldman Sachs & Co.
P/E                       12.4X    11.1X

EPS Quarter/Interim
                      *
                           0.58     0.48
                                            Investment view
                                            We are initiating coverage on AECOM (ACM), a premier global design firm, with a Neutral rating and 12-
Investment Lists                            month target price of $28. We have a positive long-term bias toward ACM as it is uniquely levered to
                                  Neutral   international infrastructure markets (>50% of revenues), and we expect the company’s strong business
Coverage view                     Neutral   model to lead to solid growth and margin expansion over time. However, we remain on the sidelines as
                                            austerity measures are likely to suppress upside in the stock and private non-residential construction will
*Current and a year ago
                                            remain weak over the next 6-12 months. Our FY11/FY12 EPS are 0%/2% vs. consensus.
                                            Core drivers of growth
                                            We forecast an EPS CAGR of 12% from 2010-2012 given ACM’s exposure (30%) to growing infrastructure
                                            markets (e.g., Hong Kong, Australia, Middle East) and M&A is a core competency. However, austerity




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                           August 11, 2010



                                 measures in developed markets temper our enthusiasm at this time.
                                 Risks to the investment case
                                 We would get more positive on ACM shares if a new US federal highway bill gains momentum, sovereign
                                 debt concerns alleviate and/or the private facilities market rebounds quicker than anticipated. Key risks to the
                                 downside include tighter credit and weak state/municipal spending.
                                 Valuation
                                 Our $28, 12-month price target is based on 12.4X FY2011E EPS, a 5% premium to AECOM’s closest
                                 competitor, URS.
                                 Industry context
                                 While infrastructure stocks have underperformed coverage by 19% YTD, we see greater upside to CL-Buy
                                 rated CBI and Buy-rated FLR, for three reasons: (1) constructive outlook on crude oil prices, (2) favorable
                                 end market mix and (3) strong catalysts on the horizon.



United States: Utilities: Power - Electric Utilities: Highlights from 2Q, macro outlook sends mixed signals                                     6
for utilities

                                 Michael Lapides (New York): michael.lapides@gs.com, (212) 357-6307
                                 Goldman Sachs & Co.
                                 Neil Mehta (New York): neil.mehta@gs.com, (212) 357-4042
                                 Goldman Sachs & Co.
                                 Jaideep Malik (Bangalore): jaideep.malik@gs.com, (212) 934-6967
                                 Goldman Sachs India SPL

                                 As we expected, multiple companies beat estimates for 2Q2010 – but largely on favorable weather
                                 and industrial demand
                                 In our 2Q2010 preview piece, “Raising demand forecasts, but lowering power price views,” from July 26, we
                                 laid out expectations for 2Q2010 to come in above consensus, on abnormal weather and higher industrial
                                 MWh demand. Many in our universe beat forecasts – with over 80% beating consensus and 59% beating our
                                 estimates.
                                 Commentary on 2Q2010 earnings calls remained relatively cautious on the future outlook, especially
                                 for merchant generation
                                 Companies with merchant generation remain somewhat cautious, given (1) the roll-off of above-market
                                 hedges; (2) high coal prices, combined with low natural gas and power prices, weighing on dark spreads in
                                 the forward markets; and (3) concerns on a continued recovery in MWh demand.
                                 At first glance, the new GS economic outlook, along with 2011 forward natural gas prices, send mixed
                                 signals for utilities
                                 An abnormally hot July may create upward pressure on 3Q2010 outlooks, but with the Goldman Sachs
                                 Global ECS Research lowering its GDP and industrial production forecasts for 2H2010 and 2011, this likely
                                 will weigh on our secular demand forecast. Downside risk also remains as forward natural gas prices – which
                                 impact power prices – for 2011 remain below our expectations and consensus. Lower demand weighs on
                                 both Regulated Utilities that rely on increasing MWh sales, as well as IPPs and Diversified Utilities, as
                                 demand impacts future and spot natural gas and power pricing. A lower outlook for the yield on 10-year
                                 Treasuries, with our economists’ expectations for year-end levels of 2.5% from current levels near 2.8%,
                                 however, may create upward pressure on multiples.
                                 We remain Neutral on utilities, given recent outperformance, but emerge incrementally more positive
                                 this sector
                                 While warming up slightly to the sector, we remain on the sidelines given (1) significant outperformance by
                                 the sector index since April, by 800-900 bp, and in-line ytd performance versus the SPX; (2) the bulk of the
                                 move in 10-year Treasury yields, from near 4% in 1Q to current levels near 2.8% sits in our rear-view mirror;
                                 (3) Regulated Utilities already trade at their historical average P/E multiple; and (4) Diversified Utilities and
                                 IPPs, which make up almost 55% of the sector index, still face challenging earnings trajectories as above-
                                 market hedges roll off in 2011/2012.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                         August 11, 2010




Other Headlines
Options Research

Weekly Options Watch: WOW August 11 - August 17, 2010                                                                                                         7

                                           John Marshall (New York): john.marshall@gs.com, (212) 902-6848
                                           Goldman Sachs & Co.
                                           Maria Grant, CFA (New York): maria.grant@gs.com, (212) 855-0070
                                           Goldman Sachs & Co.

                                           Options Insight: Financials options attractive given risk, catalysts
                                           Financials short-dated options appear inexpensive ahead of mortgage market reform discussions in mid-
                                           August and September. XLF 1 month implied volatility has declined rapidly to only a few points above their
                                           YTD lows, however Financials 5 year CDS spreads remain persistently wide on a relative basis. XLF 1 month
                                           implied volatility is particularly low relative to longer-dated implied volatility where investors still see risk. We
                                           are closely watching Western Europe Sovereign CDS spreads as they have widened 15% over the past five
                                           days. We are biased towards owning options in Financials.
                                           Trade ideas: MDT, ANF, DE, HD, LOW, CSCO, CAT
                                           Trade #1: Buy MDT puts to hedge downward EPS revision risk
                                           Options are inexpensive ahead of earnings given that our analyst expects consensus estimates to be revised
                                           lower. He expects loss of market share in ICDs, tough year-over-year comps, and pricing pressure in the
                                           spine market to pressure estimates.
                                           Trade #2: Buy Abercrombie (ANF) options ahead of earnings
                                           Trade #3: Deere (DE) stock with calls ahead of beat/raise
                                           Trade #4: Overwrite HD and LOW to collect elevated premium
                                           Trade #5: CSCO holders should sell straddle to monetize volatility
                                           Trade #6: Buy CAT calls for their analyst day




Basic Materials

Companhia Siderurgica Nacional (SID): CSN reported strongest 2Q results among Latam steelmakers                                                               8

SID, $17.26                                Marcelo Aguiar (Sao Paulo): marcelo.aguiar@gs.com, +55(11)3371-0771
Market cap                 $25,165 mn
                                           Goldman Sachs Brasil Bco Múlt S.A.
                                           Pedro Grimaldi (Sao Paulo): pedro.grimaldi@gs.com, +55(11)3371-0743
Target price                     $20.00
                                           Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec         2010E     2011E

EPS (R$)                  2.00     4.39    News
P/E                    15.2X       6.9X    CSN reported 2Q2010 earnings on August 10. EPS was R$0.61 vs. our R$0.52 and consensus of R$0.64.
                                           Adjusted 2Q EBITDA reached R$1,794 mn, which was +8%/+1% higher than GS/consensus. Adjusted
EPS Quarter/Interim*      0.52     0.22
                                           EBITDA margin of 46.3% was 129 bp above GS and up 544 bp qoq. Flat steel shipments of 1,301 ktons
Investment Lists                           were 2.1% above GS and up +3.1% qoq. Iron ore shipments of 4.6 mn tons was -2.8% below our forecast,
                                 Neutral   up +11% qoq, and +43% yoy.
Coverage view                    Neutral   Analysis
                                           We consider CSN’s 2Q10 results as strong. Higher-than-forecasted EBITDA was due to higher than
*Current and a year ago
                                           estimated steel shipments, realized steel prices and lower SG&A expenses. Net realized domestic steel
                                           prices increased +4.8% qoq and were +1.8% above GS. We estimate that net realized iron ore prices ex-
                                           ROM sales reached R$183/ton (or US$102/ton), representing a 69% qoq increase, lower than the quarterly
                                           price increase suggested by a new pricing methodology. This could be explained by lower price increase for
                                           ROM shipments to Namisa or carry-over volumes from 1Q10. Iron ore business represented 31% of
                                           consolidated gross profit vs. 15% in 1Q10.
                                           CSN’s steel business is operating at full capacity running at annual rate of 5.2mtpa and shipping 89% in the
                                           domestic market, which is much stronger performance than Usiminas posted at 2Q. This is explained by




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                        August 11, 2010



                                 CSN’s higher exposure to civil construction and packaging segments that are posting stronger performance
                                 than the infra-structure sector in which Usiminas has higher exposure through heavy plates shipments.
                                 Implications
                                 CSN posted the strongest results among Latam steelmakers, although operating results should deteriorate in
                                 the next two quarters due to lower shipments in the domestic market, a coking coal price increase, and lower
                                 iron ore prices. CSN remains our top pick among steelmakers. Our rating, target price, and earnings
                                 forecasts are unchanged.



Consumer Cyclicals

Brazil: Retail: B2W/ LAME: Updating estimates after mixed quarter, stay Neutral                                                              9

                                 Irma Sgarz (Sao Paulo): irma.sgarz@gs.com, +55(11)3371-0728
                                 Goldman Sachs Brasil Bco Múlt S.A.

                                 2Q results highlight external and internal challenges at B2W
                                 B2W’s 2Q results continued to reflect internal integration and external competitive challenges, leaving 1H10
                                 gross sales growth at a lackluster 13% yoy, while the Brazilian online retail market expanded at least twice
                                 that rate. This was despite a more than 100 bp investment in gross margin via aggressive prices and no
                                 significant cutback in consumer credit, which signals competition remained fierce around recent commercial
                                 events.
                                 Management confident on completing integration by year-end
                                 As integration of the logistical platform nears completion (estimated for Sept.), B2W expects to be
                                 increasingly able to offset ongoing pricing pressures with expense reduction, and drive EBITDA margin gains
                                 from 2011. While we forecast stabilizing EBITDA margins, we remain concerned about the lack of momentum
                                 on the topline, which so far remains below the low end of guidance of 15%-25% for 2010 (GS +15%).
                                 LAME: Scope for further gains limited with 95% of openings in 2H
                                 By contrast, Lojas Americanas reported a solid 100bp EBITDA margin expansion for 1H10, on gross margin
                                 gains (80bp) from effective pricing strategies and tight inventory management, backed by expense dilution in
                                 maturing stores. However, with the bulk (55) of store openings concentrated in the back half of 2010 and only
                                 a small amount of stores in the final maturation phase (12 openings in 2009), we expect any additional gross
                                 margin gains from here to be offset by operating deleverage.
                                 Remain Neutral on both as LAME fairly valued, B2W still uncertain
                                 We remain Neutral on both names, as: (1) we expect moderating SSS growth and heavy opening expenses
                                 to limit margin momentum at LAME bricks, making a premium to current valuation hard to justify, (2) the
                                 burden of proof for a successful turnaround still weighs on B2W.
                                 Updating estimates and PT for 2Q results, lower Selic rate forecast
                                 We update estimates for 2Q results and lower interest rate forecasts. For B2W, we reduce 2010-12E EPS by
                                 on average 8% as a 4% avg reduction in sales more than offsets lower financial expenses. We lower our
                                 blended EV/EBITDA and DCF 12-month price target by 1% to R$32.70. For LAME, 2010-12E EPS is on avg
                                 2% lower following changes to B2W. Our 12-month price target rises by 6%, primarily on a higher DCF value
                                 for the bricks.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                       August 11, 2010




Localiza Rent a Car S.A. (RENT3.SA) Buy: Raising estimates for new capex plan, lower interest rates                                                       10

RENT3.SA, R$24.38                            Irma Sgarz (Sao Paulo): irma.sgarz@gs.com, +55(11)3371-0728
Market cap                  R$4,918 mn
                                             Goldman Sachs Brasil Bco Múlt S.A.
Target price                      R$28.00
                                             Source of opportunity
Fiscal y/e Dec            2010E    2011E
                                             Brazilian car rental company Localiza has risen 33% over the last three months, outperforming the Bovespa
EPS (R$)                   1.13      1.32    index (up 23%). We see a further 15% upside to our revised 12-month price target of R$28 (previously
P/E                       21.6X     18.4X    R$27.30) and reiterate our Buy rating. We raise EPS estimates by 2% on average following the recently
                      *
                                             announced capex plan and revised macro forecasts (lower Selic interest rates). As announced on July 26
EPS Quarter/Interim        0.29      0.10
                                             (see our comment “Switching up a gear”), Localiza plans to invest R$2.5 bn between now and 3Q2011 to
Investment Lists                             purchase 85,000 cars to renew (85%) and expand (15%) its fleet, financed entirely from the company’s own
                      Americas Buy List      resources.
Coverage view                      Neutral   Catalyst
                                             Near term, Localiza should continue to benefit from a late-cycle recovery in business travel, while public
*Current and a year ago
                                             works inaugurations around elections could bring an extra boost. We expect rental volume growth to
                                             accelerate to 23% yoy in 2H10, as it cycles easing comps (+2% yoy in 2H09 vs. +9% in 1H09). Localiza is
                                             also well-placed to capture medium-term structural growth from business/leisure travel, outsourcing and
                                             insurance replacement, in our view. The announced capex plan reflects Localiza’s optimism about the
                                             outlook for 2H2010 and beyond, as well as confidence in its ability to fund continued fleet renewal and
                                             expansion from its own cash flow.
                                             Valuation
                                             We increase our 12-month price target to R$28 (from R$27.30). Our price target methodology is based on
                                             unchanged target multiples for forward EV/EBITDA (9.8X) and P/E (23.7X). Localiza currently trades broadly
                                             in line with its historical mean, but we see a premium as justified by the near- and medium-term higher
                                             EBITDA and EPS growth profile.
                                             Key risks
                                             Downside risks include slower demand for rentals and pre-owned cars and intensifying price competition in
                                             individual and fleet rentals.



Americas: Automobiles: Parts: Updating TRW, MGA and SMP post 2Q10 results                                                                                 11

                                             Patrick Archambault, CFA (New York): patrick.archambault@gs.com, (212) 902-2817
                                             Goldman Sachs & Co.
                                             Aditya Oberoi (New York): aditya.oberoi@gs.com, (212) 357-7617
                                             Goldman Sachs & Co.

                                             Auto earnings season sees another solid finish
                                             Once again earnings ended on a strong note with TRW, Magna (MGA), and Standard Motor Products (SMP)
                                             reporting 2Q10 results well ahead of expectations. This concludes an earnings season in which 11 out of 12
                                             covered suppliers and OEs exceeded consensus driven primarily stronger mix, higher than expected
                                             incremental margins on volume and a still benign raw materials environment. Due to typical seasonality, we
                                             project that that 2H profitability will be lower but we do see most of our companies positioned to build on 2010
                                             margins as volume continues to recover, and as the benefits of rational pricing continue to prevail in an
                                             increasing capacity utilization environment. We continue to have an Attractive coverage view on the autos.
                                             Raising target and estimates for MGA but maintaining relative Sell
                                             We are raising our price target and estimates for Magna reflecting the impact of stronger 1H mix and
                                             operational efficiencies which have pulled forward the cadence of operating improvement we expect. Our
                                             2010/2011/2012 EPS estimates go to $7.40, $8.13 and $8.77, from $5.33, $6.21 and $7.12, previously. Our
                                             6-month price target rises to $75 from $63. We believe MGA shares are fully valued at this stage as we
                                             expect the company’s performance to lag peers in 2H as mix normalizes and as the Big 3 see stepped up
                                             share headwinds where MGA has large exposure.
                                             String of upward revisions continues for TRW
                                             TRW once again trumped expectations in 2Q with a combination of better mix and cost performance driving
                                             upside. We expect lower earnings in 2H but believe the emerging market safety opportunity as well as key




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  August 11, 2010



                                           technologies like electric steering in North America present attractive out year growth prospects. We are
                                           raising our 2010/2011/2012 EPS estimates to $5.00/$5.46/$6.09, from $3.92/$4.58/$5.16, previously, which
                                           underpins our new 6-month price target of $43 from $32, previously.
                                           Adjusting SMP estimates and target on a stronger aftermarket
                                           SMP’s 2Q came in above expectations driven by stronger aftermarket demand and a slightly better margin.
                                           We continue to expect pent up demand and a stabilization of miles driven to drive revenue growth. This
                                           brings our 2010/2011/2012 EPS estimates to $0.81/$1.08/$1.19 from $0.72/ $1.06/$1.16, previously. Our 6-
                                           month price target rises to $11 from $9.




Energy

Quicksilver Resources, Inc. (KWK): Continue to see more attractive upside among other E&Ps                                                           12

KWK, $12.68                                Brian Singer, CFA (New York): brian.singer@gs.com, (212) 902-8259
Market cap                  $2,143 mn
                                           Goldman Sachs & Co.
                                           Pavan Hoskote (New York): pavan.hoskote@gs.com, (917) 343-9044
Target price                     $13.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Andre Benjamin (New York): andre.benjamin@gs.com, (212) 855-0470
EPS ($)                   0.73     0.42    Goldman Sachs & Co.
P/E                    17.4X      30.2X

EPS Quarter/Interim*      0.20     0.25
                                           What's changed
                                           Quicksilver reported 2Q 2010 adjusted EPS of $0.18 vs. our and consensus $0.16. Production was 350
Investment Lists                           MMcf/d vs. our 357.4 MMcf/d. Realized gas prices were $6.93/Mcf vs. our $5.62/Mcf (our gas price estimates
                   Americas Sell List      included the impact of ENI contract-related losses). Operating cash flow was $120 mn vs. our $86 mn. Total
Coverage view                    Neutral   costs were $3.61/Mcfe vs. our $3.59/Mcfe. We revise our 2010E/2011E/2012E/2013E EPS to
                                           $0.73/$0.42/$0.97/$0.99 from $0.72/$0.51/$1.01/$1.09 for changes to production, prices and costs as well as
*Current and a year ago
                                           the pending asset sale of its stake in Quicksilver Gas Services.
                                           Implications
                                           We maintain our Sell rating on Quicksilver. KWK’s remaining inventory of uncompleted wells in the Barnett
                                           Shale provides relatively low capital cost growth near term. However, we generally believe that the Street is
                                           already focused on other key catalysts, most notably potential joint ventures. Following management
                                           comments on recent conference calls, we believe an upstream and/or midstream joint venture in the Horn
                                           River Basin is possible, though it is unclear whether it would come with a meaningful up-front cash payment
                                           versus a large carry whereby the counterparty would cover Quicksilver’s future capital costs. Following
                                           midstream sale-related debt paydown, Quicksilver will have less flexibility to paydown additional debt.
                                           Ultimately, we see a better combination of valuation and catalysts for other E&Ps. For gassy pure-play peers,
                                           we prefer EXCO Resources which trades at a lower EV/EBITDA multiple and a greater discount to net asset
                                           value.
                                           Valuation
                                           KWK trades at 8.2X 2011E EV/EBITDA vs. 7.1X average for COG, SWN, XCO, and UPL. We see 3% return
                                           potential to our multiple- and DCF-based six-month price target of $13.
                                           Key risks
                                           Commodity price volatility, drilling results, costs, gov’t pronouncements.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                      August 11, 2010




A123 Systems, Inc. (AONE): Investing in capacity to build credibility - still Neutral                                                                     13

AONE, $10.44                                 Mark Wienkes, CFA (New York): mark.wienkes@gs.com, (212) 357-1986
Market cap                    $1,084 mn
                                             Goldman Sachs & Co.
                                             David Lefty (New York): david.lefty@gs.com, (212) 902-9429
Target price                        $9.00
                                             Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E

EPS ($)                   (1.20)    (1.00)   What's changed
P/E                           --        --   A123 reported 2Q10 results of $22.6mn in revenue vs. our/consensus estimates of $27.9/$25.5mn. LPS was
                      *                      ($0.33), worse than our estimate of ($0.28). Although the company announced its withdrawal from
EPS Quarter/Interim       (0.30)    (1.78)
                                             negotiations with Chrysler, it also announced incremental supply agreements with AES for grid stabilization
Investment Lists                             and Daimler for hybrid buses, as well as a production agreement with a major, but unnamed, OEM. The
                                   Neutral   company guided to FY10 revenue at the lower end of the previously announced range of $120-150mn and
Coverage view                      Neutral
                                             maintained its expectation of $450-550mn for FY11. We lower our FY10 revenue to $120mn, offset with an
                                             increase in our estimate for FY11 to $300mn. Our revenue estimate for FY11 remains below the company’s
*Current and a year ago                      expectation so as to incorporate sufficient time to complete the capacity build and deliver on supply contracts.
                                             We also revised our LPS estimate for 2010 downward from ($1.13) to ($1.20). Our LPS estimates for the out
                                             years remain unchanged.
                                             Implications
                                             We remain Neutral rated on the shares because we think that despite a leading technology and growing
                                             credibility afforded by capacity expansion, the investment cycle ahead of the revenue ramp will take longer
                                             than expected. A123 is still building its Michigan plant, so capex and expenses remain high relative to
                                             revenue, a situation we expect to continue throughout FY11. As alliances continue to shift into place, we
                                             expect greater visibility into the level and timing of supply contracts.
                                             Valuation
                                             Our 6-month price target of $9 is based on our DCF valuation. At the current share price of $10.44, the stock
                                             trades at a 2010E P/Revenue multiple of 9.0X and a 2011E P/Revenue multiple of 3.6X.
                                             Key risks
                                             Upside: Faster-than-expected revenue ramp; high-profile partnerships Downside: Poor execution at scale;
                                             aggressive Asian competition



SunPower Corp. (SPWRA): SunPower tracking on plan for 2010/2011 after solid 2Q2010 result                                                                 14

SPWRA, $12.93                                Mark Wienkes, CFA (New York): mark.wienkes@gs.com, (212) 357-1986
Market cap                    $2,394 mn
                                             Goldman Sachs & Co.
                                             David Lefty (New York): david.lefty@gs.com, (212) 902-9429
Target price                       $15.00
                                             Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E

EPS ($)                    1.50      1.85    What's changed
P/E                        8.6X      7.0X    SunPower reported above-consensus 2Q10 results as stronger gross margins more than offset lighter
                      *                      revenue. Revenue of $392 mn was below $400 mn consensus and our $420 mn estimate. The gross margin
EPS Quarter/Interim        0.15      0.45
                                             reached 26% for both of the newly stated UPP (Utility & Power Plants) and R&C (Residential and
Investment Lists                             Commercial) businesses. Non-GAAP EPS of $0.15 beat both our $0.13 estimate and consensus at $0.09.
                                   Neutral   The company saw higher volumes qoq and expects 65% of 2010E revenue to fall in 2H10 as the company
Coverage view                      Neutral
                                             recognizes significant UPP business in Italy. All revenue targets were reaffirmed, with the full year 2010E
                                             EPS range tightened upward by $0.10 at the bottom end to $1.35-$1.65. Our 2011E non-GAAP EPS goes to
*Current and a year ago                      $1.85 from $1.80 on modestly higher revenue and more visibility into execution of utility project pipeline in
                                             2011.
                                             Implications
                                             We rate SPWRA shares Neutral and still see a balanced risk/reward relative to coverage peers. We think the
                                             additional clarity into the business via the new segment reporting is a solid first step toward improving
                                             investor confidence, adding to the ability to offer better visibility into 2011 from a larger UPP pipeline.
                                             However, we also see higher relative near-term, cost-related execution risk, as the company detailed a fairly
                                             aggressive efficiency-adjusted cost reduction road map and 2010 remains back-half weighted for what we
                                             see as a “show-me” stock. Consensus EPS likely edges upward but not enough to warrant a near-term stock




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                             August 11, 2010



                                 revaluation.
                                 Valuation
                                 We see 16% upside to our DCF- and multiples-driven six-month price target of $15. The shares currently
                                 trade at 7.0X our 2011E non-GAAP EPS of $1.85 and 20.9X 2011E GAAP EPS of $0.62. Our price target
                                 implies a 2011E non-GAAP P/E multiple of 8.1X.
                                 Key risks
                                 Risks to our view and price target include better/worse execution of the AUO JV, utility-scale project
                                 development, and production cost improvements.




Healthcare

Americas: Healthcare Services: Hospitals: June update: Markets' recovery stalls, supporting tough                                                15
outlook

                                 Shelley Gnall (New York): shelley.gnall@gs.com, (212) 902-2068
                                 Goldman Sachs & Co.
                                 Erin Blum (New York): erin.blum@gs.com, (212) 855-7718
                                 Goldman Sachs & Co.
                                 Matthew Borsch, CFA (New York): matthew.borsch@gs.com, (212) 902-6784
                                 Goldman Sachs & Co.
                                 Barbara Chang (New York): barbara.chang@gs.com, (212) 902-9758
                                 Goldman Sachs & Co.

                                 June update
                                 Our latest update of macro trends finds erosion in hospital markets’ labor statistics in June: on a sequential
                                 basis (vs May 2010), unemployment rates in our covered hospital companies’ key markets have increased
                                 30-70 bp. This is in contrast to the national trend which showed a sequential improvement of 20 bp. Despite
                                 an apparent reversal in the recently positive trend, unemployment rates are still down 10-110 bp since
                                 January in all our covered companies’ markets (versus flat trend nationwide).
                                 All the key hospital markets had lower unemployment than the national average through June though some
                                 continue to lag the group:
                                 In-line with national trend: CYH, HMA, and LPNT (9.5%/9.7%/9.9%)
                                 Worse than peer group: THC and UHS (11.9%/12.6%)
                                 With this report, we update macro trends in more than 300 local hospital markets through June to assess
                                 covered companies’ exposure to economic conditions as potential leading indicators of admissions and/or
                                 bad debt trends. This data is not seasonally adjusted, making yoy comparisons more meaningful than qoq
                                 comparisons.
                                 Volume headwinds likely to persist, sharpening the focus on costs
                                 2Q 2010 hospital s/s admissions trends were weaker than expected as the sustained economic downturn
                                 impacted payor mix, demand for elective services, and weaker obstetric admissions due to lower birthrates.
                                 We expect a resurgence in hospital volumes will likely lag economic recovery just as the decline in volumes
                                 was delayed after the onset of the recession. There are at least two reasons for the expected delay in
                                 recovery: the newly employed typically must wait three months for health insurance to activate and the
                                 birthrate historically lags a recovery. As a result, we see no reason to expect a near-term reversal in recent
                                 volume trends. Therefore, we look for weak overall volume growth with outpatient outpacing inpatient and
                                 Medicaid/self-pay outpacing commercial volumes. During the back half of the year, we expect hospitals with
                                 the most capital flexibility for acquisitions to boost top line results and/or the most dry powder for incremental
                                 cost cutting will be best positioned to preserve margins and hit bottom line expectations.



United States: Healthcare: Medical Technology: Weak utilization trends drove stock underperformance                                              16
during 2Q2010

                                 David H. Roman (New York): david.roman@gs.com, (212) 902-7839
                                 Goldman Sachs & Co.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                August 11, 2010



                                          John Marshall (New York): john.marshall@gs.com, (212) 902-6848
                                          Goldman Sachs & Co.
                                          Nikhil Hanmantgad (New York): nikhil.hanmantgad@gs.com, (212) 357-4031
                                          Goldman Sachs & Co.
                                          Kunal Singh, CFA (Bangalore): kunal.singh@gs.com, (212) 934-6546
                                          Goldman Sachs & Co.

                                          Performance following earnings lackluster
                                          Since the start of 2Q2010 earnings season (July 20, 2010), stocks in our coverage universe are +0.4% on a
                                          market cap-weighted basis vs. +4.1% for the S&P 500. Lower-than-expected utilization trends across several
                                          therapeutic categories (e.g., orthopedics, general surgery, spine) drove the underperformance. The pricing
                                          environment remains challenging but does not appear to be worsening. Based on trends in 2Q, we are
                                          making changes to several company and industry models as a result of lower utilization.
                                          Top picks remain: BAX, HSP, and ZMH
                                          We see the most underappreciated value in shares of Baxter (BAX/CL-Buy) and Hospira (HSP/Buy). We
                                          think both companies are well positioned to participate in global healthcare expansion, with Hospira a key
                                          beneficiary of hospitals’ efforts to reduce costs and increased long-term volumes associated with reform. In
                                          the case of Zimmer (ZMH/Buy), we continue to see risk/reward as favorable but acknowledge that procedure
                                          volume trends needs to be monitored.
                                          Lowering estimates for Medtronic ahead of 1QFY2011 results
                                          We lower our estimates for Medtronic based on the following: (1) lower end-user market demand in US ICDs
                                          (we project US revenue of $513 mn, +1% yoy/ -10% qoq) in 1Q and (2) increased pricing and reimbursement
                                          pressures in spine. For FY2011- FY2013, we lower our EPS estimates to $3.46, $3.75, and $4.11 from $3.51,
                                          $3.82, and $4.23, respectively. In total, we now project FY2011E-FY2013E EPS CAGR of 8.9%vs. our
                                          previous forecast of 9.7%. As a result of lower earnings estimates and reduced projected growth rate, we
                                          lower our 12-month price target to $40. This implies an 11X multiple on CY2011E EPS, which we think is
                                          reasonable, given Medtronic’s projected growth vs. the peer group. Our rating remains Neutral.
                                          Buy MDT puts to hedge ahead of earnings
                                          MDT options prices are inexpensive ahead of earnings. We recommend shareholders buy September $35
                                          puts for $0.62 to hedge as we see the potential for consensus estimates to be revised lower following the
                                          report.



Technology

Taleo Corporation (TLEO): Meetings set positive tone; Secular winner at reasonable valuation                                                       17

TLEO, $24.82                              Stephanie Withers, CFA (San Francisco): stephanie.withers@gs.com, (415) 249-7470
Market cap                  $1,065 mn
                                          Goldman Sachs & Co.
                                          Sarah Friar (San Francisco): sarah.friar@gs.com, (415) 249-7436
Target price                     $30.00
                                          Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E    Ventsi Stoichev (San Francisco): ventsi.stoichev@gs.com, (415) 249-7440
EPS ($)                   0.41     0.64   Goldman Sachs & Co.
P/E                    60.4X     38.8X

EPS Quarter/Interim*      0.09     0.11
                                          What's changed
                                          We hosted a series of investor meetings in New York with Taleo’s CEO, Mike Gregoire, and SVP of Products
Investment Lists                          & Technology, Jason Blessing.
                   Americas Buy List      Implications
Coverage view                Attractive   Through the day, investors were focused on six main topics: (1) The backdrop: The environment seems to be
*Current and a year ago
                                          constructive for HR application spending, and we expect Taleo organic growth can approach the high-teens
                                          to 20% level in the coming 12-18 months as long as a relatively benign macro backdrop persists. (2)
                                          Investment in growth: Taleo intends to channel the majority of the stepped-up investment announced on its
                                          earnings call into Sales & Marketing, balanced between SMB and enterprise, and spread geographically. (3)
                                          CFO Katy Murray’s departure: Taleo has hired an executive search firm and is interviewing candidates; we
                                          expect the process to be wrapped up or nearing completion by Ms. Murray’s departure in October. (4) The
                                          evolving competitive landscape: There is a general sentiment among investors that competition in HR
                                          software is heating up; the competitive landscape is evolving, but the pure-plays remain rational on pricing




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                         August 11, 2010



                                            and the big incumbents continue to be culturally challenged in SaaS. (5) Product roadmap: The company has
                                            the R&D infrastructure it needs to execute its product roadmap; focus remains on continued innovation in
                                            core recruiting, building out the suite of HR apps and wrapping in analytics; we view analytics as a potentially
                                            powerful differentiating factor. (6) M&A: Management continues to look for appealing accretive deals that fit
                                            stringent acquisition criteria.
                                            Valuation
                                            Our 12-month, $30 price target is based on EV/sales, EV/adjusted FCF, DCF, and an M&A premium. The
                                            stock trades at 3.1X 2011E revenues and 25.8X 2011E adjusted FCF versus SaaS peers at 4.8X and 33.2X.
                                            Key risks
                                            Risks include potential acquisitions, competition, and CFO transition.



Transportation

ALL America Latina Logistica (ALLL11.SA): Record EBITDA margin despite weak grains, positive 2H                                                               18
outlook

ALLL11.SA, R$16.57                          Eduardo Siffert Couto, CFA (Sao Paulo): eduardo.couto@gs.com, +55(11)3371-0764
Market cap                R$11,376 mn
                                            Goldman Sachs Brasil Bco Múlt S.A.
                                            Tais Correa (Sao Paulo): tais.correa@gs.com, +55(11)3371-0833
Target price                     R$21.30
                                            Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec         2010E      2011E

EPS (R$)                  0.24      0.39    News
P/E                    69.8X       42.2X    ALL released full 2Q2010 results today (August 10) before market open. The main EBITDA and volume
                                            figures for 2Q were pre-released on July 20. The company reported R$ 793 mn in consolidated net revenues,
EPS Quarter/Interim*      0.15      0.10
                                            up 4% yoy and 3% down from our R$ 815 mn estimate. The reported EBITDA margin of 56.8% for the
Investment Lists                            Brazilian operation was +115 bp above our estimate. ALL’s 2Q2010 net income reached R$ 136 mn, 36%
                   Americas Buy List        above our forecast.
Coverage view                Attractive     Analysis
                                            ALL’s 2Q2010 operational numbers reflect the company’s strong business model, as margins and EBITDA
*Current and a year ago
                                            continue to expand on an annual basis. ALL’s 2Q2010 record margins are particularly impressive considering
                                            that grain volumes (soybean and corn), which are the highest margin product of ALL, dropped 14% yoy to
                                            51% of total cargo vs. 62% one year ago. Sugar also grew 140% yoy, representing 12% of total Brazilian
                                            volumes. We previously thought that higher sugar volumes would negatively impact ALL’s margins, which
                                            was not the case in 2Q. Another highlight was lower income taxes that pushed ALL’s net income up. On the
                                            cash flow side, if we exclude expansion capex and negative working capital, ALL generated R$214 mn in
                                            positive cash flow during the 2Q2010. ALL’s working capital was disappointing, as it remains negative with
                                            accounts receivable going up while suppliers decline, which we do not view as a recurrent situation.
                                            Implications
                                            ALL operational performance has been strong this year, with EBITDA up 14% in the 1H2010. The company
                                            was able to significantly recover profitability despite lower grain trading. Growth outlook for the 2H2010
                                            seems solid as better grain prices and a weaker base of comparison from last year should boost EBITDA by
                                            49% yoy in 2H2010.The company is trading at 10.5X 2010E EV/EBITDA, 12% below its historical average.
                                            Our Buy-rating, estimates, and price target are unchanged.



Reports Published

                                           USA: FOMC Meeting Results - A "Baby Step" Toward QE2, Tue Aug 10 2010


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Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                              August 11, 2010




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