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									                                          Americas Morning Summary
                                          February 11, 2011



The Goldman Sachs Group, Inc.
                                           Focus Items
This document contains comments
related to the following stocks:           Americas: Asset Managers: Money manager barometer: domestic equity flows
                                                                                                                                                                       1
                                           reach newer highs; munis outflow.
Alexion Pharmaceuticals, Inc.              Ameriprise Financial, Inc. (AMP) Buy: Better retail trends enhance structurally
                                                                                                                                                                       2
(ALXN)                                     improving ROE; Up to Buy
AllianceBernstein Holding L.P. (AB)
Altera Corp. (ALTR)                        Options Research: Financials: Buy calls ahead of analyst days, capital results                                              3
Ameriprise Financial, Inc. (AMP)           Americas: Technology: TMT DESKTOP                                                                                           4
Bank of America Corporation (BAC)
BCE, Inc. (BCE)                            Wright Express Corp. (WXS): Strong story intact, but disciplined on price;
                                                                                                                                                                       5
BCE, Inc. (BCE.TO)                         Downgrade to Neutral
Blue Nile, Inc. (NILE)
Caterpillar, Inc. (CAT)                    Sprint Nextel Corp. (S): Positive inflections in 4Q, but bar now set higher; down
                                                                                                                                                                       6
CBOE Holdings, Inc. (CBOE)                 to Neutral
Cephalon, Inc. (CEPH)
                                           Alexion Pharmaceuticals, Inc. (ALXN): We expect continued outperformance in
Chipotle Mexican Grill, Inc. (CMG)                                                                                                                                     7
Citigroup Inc. (C)                         2011; maintain CL-Buy
DaVita Inc. (DVA)
Education Management Corp.
(EDMC)
                                           Key Data Changes
EnCana Corp. (ECA)                         Investment List Additions
EnerSys Inc. (ENS)
                                           Company                                      Ticker                            Investment List Additions
Equifax, Inc. (EFX)
Expedia Inc. (EXPE)                        Ameriprise Financial, Inc.                   AMP                                   Americas Buy List
FLIR Systems, Inc. (FLIR)
Gamco Investors Inc. (GBL)                 Investment List Removals
General Maritime Corporation               Company                                      Ticker                         Investment List Removals
(GMR)
                                           Sprint Nextel Corp.                              S                                 Americas Buy List
Graham Packaging Company Inc.
(GRM)                                      Wright Express Corp.                         WXS                                   Americas Buy List
Group 1 Automotive, Inc. (GPI)
GSI Commerce, Inc. (GSIC)                  Rating and price target changes
Ingram Micro Inc. (IM)                                                                  Rating/
International Flavors & Fragrances                                                     Coverage                Price Target                       Estimates
Inc. (IFF)                                                                               view
                                                                                                                                        Current       Next    Fiscal
J.P. Morgan Chase & Co. (JPM)              Company                          Ticker    New        Old     New        Old       % chg
                                                                                                                                         Year         Year     y/e
Kraft Foods Inc. (KFT)
Laboratory Corporation of America          Alexion Pharmaceuticals, Inc.    ALXN      B/C       unch   ↑ $100.00   $89.00     12.4%      $1.78        $2.16   Dec
Holdings (LH)                              AllianceBernstein Holding L.P.    AB       N/A       unch   ↓ $24.00    $26.00     (7.7%)     $1.75        $2.05   Dec
Lorillard, Inc. (LO)
                                           Ameriprise Financial, Inc.        AMP     ↑ B/A      N/A    ↑ $73.00    $61.00     19.7%      $5.70        $6.45   Dec
Mack Cali Realty Corporation (CLI)
Mettler-Toledo International Inc.          BCE, Inc.                         BCE      N/N       unch   ↑ $35.00    $34.00     2.9%      C$2.84      C$2.99    Dec
(MTD)                                      BCE, Inc.                        BCE.TO    N/N       unch ↑ C$35.00 C$34.00        2.9%      C$2.99      C$3.13    Dec
MMX (MMXM3.SA)
Momenta Pharmaceuticals (MNTA)             Blue Nile, Inc.                   NILE     N/N       unch   ↓ $57.00    $60.00     (5.0%)     $1.05        $1.22   Dec
Nordic American Tanker Shipping            CBOE Holdings, Inc.              CBOE      N/N       unch   ↑ $28.00    $25.00     12.0%      $1.50        $1.75   Dec
For further product information,
contact:

New York Investment Research
(212) 902-1000
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Global Investment Research
Ltd. (NAT)                           Chipotle Mexican Grill, Inc.            CMG        B/A      unch   ↑ $310.00 $285.00           8.8%           $7.00        $9.15     Dec
Northrop Grumman Corp. (NOC)
Och-Ziff Capital Management Group    Education Management Corp.              EDMC       N/N      unch    ↑ $14.00       $12.50      12.0%          $1.71        $1.40     Jun
LLC (OZM)                            EnCana Corp.                            ECA        S/N      unch    ↑ $30.00       $27.00      11.1%          $0.61        $0.54     Dec
Overseas Shipholding Group (OSG)
                                     EnerSys Inc.                            ENS        N/N      unch    ↑ $36.00       $34.00      5.9%           $2.50        $2.80     Mar
Panera Bread Co. (PNRA)
Parker Hannifin Corp. (PH)           Equifax, Inc.                            EFX       N/N      unch    ↓ $41.00       $43.00      (4.7%)         $2.52        $2.87     Dec
PepsiCo, Inc. (PEP)                  Expedia Inc.                            EXPE       N/N      unch    ↓ $26.00       $29.00   (10.3%)           $1.92        $2.19     Dec
Post Properties Inc. (PPS)
Pzena Investment Management,         FLIR Systems, Inc.                      FLIR       N/C      unch    ↑ $32.00       $30.00      6.7%           $1.80        $2.00     Dec
Inc. (PZN)                           General Maritime Corporation            GMR        N/N      unch    ↓ $3.25        $3.75    (13.4%)           ($0.96)      ($0.94)   Dec
Republic Services, Inc. (RSG)
                                     Graham Packaging Company Inc.           GRM        B/N      unch    ↑ $21.00       $17.00      23.5%          $1.90        $2.40     Dec
Scripps Networks Interactive, Inc.
(SNI)                                GSI Commerce, Inc.                      GSIC       N/N      unch    ↓ $25.00       $27.00      (7.4%)         $0.83        $1.20     Dec
Spirit AeroSystems Holdings, Inc.    International Flavors & Fragrances
(SPR)                                                                           IFF     N/N      unch    ↑ $58.00       $57.00      1.8%           $3.71        $3.99     Dec
                                     Inc.
Sprint Nextel Corp. (S)              Mettler-Toledo International Inc.       MTD        N/N      unch   ↑ $169.00 $161.00           5.0%           $6.94        $7.89     Dec
Teekay Tankers Ltd. (TNK)
The Goodyear Tire & Rubber Co.       MMX                                   MMXM3.SA     N/N      unch ↓ R$11.20 R$14.50 (22.8%)                    R$0.12       R$0.97    Dec
(GT)                                 Nordic American Tanker Shipping
                                                                             NAT        B/N      unch    ↓ $28.00       $29.00      (3.4%)         $0.22        $0.15     Dec
Thomson Reuters Corp. (TRI)          Ltd.
Tiffany & Company (TIF)              Northrop Grumman Corp.                  NOC        S/C      unch    ↑ $61.00       $54.00      13.0%          $6.95        $7.10     Dec
Wright Express Corp. (WXS)           Och-Ziff Capital Management
Wyndham Worldwide Corp. (WYN)                                                OZM        N/A      unch    ↑ $18.00       $16.00      12.5%          $1.44        $1.60     Dec
                                     Group LLC
Wynn Resorts, Limited (WYNN)         Overseas Shipholding Group              OSG        S/N      unch    ↓ $27.00       $29.00      (6.9%)         ($3.54)      ($1.81)   Dec
                                     PepsiCo, Inc.                           PEP        B/A      unch    ↓ $77.00       $78.00      (1.3%)         $4.55        $5.03     Dec
                                     Post Properties Inc.                    PPS        S/N      unch    ↑ $33.00       $31.00      6.5%           $1.60        $1.76     Dec
                                     Spirit AeroSystems Holdings, Inc.       SPR        N/A      unch    ↑ $26.00       $24.00      8.3%           $1.90        $2.50     Dec
                                     Sprint Nextel Corp.                          S    ↓ N/N     B/N     ↓ $5.00        $6.00    (16.7%)           ($0.79)      ($0.22)   Dec
                                     The Goodyear Tire & Rubber Co.             GT      N/A      unch    ↑ $16.00       $14.00      14.3%          $0.37        $1.94     Dec
                                     Thomson Reuters Corp.                      TRI     N/A      unch    ↓ $40.00       $43.00      (7.0%)         $2.37        $2.80     Dec
                                     Wright Express Corp.                    WXS       ↓ N/N     B/N      $54.00          unch        --           $2.74        $3.35     Dec

                                     Estimate changes
                                                                                       Rating/               Current Year                           Next Year             Fiscal
                                                                                      Coverage
                                                                                                       New        Old       % chg          New         Old       % chg     y/e
                                     Company                              Ticker        view
                                     Alexion Pharmaceuticals, Inc.        ALXN          B/C        ↑ $1.78      $1.74        2.0%      ↓ $2.16        $2.30     (5.8%)    Dec
                                     AllianceBernstein Holding L.P.        AB           N/A        ↓ $1.75      $1.80       (2.8%)     ↓ $2.05        $2.21     (7.1%)    Dec
                                     Ameriprise Financial, Inc.            AMP          B/A        ↑ $5.70      $5.50        3.6%      ↑ $6.45        $6.20      4.1%     Dec
                                     BCE, Inc.                             BCE          N/N       ↓ C$2.84      C$2.87      (1.0%)    ↑ C$2.99 C$2.95            1.5%     Dec
                                     BCE, Inc.                            BCE.TO        N/N       ↑ C$2.99      C$2.95       1.5%     ↑ C$3.13 C$3.05            2.6%     Dec
                                     Blue Nile, Inc.                       NILE         N/N        ↓ $1.05      $1.17       (10.3%)    ↓ $1.22        $1.37     (10.6%)   Dec
                                     CBOE Holdings, Inc.                  CBOE          N/N        ↑ $1.50      $1.40        6.9%      ↑ $1.75        $1.60      9.2%     Dec
                                     Cephalon, Inc.                       CEPH          N/N        ↑ $8.40      $8.25        1.9%          $6.58      unch         --     Dec
                                     Chipotle Mexican Grill, Inc.          CMG          B/A        ↑ $7.00      $6.83        2.4%      ↑ $9.15        $8.51      7.6%     Dec
                                     DaVita Inc.                           DVA          B/N        ↓ $4.80      $4.90       (1.9%)     ↓ $6.05        $6.15     (1.6%)    Dec
                                     Education Management Corp.           EDMC          N/N        ↓ $1.71      $1.73       (1.4%)     ↑ $1.40        $1.13     24.0%      Jun
                                     EnCana Corp.                          ECA          S/N        ↑ $0.61      $0.26       131.3%     ↑ $0.54        $0.27     102.5%    Dec
                                     EnerSys Inc.                          ENS          N/N        ↑ $2.50      $2.30        8.8%      ↑ $2.80        $2.70      3.5%     Mar
                                     Equifax, Inc.                         EFX          N/N        ↓ $2.52      $2.59       (2.6%)     ↓ $2.87        $2.90     (1.3%)    Dec
                                     Expedia Inc.                         EXPE          N/N        ↓ $1.92      $2.05       (5.9%)     ↓ $2.19        $2.34     (6.2%)    Dec
                                     FLIR Systems, Inc.                    FLIR         N/C        ↑ $1.80      $1.75        2.9%      ↑ $2.00        $1.95      2.3%     Dec
                                     Gamco Investors Inc.                  GBL          N/A        ↑ $3.00      $2.94        2.1%      ↑ $3.65        $3.55      2.8%     Dec
                                     General Maritime Corporation          GMR          N/N       ↓ ($0.96)     ($0.84)     (15.0%) ↓ ($0.94) ($0.36) (158.7%)            Dec
Graham Packaging Company
                                  GRM      B/N   ↑ $1.90     $1.80      5.3%     ↑ $2.40   $2.30      4.5%     Dec
Inc.
Group 1 Automotive, Inc.          GPI      B/A   ↑ $3.61     $3.46      4.6%     ↑ $4.53   $4.25      6.6%     Dec
GSI Commerce, Inc.                GSIC     N/N   ↓ $0.83     $0.86     (4.0%)    ↓ $1.20   $1.22     (2.0%)    Dec
International Flavors &
                                  IFF      N/N   ↑ $3.71     $3.58      3.5%     ↑ $3.99   $3.88      3.0%     Dec
Fragrances Inc.
Mettler-Toledo International
                                  MTD      N/N   ↑ $6.94     $6.68      3.9%     ↑ $7.89   $7.57      4.3%     Dec
Inc.
MMX                             MMXM3.SA   N/N   ↑ R$0.12 (R$0.05)      NM       ↑ R$0.97 R$0.68     43.4%     Dec
Momenta Pharmaceuticals          MNTA      N/C   ↑ $3.05     $2.47     23.8%     ↑ $3.05   $2.75     10.8%     Dec
Nordic American Tanker
                                  NAT      B/N   ↓ $0.22     $0.32     (31.1%)   ↓ $0.15   $0.71     (78.9%)   Dec
Shipping Ltd.
Northrop Grumman Corp.            NOC      S/C   ↓ $6.95     $7.05     (1.4%)    ↑ $7.10   $6.80      4.4%     Dec
Och-Ziff Capital Management
                                  OZM      N/A   ↑ $1.44     $1.38      4.6%     ↑ $1.60   $1.50      6.3%     Dec
Group LLC
Overseas Shipholding Group        OSG      S/N   ↓ ($3.54)   ($3.33)   (6.1%)    ↓ ($1.81) ($1.68)   (8.2%)    Dec
PepsiCo, Inc.                     PEP      B/A   ↓ $4.55     $4.60     (1.0%)    ↓ $5.03   $5.12     (1.8%)    Dec
Post Properties Inc.              PPS      S/N   ↑ $1.60     $1.50      6.9%     ↑ $1.76   $1.70      3.6%     Dec
Pzena Investment
                                  PZN      S/A   ↑ $0.41     $0.38      7.5%     ↑ $0.49   $0.47      2.7%     Dec
Management, Inc.
Scripps Networks Interactive,
                                  SNI      S/A   ↑ $2.71     $2.70      0.4%     ↑ $3.07   $3.05      0.6%     Dec
Inc.
Spirit AeroSystems Holdings,
                                  SPR      N/A   ↓ $1.90     $2.05     (7.6%)    ↓ $2.50   $2.60     (4.0%)    Dec
Inc.
Sprint Nextel Corp.                S       N/N   ↓ ($0.79)   ($0.66)   (19.3%) ↑ ($0.22) ($0.30)     27.0%     Dec
Teekay Tankers Ltd.               TNK      N/N   ↓ $0.28     $0.32     (12.0%)   ↓ $0.47   $0.72     (35.8%)   Dec
The Goodyear Tire & Rubber
                                  GT       N/A    $0.37       unch       --      ↑ $1.94   $1.90      1.9%     Dec
Co.
Thomson Reuters Corp.             TRI      N/A   ↓ $2.37     $2.50     (5.4%)    ↓ $2.80   $2.90     (3.5%)    Dec
Wyndham Worldwide Corp.           WYN      N/A    $2.11       unch       --      ↑ $2.40   $2.30      4.3%     Dec


Other Headlines
Basic Materials
MMX (MMXM3.SA): Strong growth and challenges ahead; remain Neutral                                                   8

Consumer Cyclicals
Education Management Corp. (EDMC): 2Q enrollment growth strong, but slowed sequentially                              9
Group 1 Automotive, Inc. (GPI): A top-line driven growth story that still has considerable upside                10
The Goodyear Tire & Rubber Co. (GT): An attractive value play; but we think better entry points
                                                                                                                 11
are likely
Wynn Resorts, Limited (WYNN): First Take: Solid 4Q; management tepid on LV but bullish on
                                                                                                                 12
Macau
Panera Bread Co. (PNRA): First Take: Strong 4Q10 profitability may be calm before the storm                      13
Thomson Reuters Corp. (TRI): Margin base reset, the wait for double-digit profit growth ensues                   14
Scripps Networks Interactive, Inc. (SNI): Programming for 2011 audience growth, but waiting to
                                                                                                                 15
materialize
Chipotle Mexican Grill, Inc. (CMG): SSS acceleration overwhelms the early impact of food
                                                                                                                 16
inflation
Blue Nile, Inc. (NILE): Sales strong but marketing holds back flow through, lowering EPS                         17
Wyndham Worldwide Corp. (WYN): Updating estimates after 4Q results                                               18
Americas: Retail: With jewelry prices up DD, how much do you love your valentine?                                19

Consumer Staples
International Flavors & Fragrances Inc. (IFF): EPS holding up but gross profit growth slowing
                                                                                                     20
sharply; Neutral
PepsiCo, Inc. (PEP): Highly visible high-single-digit EPS growth good enough                         21
Kraft Foods Inc. (KFT): Overhangs shrink (but do not disappear) after guidance reset                 22
Lorillard, Inc. (LO): Some drama, but limited insight from today's TPSAC meeting                     23

Energy
EnCana Corp. (ECA): Cutbank value above NAV; raise price target, maintain relative Sell              24
EnerSys Inc. (ENS): EnerSys continues to benefit from cyclical recovery in F3Q11                     25
Americas: Energy: Tankers: Tankers: Tough start to 2011, lowering estimates and price targets        26

Financial Services
CBOE Holdings, Inc. (CBOE): A solid quarter overshadowed by surging industry volumes                 27
Och-Ziff Capital Management Group LLC (OZM): AuM growth and income; raise price target to
                                                                                                     28
$18
Post Properties Inc. (PPS): Growth picking up but still Sell on valuation                            29
Mack Cali Realty Corporation (CLI): Still Neutral as 2011 growth seems flat but we favor CLI's
                                                                                                     30
5.2% yield

Healthcare
Cephalon, Inc. (CEPH): 4Q brings strength but still LT uncertainty and sizable cash balance          31
DaVita Inc. (DVA): 4Q wrap-up: Positioning for bundle on track; Maintain Buy                         32
Mettler-Toledo International Inc. (MTD): 4Q2010: Strong 4Q and guidance but shares look fairly
                                                                                                     33
valued
Momenta Pharmaceuticals (MNTA): Regulatory and litigation risk persists; we remain on the
                                                                                                     34
sidelines
Laboratory Corporation of America Holdings (LH): Volume improvement in 4Q trends; maintain
                                                                                                     35
2011-2012 EPS

Industrials
Republic Services, Inc. (RSG): 4Q2010 beats expectations on higher margins; Solid FCF story          36
Northrop Grumman Corp. (NOC): Adjusting estimates for Ships; reiterate Sell given Defense
                                                                                                     37
outlook
Caterpillar, Inc. (CAT): Construction equipment recovery accelerating, acute focus on cost control   38
Spirit AeroSystems Holdings, Inc. (SPR): Growth story on track, but cash far from strong;
                                                                                                     39
reiterate Neutral
FLIR Systems, Inc. (FLIR): Impressive Commercial performance in 4Q; Government still tough           40
Parker Hannifin Corp. (PH): PH management meetings reinforce positive view                           41
Graham Packaging Company Inc. (GRM): Stronger than expected 4Q results; Reiterate Buy on
                                                                                                     42
FCF, valuation

Technology
Equifax, Inc. (EFX): 4Q tops, 1H11 investments higher, but fundamentals are improving                43
Expedia Inc. (EXPE): 4Q2010 review: Running harder to stay in place or to jump ahead?                44
GSI Commerce, Inc. (GSIC): Adjusting interest expense and share count; lower target, estimates       45
Ingram Micro Inc. (IM): Maintaining our Street-high EPS of $2.40 for 2011; reiterate CL-Buy          46
Altera Corp. (ALTR): Meetings highlight growth opportunity; still Neutral on cyclical risks          47

Telecom Services
BCE, Inc. (BCE): Investing for growth in the right places, but competitive risk looms   48

Reports Published
Americas Morning Summary                                                                                                                February 11, 2011




Focus Items

Americas: Asset Managers: Money manager barometer: domestic equity flows reach newer highs; munis                                                      1
outflow.

                                          Marc Irizarry (New York): marc.irizarry@gs.com, (212) 902-4175
                                          Goldman Sachs & Co.
                                          Alexander Blostein, CFA (New York): alexander.blostein@gs.com, (212) 357-9976
                                          Goldman Sachs & Co.
                                          Neha Killa (New York): neha.killa@gs.com, (646) 446-1770
                                          Goldman Sachs & Co.

                                          Equity flows positive, while munis continue to outflow
                                          Lipper FMI data suggests equity inflows continue in the current week with +$4.6 bn. This week saw the gap
                                          between domestic (+$4.0 bn) and non-US flows (+$0.6 bn) widen further. This compares to +$1.8 bn of total
                                          equity flows in the prior week (US: +$1.4 bn; non-US: +$0.4 bn) as reported by ICI. Total bond fund flows
                                          continue to be positive, as outflows in muni funds (-$1.1 bn) is offset by inflows of +$3.7 bn in taxable bond
                                          funds, taking total flows to +$2.5 bn. This compares to +$0.6 bn of inflows last week as per ICI (+$1.8 bn in
                                          taxable bond funds; -$1.1 bn in munis). MMF’s saw inflows of +$10.2 bn, after 5 consecutive weeks of
                                          outflows.
                                          Equity ETFs (ex-comm) continue to outflow
                                          Equity ETFs (ex-commodities) continue to outflow with -$2.4 bn, versus -$2.2 bn last week. Commodity ETFs
                                          inflowed +$270 mn, up from +$36 mn in the prior week. Bond ETF inflows slowed down to +$20 mn versus
                                          +$791 mn last week, as inflows in taxable ETF’s decelerated to +$44 mn, from +$828 mn in the prior week.
                                          Equity and FI fund performance
                                          Equity fund performance for 1Q11TD is +3.3%, lagging the S&P500’s +5.1%. Equity centric manager, PZN
                                          leads the group with +7.1%, followed by CLMS with +4.4% in equity asset-weighted performance. Fixed-
                                          income asset-weighted performance for the group is -0.6%, with the Barclays Aggregate Bond Index’ -1.8%.
                                          ART continues to lead with +1.9% in performance, followed by CLMS and IVZ with +1.6% and 0.6%
                                          respectively in asset-weighted FI performance.
                                          Estimate changes post earnings
                                          AB reported January AuM and 4Q10 results. Although outflows are getting less worse (January outflows of -
                                          $1.4 bn, versus -$29 bn of outflows in 4Q10), we expect outflows to linger at a modest pace in 2011, as
                                          equity performance remains a concern. We revise our 2011/12 estimates for AB to $1.75/$2.05 from
                                          $1.80/$2.21, and revise our 12-month price target for AB to $24 from $26 on weaker flow trends. On the back
                                          of earnings results, we revise our 2011/12 estimates for GBL/ PZN to $3.00/$3.65 and $0.41/$0.49,
                                          respectively. We introduce 2013 estimates for AB/GBL/PZN.




Ameriprise Financial, Inc. (AMP) Buy: Better retail trends enhance structurally improving ROE; Up to Buy                                               2

AMP, $61.89                               Alexander Blostein, CFA (New York): alexander.blostein@gs.com, (212) 357-9976
Market cap                 $15,391 mn
                                          Goldman Sachs & Co.
                                          Marc Irizarry (New York): marc.irizarry@gs.com, (212) 902-4175
Target price                     $73.00
                                          Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E    Neha Killa (New York): neha.killa@gs.com, (646) 446-1770
EPS ($)                   5.70     6.45   Goldman Sachs & Co.
P/E                    10.9X      9.6X

EPS Quarter/Interim*      1.33     0.81
                                          Source of opportunity
                                          We upgrade Ameriprise to Buy from Neutral, with a $73 price target, implying 18% upside from current levels.
Investment Lists                          We view AMP as a direct beneficiary of the improving retail investor risk appetite, which further enhances
                   Americas Buy List      AMP’s structural shift toward higher ROE businesses and is not fully reflected in the Street’s EPS estimates
Coverage view                Attractive   or the stock’s valuation. We raise our 2011/2012/2013 EPS estimates to $5.70/$6.45/$7.23 from
                                          $5.50/$6.20/$6.90 on stronger industry flows, better equity markets so far in 1Q and positive operating
*Current and a year ago
                                          leverage amid stronger financial advisor productivity and continued cost synergies from the Columbia deal.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                         February 11, 2011



                                 Catalyst
                                 We see the following key themes driving the stock in the coming months: (1) Retail re-risking is unfolding,
                                 evidenced by $21 billion on net inflows into equities YTD (best January since 2007), with a tilt toward
                                 domestic equities, a sweet spot for Columbia which continues to see stronger investment performance; (2)
                                 AMP’s margin expansion story remain in-tact and we see over 250 bp core margin improvement by 2012 led
                                 by cost synergies in Columbia (not assuming higher rates which would add at least another 50 bp to the
                                 margin); (3) AMP is both willing and able to return capital to shareholders, on track to buy back 7% of its
                                 current market cap by 2012 – one of the highest among large-cap financials; (4) AMP’s valuation is yet to re-
                                 rate as the firm’s ROE is on track to improve from current 12% to an estimated 15% in 2012. That said, the
                                 stock’s current 11X 2011 P/E is still 15% below peers based on AMP’s evolving business mix.
                                 Valuation
                                 We raise our 12-month SOTP-based price target to $73 (from $61 prior) on higher estimates and rollover to
                                 2012. Our target price implies 11X 2012 P/E.
                                 Key risks
                                 Equity market volatility and integration of Columbia.



Options Research: Financials: Buy calls ahead of analyst days, capital results                                                                  3

                                 John Marshall (New York): john.marshall@gs.com, (212) 902-6848
                                 Goldman Sachs & Co.
                                 Richard Ramsden (New York): richard.ramsden@gs.com, (212) 357-9981
                                 Goldman Sachs & Co.
                                 Maria Grant, CFA (New York): maria.grant@gs.com, (212) 855-0070
                                 Goldman Sachs & Co.
                                 Ryan M. Nash, CFA (New York): ryan.nash@gs.com, (212) 902-8963
                                 Goldman Sachs & Co.
                                 Jessica Binder Graham, CFA (New York): jessica.graham@gs.com, (212) 902-7693
                                 Goldman Sachs & Co.
                                 Katherine Fogertey (New York): katherine.fogertey@gs.com, (212) 902-6473
                                 Goldman Sachs & Co.

                                 Near-term catalysts; buy BAC, C, JPM, XLF April calls
                                 April options capture an unusually large number of catalysts that have the potential to drive financials shares
                                 higher.
                                 JPM analyst day (15-Feb). Management is likely to discuss dividend increases and a substantial buyback
                                 (potentially $10b). Investors are waiting for JPMs first long-term guidance statements since reg reform.
                                 BAC analyst day (8-Mar). Management may provide further comfort on their non-GSE mortgage exposure
                                 that leads investors to lower loss estimates; we lowered ours by 15% two weeks ago.
                                 Fed’s Capital assessment results (20-Mar). The Fed is expected to communicate the results to banks, and
                                 may even publish the bank-by-bank details. Investors underweight the sector could be comforted.
                                 GSE-reform (ongoing). Less government support for the GSEs may be a positive for banks as spreads and
                                 fees would likely go up.
                                 C, JPM, BAC earnings (11, 13, 15-April). Important loan growth data.
                                 Fed comments to calm fears; sell January-2013 strangles
                                 The Fed’s assessment of capital levels at large banks is likely to reassure investors that there is more than
                                 enough capital for banks to weather future systemic stresses. For select big cap banks, 1-2 year options
                                 prices are particularly elevated vs a 20 yr history. We recommend selling Jan-2013 strangles in BAC, C, JPM
                                 and XLF on their own or to fund April calls.



Americas: Technology: TMT DESKTOP                                                                                                               4

                                 James Covello (New York): james.covello@gs.com, (212) 902-1918
                                 Goldman Sachs & Co.
                                 James Mitchell, CFA (New York): james.mitchell@gs.com, (212) 357-1849
                                 Goldman Sachs & Co.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                       February 11, 2011



                                 Jason Armstrong, CFA (New York): jason.armstrong@gs.com, (212) 902-8156
                                 Goldman Sachs & Co.
                                 Bill Shope, CFA (New York): bill.shope@gs.com, (212) 902-6834
                                 Goldman Sachs & Co.
                                 Derek R. Bingham (San Francisco): derek.bingham@gs.com, (415) 249-7435
                                 Goldman Sachs & Co.
                                 In Young Chung (Seoul): inyoung.chung@gs.com, +82(2)3788-1799
                                 Goldman Sachs (Asia) L.L.C., Seoul Branch
                                 Craig Hettenbach (New York): craig.hettenbach@gs.com, (212) 902-9959
                                 Goldman Sachs & Co.
                                 Simona Jankowski, CFA (San Francisco): simona.jankowski@gs.com, (415) 249-7437
                                 Goldman Sachs & Co.
                                 Thomas D. Lee (New York): thomas.d.lee@gs.com, (212) 902-2066
                                 Goldman Sachs & Co.
                                 Vincent Lin, CFA (New York): vincent.lin@gs.com, (212) 934-0510
                                 Goldman Sachs & Co.
                                 Julio C. Quinteros Jr. (San Francisco): julio.quinteros@gs.com, (415) 249-7464
                                 Goldman Sachs & Co.
                                 John T. Williams (New York): john.t.williams@gs.com, (212) 357-3948
                                 Goldman Sachs & Co.
                                 James Schneider, Ph.D. (New York): james.schneider@gs.com, (917) 343-3149
                                 Goldman Sachs & Co.
                                 Kate Kotlarsky (New York): kate.kotlarsky@gs.com, (212) 357-7956
                                 Goldman Sachs & Co.
                                 Stephanie Withers, CFA (San Francisco): stephanie.withers@gs.com, (415) 249-7470
                                 Goldman Sachs & Co.
                                 Drew Borst (New York): drew.borst@gs.com, (212) 902-7906
                                 Goldman Sachs & Co.
                                 Maria Grant, CFA (New York): maria.grant@gs.com, (212) 855-0070
                                 Goldman Sachs & Co.
                                 Katherine Fogertey (New York): katherine.fogertey@gs.com, (212) 902-6473
                                 Goldman Sachs & Co.
                                 John Marshall (New York): john.marshall@gs.com, (212) 902-6848
                                 Goldman Sachs & Co.
                                 Gregory J. Chwatko (New York): gregory.chwatko@gs.com, (212) 902-0673
                                 Goldman Sachs & Co.
                                 Scott Marchakitus, CFA (New York): scott.marchakitus@gs.com, (212) 902-9760
                                 Goldman Sachs & Co.
                                 Scott Wipperman, CFA (New York): scott.wipperman@gs.com, (212) 357-9922
                                 Goldman Sachs & Co.
                                 Henry King (Hong Kong): henry.king@gs.com, +852-2978-0748
                                 Goldman Sachs (Asia) L.L.C.
                                 Daiki Takayama (Tokyo): daiki.takayama@gs.com, +81(3)6437-9870
                                 Goldman Sachs Japan Co., Ltd.
                                 Michael Bang (Seoul): michael.bang@gs.com, +82(2)3788-1655
                                 Goldman Sachs (Asia) L.L.C., Seoul Branch
                                 Donald Lu, Ph.D (Beijing): donald.lu@ghsl.cn, +86(10)6627-3123
                                 Beijing Gao Hua Securities Company Limited

                                 Increasingly focused on secular themes
                                 Our investment stance across TMT is increasingly focused on secular themes, as we believe the cyclical
                                 refresh of 2010 has largely run its course. Our TMT sub-sector view is fairly balanced between Neutral and
                                 Attractive, as we see increasingly dispersion between secular leaders and laggards.
                                 Mobility and cloud critical for 2011
                                 We see mobility as a key investment theme in 2011, as tablets gain momentum, the LTE/4G ramp begins,
                                 and smartphone/tablet penetration deepens. We also expect mobile devices to disrupt Wintel’s hold on the
                                 traditional compute market, opening up industry profit pools and creating powerful investment opportunities.
                                 Meanwhile, the evolution of the cloud, both public and private, should drive increased technical integration




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                     February 11, 2011



                                           across enterprise infrastructure stacks and lead to greater need for partnerships and M&A amongst the
                                           leading technology vendors.
                                           Preferred stocks
                                           From a stock perspective, our CL Buy-rated names include Cognizant Technology Solutions and Juniper
                                           Networks for their leverage to the shift to cloud computing. For the rise of smartphones and tablets we favor
                                           Apple, Broadcom, Qualcomm, Sapient, Verizon, HTC, and Nitto Denko. We also remain positive on the
                                           towers, SBA Communications and Crown Castle, given their leverage to mobile data growth. For the cyclical
                                           recovery in advertising, we favor Disney and Viacom. Finally, we also recommend Ingram Micro for its
                                           exposure to the capital allocation theme and sharply higher peak EPS power this cycle.
                                           Research highlights
                                           “LTE: fueling the mobile super-cycle; implications across TMT”. Published February 10, 2011.
                                           “Americas: Technology: Capital allocation in TMT: A framework for determining who’s next”. Published
                                           February 3, 2011.



Wright Express Corp. (WXS): Strong story intact, but disciplined on price; Downgrade to Neutral                                                             5

WXS, $52.23                                John T. Williams (New York): john.t.williams@gs.com, (212) 357-3948
Market cap                  $2,025 mn
                                           Goldman Sachs & Co.
                                           Julio C. Quinteros Jr. (San Francisco): julio.quinteros@gs.com, (415) 249-7464
Target price                     $54.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Roman Leal (San Francisco): roman.leal@gs.com, (415) 249-7468
EPS ($)                   2.74     3.35    Goldman Sachs & Co.
                                           Dennis Sevilla (San Francisco): dennis.sevilla@gs.com, (415) 249-7434
P/E                    19.1X      15.6X
                                           Goldman Sachs & Co.
EPS Quarter/Interim*      0.73     0.56

Investment Lists
                                           What happened
                                 Neutral   We are downgrading WXS to Neutral from Buy, as shares are within 3% of our $54 price target and now
Coverage view                    Neutral   trade at what we consider an appropriate 16X our CY11E EPS. Since upgrading WXS to Buy (May 4, 2010),
                                           the stock is +59% (vs. the S&P 500 +13% and the Russell 2000 +14%). YTD, WXS shares are +14%, vs. the
*Current and a year ago
                                           S&P 500 +5% and the Russell 2000 +3%. Over the last 12 months, WXS was up 89% vs. the S&P 500 up
                                           24%. Our 12-month $54 price target and estimates are unchanged.
                                           Current view
                                           Still-favorable view on fleet and fuel cards, but disciplined on our price target. We still view WXS as very well-
                                           positioned in payments given: (1) its strong competitive position in an underpenetrated market, (2) zero
                                           exposure to consumer lending and debit/regulatory risk, (3) an improved fleet spending backdrop, and (4)
                                           potential European upside, but would look for a more attractive entry point before recommending the shares
                                           given current valuation and limited near-term upside. We believe that investors looking for financial
                                           technology and payments exposure should instead focus on Buy-rated FIS ($31.80), MA ($252.13), NTSP
                                           ($15.01), and V ($74.74), which offer average market weighted upside potential of 12%.
                                           Valuation: Our 12-month price target of $54 leverages our sector-relative investment framework and CY11
                                           P/E and EV/EBITDA multiples, and implies a P/E of 16X.
                                           Risks: Upside: continued fuel price appreciation, acquisitions, higher revenue and transaction growth, further
                                           fleet sector improvement. Downside: lower fuel prices, weaker credit quality, client concentration.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                      February 11, 2011




Sprint Nextel Corp. (S): Positive inflections in 4Q, but bar now set higher; down to Neutral                                                                 6

S, $4.60                                     Jason Armstrong, CFA (New York): jason.armstrong@gs.com, (212) 902-8156
Market cap                  $13,676 mn
                                             Goldman Sachs & Co.
                                             John Marshall (New York): john.marshall@gs.com, (212) 902-6848
Target price                        $5.00
                                             Goldman Sachs & Co.
Fiscal y/e Dec            2011E    2012E     Scott Goldman (New York): scott.goldman@gs.com, (212) 357-4640
EPS ($)                   (0.79)    (0.22)   Goldman Sachs & Co.
                                             Jonathan Hong (New York): jonathan.hong@gs.com, (212) 357-9111
P/E                           --        --
                                             Goldman Sachs & Co.
                      *
EPS Quarter/Interim       (0.24)    (0.29)   Matthew Niknam (New York): matthew.niknam@gs.com, (212) 357-3372
Investment Lists                             Goldman Sachs & Co.
                                   Neutral   Lakshmi Venkateshwaran (Bangalore): lakshmi.venkateshwaran@gs.com, (212) 934-6022
                                             Goldman Sachs India SPL
Coverage view                      Neutral
                                             Dan Pellegrinelli (New York): dan.pellegrinelli@gs.com, (212) 902-7516
*Current and a year ago                      Goldman Sachs & Co.

                                             What happened
                                             Sprint reported 4Q results that included an inflection in both postpaid subscribers (growth for first time in
                                             several years), and postpaid ARPU. Margins remained under pressure while capital spending plans are
                                             higher than our prior expectations in 2011, and likely beyond. With key fundamental inflections realized in 4Q
                                             results, and a more risky bar set for 2011, we no longer find compelling risk/reward in Sprint, and hence
                                             downgrade to Neutral. We lower our 12 month DCF/SOTP based PT to $5 (from $6), on higher maintenance
                                             capex. Since upgrading on May 23, 2010 shares are +4.3%, vs S&P500 +21.5%. Over the last 12 mths
                                             shares are +19.2% vs S&P500 +23.4%.
                                             Current view
                                             Our upgrade in the middle of last year was premised on improving fundamentals. Our argument was fewer
                                             “subs up for grabs” would benefit churn and improve net add performance substantially. More recently, we
                                             argued that the anniversary of the Any Mobile Anytime introduction would materially improve ARPU trends.
                                             Each of these played out in 4Q, which, while positive, has reset the bar higher for 2011. In particular, wireless
                                             EBITDA margin expansion (implied) and positive postpaid net adds for 2011 (guidance) are within reason,
                                             but not without substantial risk given the competitive environment.
                                             In our view, with the bar set higher on fundamental performance, the Sprint “Buy” call now hinges almost
                                             entirely on strategic catalyst events, including CLWR funding (Sprint, T-Mobile, a combination of the two),
                                             and a longer-term margin expansion opportunity through network redesign. Each of these carries significant
                                             potential. However, limited visibility and a choppy 2011 trajectory, with substantial 1Q competitive activity
                                             around Verizon’s iPhone launch, makes the risk/reward less compelling, causing us to downgrade to Neutral.
                                             Our revised estimates include 2011 revenues of $32.8bn (up 0.4% from prior), EBITDA of $5.35bn (down
                                             3.7%), and FCF of $1.11bn (down 31%).




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   February 11, 2011




Alexion Pharmaceuticals, Inc. (ALXN): We expect continued outperformance in 2011; maintain CL-Buy                                                         7

ALXN, $89.94                                Sapna Srivastava (New York): sapna.srivastava@gs.com, (212) 357-7528
Market cap                   $8,477 mn
                                            Goldman Sachs & Co.
                                            Hema Srinivasan (New York): hema.srinivasan@gs.com, (212) 902-6761
Target price                      $100.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E    Yogesh Ahuja (New York): yogesh.ahuja@gs.com, (212) 902-0871
EPS ($)                    1.78      2.16   Goldman Sachs & Co.
P/E                       50.7X    41.6X

EPS Quarter/Interim
                      *
                           0.51      0.24
                                            What's changed
                                            Alexion management provided positive pipeline and strategic updates on the call, which increase our
Investment Lists                            confidence in Soliris’s potential. We increase our Soliris sales forecasts and raise our 12-month price target
                    Americas Buy List       to $100.
          Americas Conviction Buy List
                                            Implications
Coverage view                 Cautious      We expect continued ALXN outperformance in 2011, given the following. (1) Soliris offers long-term
*Current and a year ago                     sustainable growth in an industry where growth is the key valuation driver and is increasingly rare. We
                                            estimate Soliris can grow from $735 mm in 2011 to over $2 bn in 2015 (29% CAGR) driven by expansion in
                                            core PNH markets and success in expanded indications. Today’s call increased our confidence in the aHUS
                                            opportunity (the next leg of growth for Soliris), as filing timelines were accelerated.
                                            (2) Several upcoming catalysts are likely to be positive: (1) Filing for Soliris in aHUS has moved up to mid-
                                            2011 from 2H11(launch expected 1H12); (2) Phase III trials for Soliris in transplant will be initiated in mid-
                                            2011, which we estimate implies potential launch in 2014; (3) Phase II proof of concept data for at least three
                                            to four indications expected in 2011.
                                            (3) Acquisition strategy increases our confidence in long-term value creation. We like the recent Taligen and
                                            Orphatec deals, both of which target ultra-orphan disorders, Alexion’s core competency. We believe the
                                            timing and price of both deals were ideal, and both have the potential to create long-term value.
                                            In its 4Q release, ALXN reported 4Q non-GAAP EPS of $0.51 vs. our $0.48 estimate. We revise our 2011-
                                            2013 non-GAAP EPS estimates to $2.16/$2.80/ $3.63 from $2.30/ $2.89/$3.76 on higher expected
                                            expenses.
                                            Valuation
                                            We revise our 12-month, DCF- and M&A-derived price target to $100 from $89 on increased Soliris sales
                                            forecasts.
                                            Key risks
                                            Soliris sales or clinical development in expanded indications disappoints.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                    February 11, 2011




Other Headlines
Basic Materials

MMX (MMXM3.SA): Strong growth and challenges ahead; remain Neutral                                                                                         8

MMXM3.SA, R$9.20                             Marcelo Aguiar (Sao Paulo): marcelo.aguiar@gs.com, +55(11)3371-0771
Market cap                  R$4,351 mn
                                             Goldman Sachs Brasil Bco Múlt S.A.
                                             Pedro Grimaldi, CFA (Sao Paulo): pedro.grimaldi@gs.com, +55(11)3371-0743
Target price                      R$11.20
                                             Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec            2010E    2011E     Diogo Miura (Sao Paulo): diogo.miura@gs.com, +55(11)3371-0766
EPS (R$)                   0.12      0.97    Goldman Sachs Brasil Bco Múlt S.A.
P/E                       77.4X      9.5X

EPS Quarter/Interim
                      *
                           0.18     (0.09)
                                             What's changed
                                             We update our estimates for Brazilian mining company MMX, taking into account the completed private
Investment Lists                             placement and offtake agreement with SK Networks as well as new capex projections for the Serra Azul and
                                   Neutral   Bom Sucesso projects. Our rating remains Neutral as we see balanced risk/reward: DCF valuation points to
Coverage view                      Neutral   attractive long-term upside, but this is dependent on successful execution of projects that are still in their
                                             early stages.
*Current and a year ago
                                             Implications
                                             MMX has also announced the acquisition of the Sudeste port (the company expects the transaction to close
                                             by 2Q2011, subject to regulatory approval) partly through issuance of new shares, as well as a preliminary
                                             agreement with Usiminas for iron ore mining and port handling. We do not include these transactions in our
                                             estimates at this stage but, in our view, these recent developments position MMX to proceed with its stated
                                             growth strategy and thus reduce the probability of a takeout; accordingly, we remove the M&A component
                                             from our valuation.
                                             Valuation
                                             Our revised 12-month price target is R$11.2 (previously R$14.5 with a 20% M&A component at a 20%
                                             premium). We use a 50%/50% blend of DCF (R$15.0/share) and risk-adjusted EV/ton analysis
                                             (R$7.5/share). We make significant changes to estimates: revenues decrease despite higher forecast
                                             volumes as a result of a higher proportion of lower-price (and lower-cost) domestic sales. EPS increases by
                                             43% to R$0.97 in 2011E (lower costs) and is down 54% to R$0.91 in 2012E (higher capex). Our DCF value
                                             per share declines to R$15 from R$16.
                                             Key risks
                                             Risks include higher- or lower-than-expected iron ore prices, the timing and completion of pending
                                             transactions, Brazilian currency appreciation, project execution delays, and higher- or lower-than-estimated
                                             capex.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                February 11, 2011



Consumer Cyclicals

Education Management Corp. (EDMC): 2Q enrollment growth strong, but slowed sequentially                                                                9

EDMC, $20.05                                Maria Karahalis, CFA (New York): maria.karahalis@gs.com, (212) 902-6737
Market cap                   $2,814 mn
                                            Goldman Sachs & Co.
                                            Min Park (San Francisco): min.park@gs.com, (415) 249-7445
Target price                      $14.00
                                            Goldman Sachs & Co.
Fiscal y/e Jun            2011E   2012E     Gabriela Bis (New York): gabriela.bis@gs.com, (212) 902-4513
EPS ($)                    1.71     1.40    Goldman Sachs & Co.
P/E                       11.7X    14.4X

EPS Quarter/Interim
                      *
                           0.49     0.50
                                            What's changed
                                            EDMC reported FY2Q11 results that came in ahead of our estimates. Revenue increased 18% yoy to $772
Investment Lists                            mn versus GS/consensus of $768 mn/$770 mn, and adjusted EPS came in at $0.64 versus GS/consensus of
                                  Neutral   $0.62/$0.61 and company guidance of $0.60-$0.62. Key observations:
Coverage view                     Neutral   (1) Revenue was in line; (2) excluding the $7.5 mn charge for the EFL portfolio accounting change, ed
                                            services expense was in line; (3) G&A was much better than expected; and (4) the tax rate was lower than
*Current and a year ago
                                            expected (38.5% vs. 40%). Enrollment growth for 3Q (SSB) was below our forecast but remained strong
                                            relative to EDMC’s peers.
                                            Implications
                                            We have reduced our 2011 estimates for lower 2H11 enrollment growth and higher ed services expenses,
                                            partially offset by lower G&A expenses and a lower tax rate. We have increased our FY2012 estimates to
                                            reflect a slower decline in revenue per student and lower interest expense (lower LIBOR). However, our
                                            forecast still assumes that EBITDA will step down in 2012 from 2011 as the company transitions to meet the
                                            new rules on gainful employment. Our FY2011-2013 EBITDA estimates are now $655 mn, $549 mn, and
                                            $443 mn versus $666 mn, $494 mn, and $420 mn, respectively. Our FY2011-2013 EPS estimates are now
                                            $1.71, $1.40, and $0.90 versus $1.73, $1.13, and $0.73 respectively. Our FY2011 EPS estimate of $1.71
                                            compares with company guidance of $1.67-$1.72. Our new FY3Q estimates are just above the high end of
                                            company guidance: EBITDA of $180 mn versus $172 mn-$179 mn and EPS of $0.49 versus $0.46-$0.48.
                                            Valuation
                                            We increase our six-month, DCF-based price target to $14.00 from $12.50 as a result of the increase in our
                                            2012 and 2013 estimates.
                                            Key risks
                                            Downside: further restrictions and oversight. Upside: final Department of Education rules (early 2011) are
                                            less onerous than proposed.



Group 1 Automotive, Inc. (GPI): A top-line driven growth story that still has considerable upside                                                    10

GPI, $39.00                                 Patrick Archambault, CFA (New York): patrick.archambault@gs.com, (212) 902-2817
Market cap                   $957.0 mn
                                            Goldman Sachs & Co.
                                            Aditya Oberoi (New York): aditya.oberoi@gs.com, (212) 357-7617
Target price                      $52.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E

EPS ($)                    3.61     4.53    What's changed
P/E                       10.8X     8.6X    4Q10 EPS of $0.64 was slightly above our expectation of $0.63 and the Street of $0.62. We are raising our
                      *                     2011/2012 estimates to $3.61/$4.53 from $3.46/$4.25. We are also introducing our 2013E EPS estimate of
EPS Quarter/Interim        0.65     0.44
                                            $4.86. Our estimate changes reflect: a slightly lower level of profitability in new & used vehicles and P&S
Investment Lists                            given the company’s strategy to trade some margin for higher sales; and a modestly lower used to new ratio
                      Americas Buy List     vs. our previous estimates. These factors are more than offset by higher top-line growth, driven by strong
Coverage view                 Attractive
                                            new volumes, higher growth in the P&S segment vis-à-vis our earlier forecast, and the impact of the
                                            mortgage facility restructuring that lowers interest expense by $3.8 mn.
*Current and a year ago
                                            Implications
                                            In 4Q, GPI outperformed our mix implied growth rate for new units by 10.7%, driven by its strong state
                                            footprint as well as pricing actions. We model a more moderate pace of outperformance in out years as
                                            growth rates in some of GPI’s larger states (TX, CA) converge with the market. On the P&S side, we expect
                                            the company to continue to benefit from stepped up recalls, and from stronger customer pay driven by growth




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                    February 11, 2011



                                           initiatives (e.g. tire sales) and the build out of the collision services business. This more than offsets a 40bp
                                           and 30bp gross margin contraction in 2011/2012 which we model driven by a (1) price competition in new
                                           vehicles, (2) still high inventory acquisition costs in used, and (3) the typical revenue mix shift away from P&S
                                           as SAAR recovers.
                                           Valuation
                                           Our unchanged 6-month price target of $52 is based on our 2011 and 2012 EBITDA and EPS estimates. GPI
                                           remains our favourite name within our dealer coverage group with best in class revenue and EBITDA growth,
                                           still low earnings expectations, and an attractive valuation.
                                           Key risks
                                           Primarily the pace of new vehicle sales and pricing at the dealer level.



The Goodyear Tire & Rubber Co. (GT): An attractive value play; but we think better entry points are likely                                               11

GT, $14.30                                 Patrick Archambault, CFA (New York): patrick.archambault@gs.com, (212) 902-2817
Market cap                  $3,461 mn
                                           Goldman Sachs & Co.
                                           Aditya Oberoi (New York): aditya.oberoi@gs.com, (212) 357-7617
Target price                     $16.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E

EPS ($)                   0.37     1.94    What's changed
P/E                    38.9X       7.4X    Following 4Q10 results we are adjusting our 2011/2012/2013 estimates to $0.37, $1.94 and $2.25 from
                                           $0.37, $1.90 and $2.29. Our price target rises to $16 from $14, implying 12% upside.
EPS Quarter/Interim*      0.19     0.18
                                           Implications
Investment Lists
                                           Our new estimates reflect a slightly reduced volume forecast driven by lower OE share expectations and a
                                 Neutral   stepped up raw materials inflation assumption, both of which are effectively offset by firmer pricing and a
Coverage view                Attractive    higher run rate of fixed cost absorption, particularly for 2012 when GT sees the impact of the closure of the
                                           Union City facility.
*Current and a year ago
                                           Overall, we saw the 4Q10 results as positive with significant price increases holding and a better cost
                                           performance than we had modeled. We believe GT has significant earnings growth potential ahead, driven
                                           by volume, pricing and fixed cost leverage from improving utilization, and we see more than $2.00 of
                                           earnings power at today’s volumes in an environment where pricing can neutralize raw materials inflation.
                                           That said, we think it may take sometime to realize GT’s long term value given the lag in recouping raw
                                           materials inflation, which we see driving a net headwind of approximately $100mn per quarter that we expect
                                           to persist through most of 2011. Combined with the risk of further commodity-driven estimate revisions, this
                                           keeps us on the sidelines with a Neutral rating.
                                           Valuation
                                           Our 6-month, multiples-based price target moves from $14 to $16 driven by our estimate revisions and the
                                           rolling forward of our P/E and EV/EBITDA multiples-based methodology to weight 2012 estimates at 100%
                                           versus a split of 75% 2012 and 25% 2011, previously.
                                           Key risks
                                           Primarily the pace of raw material costs inflation and GT’s weak cash flow driven by increased capex and
                                           working capital requirements.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   February 11, 2011




Wynn Resorts, Limited (WYNN): First Take: Solid 4Q; management tepid on LV but bullish on Macau                                                         12

WYNN, $120.15                               Steven Kent, CFA (New York): steven.kent@gs.com, (212) 902-6752
Market cap                  $14,751 mn
                                            Goldman Sachs & Co.
                                            Neil Portus, CFA (New York): neil.portus@gs.com, (212) 902-2077
Target price                      $120.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E    Afua Ahwoi (New York): afua.ahwoi@gs.com, (212) 902-1760
EPS ($)                    2.12      2.95   Goldman Sachs & Co.
P/E                       56.6X    40.8X

EPS Quarter/Interim
                      *
                           0.94      0.08
                                            News
                                            After the close, Wynn reported 4Q2010 earnings results. Net revenues were $1.24 bn vs. our $1.24 bn
Investment Lists                            estimate and consensus of $1.12 bn. Adjusted property EBITDA was $365 mn vs. our $379 mn estimate and
                                  Neutral   consensus of $334 mn. Adjusted EPS was $0.91 vs. our $0.94 and consensus of $0.68. The company
Coverage view                     Neutral   reported $0.08 last year.
*Current and a year ago
                                            Analysis
                                            Wynn Las Vegas reported 4Q property revenues of $325 mn vs. our $330 mn forecast and EBITDA of $68
                                            mn vs. our $73 mn estimate.
                                            On the call, management stated that its Las Vegas’ forward “indicators are pointing up” though they are “still
                                            very lackluster and disappointing” given the market’s recent supply additions. As a whole, management
                                            thinks 2011 will be better than 2010 and noted several constructive data points: (a) Wynn LV had its biggest
                                            Chinese New Year ever this year, (b) the property has raised room rates (following its almost completed
                                            room remodels) and (c) convention room nights are rising (and expected to be 20-22% of total room nights
                                            this year vs. 13% in 2009 and 22-25% before the downturn).
                                            Wynn Macau reported 4Q property revenues of $912 mn vs. our $910 mn estimate and EBITDA of $297 mn
                                            vs. our $306 mn forecast.
                                            Management indicated that Macau is very robust and Wynn Macau had a strong Chinese New Year (i.e., the
                                            property had casino win in excess of $46 mn in one 24-hour period). Regarding Cotai, the design has been
                                            completed with management labeling it a “break away” property. While the cost and timing details are not
                                            finalized, at this point, management indicated it was comfortable with a $2.5 bn cost and potential opening
                                            timeframe of late 2014/early 2015.
                                            Implications
                                            We think shares could trade sideways given the roughly in line results. No change to our estimates and price
                                            target.



Panera Bread Co. (PNRA): First Take: Strong 4Q10 profitability may be calm before the storm                                                             13

PNRA, $99.71                                Michael Kelter (New York): michael.kelter@gs.com, (212) 934-4252
Market cap                   $3,045 mn
                                            Goldman Sachs & Co.
                                            Chris Cerrone (New York): chris.cerrone@gs.com, (917) 343-5320
Target price                      $100.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E

EPS ($)                    3.64      4.25   News
P/E                       27.4X    23.5X    4Q10 EPS of $1.21 was ahead of our $1.18 estimate and consensus of $1.17 on system-wide comps of
                      *                     5.8%, which were modestly above expectations. The company raised its FY2011 EPS guidance to $4.40-
EPS Quarter/Interim        1.18      1.00
                                            $4.45 from $4.30-$4.35.
Investment Lists
                                            Analysis
                                  Neutral   In our view it was a high quality quarter, particularly in terms of profitability:
Coverage view                 Attractive    Same-store sales – The composition of PNRA’s 5.2% company-operated SSS was solid as it was driven by a
                                            2.9% increase in traffic. Furthermore, SSS improved as the quarter progressed, up 4.8% in October, 5.8% in
*Current and a year ago
                                            November and 6.7% in December. This said, 1Q11 quarter-to-date SSS came in at 2.8%, due in part to
                                            weather, below our 3.5% estimate and consensus of 4.1%.
                                            Restaurant level margins – We were particularly encouraged by the company’s bakery café margins of
                                            21.6%, well ahead of our 20.1% forecast and 200bp better than YAG on lower than expected labor costs.
                                            Although these margin levels may prove fleeting given the onset of food inflation, nonetheless they represent
                                            a strong base. The company’s $1.06-1.08 1Q11 EPS guidance implies a near-term continuation of solid
                                            profitability.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                    February 11, 2011



                                           Implications
                                           We expect the shares to trade up on the solid comps and improved profitability. This said, we would not
                                           chase any rallies as this could be the calm before the food inflation storm that we expect to materialize in
                                           2H11 and into 2012. We will be looking to tomorrow’s 8:30am conference call for any details on the
                                           sustainability of current margin levels in light of recent moves in the prices of key commodities.
                                           Our estimates and price target are unchanged pending additional details from the call.



Thomson Reuters Corp. (TRI): Margin base reset, the wait for double-digit profit growth ensues                                                            14

TRI, $40.09                                Brian Karimzad (New York): brian.karimzad@gs.com, (212) 357-1745
Market cap                 $33,585 mn
                                           Goldman Sachs & Co.
                                           Grace Huan (New York): grace.huan@gs.com, (212) 357-8280
Target price                     $40.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E

EPS ($)                   2.37     2.80    What's changed
P/E                    16.9X      14.3X    Following 4Q 2010 results we adjust our 2011/2012/2013 EPS ex-integration to $2.37/$2.80/$3.08 vs.
                                           $2.50/$2.90/$3.15 prior on a lower margin base due to disposals and recent acquisitions. Off this lower base,
EPS Quarter/Interim*      0.46     0.46
                                           2011 guidance was in line with our outlook. We are Neutral rated, for now favoring media names with faster
Investment Lists                           2011 operating growth.
                                 Neutral   Implications
Coverage view                Attractive    Margin expansion and profit growth back-half weighted. The dilutive impact of acquisitions made to date and
                                           investment will impact 1Q and 2Q before lapping in the back half. Thus, while we see low-double digit EPS
*Current and a year ago
                                           growth ex-integration expense in 2011, we expect the first half will remain in the single digits with more
                                           material acceleration by 3Q and 4Q. In addition, the natural lag in the subscription model weights organic
                                           revenue growth to later in the year, reflecting more recent inflection in market trends. Management was
                                           confident of eventual high single-digit top-line growth potential and mid-20% operating margins.
                                           Monetization of new product development still somewhat light. While Westlaw is making good traction among
                                           small law firms, where share shift opportunities exist, we suspect that large law price increases on the
                                           upgrade are still being offset by broader budget scrutiny on other Westlaw products, limiting growth. At
                                           Markets, Eikon at 12,000 desktops (vs 3,500 in November) is encouraging, with some net new adds within,
                                           though still early days, with buy-side traction limited by pending product upgrades.
                                           Valuation
                                           Our new $40 ($43 prior) 6-month price target remains based on 17X 2011 EPS ex integration of $2.37 (vs
                                           $2.50).
                                           Key risks
                                           European weakness, faster/slower product adoption, investment spend.



Scripps Networks Interactive, Inc. (SNI): Programming for 2011 audience growth, but waiting to materialize                                                15

SNI, $49.87                                Brian Karimzad (New York): brian.karimzad@gs.com, (212) 357-1745
Market cap                  $8,439 mn
                                           Goldman Sachs & Co.
                                           James Mitchell, CFA (New York): james.mitchell@gs.com, (212) 357-1849
Target price                     $47.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E     Drew Borst (New York): drew.borst@gs.com, (212) 902-7906
EPS ($)                   2.71     3.07    Goldman Sachs & Co.
                                           Grace Huan (New York): grace.huan@gs.com, (212) 357-8280
P/E                    18.4X      16.3X
                                           Goldman Sachs & Co.
EPS Quarter/Interim*      0.63     0.50

Investment Lists
                                           What's changed
                   Americas Sell List      Scripps Networks reported 4Q10 EPS that was 4% below our estimate due to weaker cable ad growth (10%
Coverage view                Attractive    vs. our 12% estimate) and margins. The market was also disappointed that there was no share repurchase
                                           announcement. Newly issued 2011 guidance is slightly ahead of our estimates though we remain concerned
*Current and a year ago
                                           about weak ratings trends and are 4% below segment OI guidance. We adjust our 2011/12/13 ests up 1% to
                                           $2.71/$3.07/$3.38 on stronger Interactive segment margins.
                                           Implications




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   February 11, 2011



                                           2011 guidance implies 11-14% advertising growth – 2011 guidance is for 10-12% cable network revenue
                                           growth implies 11-14% advertising and a return to Food/HGTV ratings growth, given 7% affiliate fee growth.
                                           We estimate 10% ad growth due to concerns about ratings that have yet to grow yoy. Our cable EBITDA
                                           estimate is 4% below guidance.
                                           1Q11 advertising expected to accelerate – Advertising growth is expected to sequentially accelerate due to
                                           stable ratings, good calendar Upfront sales, and strong scatter. We estimate 1Q11 ad growth of 12%, which
                                           assumes flat yoy audience trends.
                                           Total day ratings still declining yoy – January ratings were down 6% yoy due to an 8% decline at Food and
                                           10% decline at HGTV, albeit off a difficult comp, keeping us guarded. Sequentially ratings are more stable.
                                           No share repurchase authorization disappointing – With the Tribune bankruptcy finally nearing completion
                                           and ongoing discussion about offsetting the Cooking Channel dilution, SNI could be holding cash for a
                                           possibly more urgent bid to buy out Tribune’s minority stake in Food.
                                           Valuation
                                           We are rated Sell on SNI shares with a $47 12-month price target based on 17X 2011E EPS of 2.71.
                                           Key risks
                                           Better ratings; buy-in of Tribune stake; higher return of cash.



Chipotle Mexican Grill, Inc. (CMG): SSS acceleration overwhelms the early impact of food inflation                                                      16

CMG, $256.63                               Michael Kelter (New York): michael.kelter@gs.com, (212) 934-4252
Market cap                  $8,117 mn
                                           Goldman Sachs & Co.
                                           Chris Cerrone (New York): chris.cerrone@gs.com, (917) 343-5320
Target price                     $310.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2011E      2012E

EPS ($)                   7.00      9.15   What's changed
P/E                    36.7X      28.0X    CMG reported 4Q10 EPS of $1.47, well ahead of our $1.28 estimate. SSS of 12.6% were ahead of our
                                           11.0% estimate and the 9.9% consensus.
EPS Quarter/Interim*      1.51      1.19
                                           Implications
Investment Lists
                                           We maintain our Buy rating on CMG shares on the heels of yet another strong quarter. We see CMG as the
                   Americas Buy List       best growth story within our coverage universe and believe the company is still very early in its long-term
Coverage view                Attractive    growth trajectory: (1) Our analysis suggests CMG is currently at only 25%-30% of its full US units potential,
                                           (2) Our recent US consumer survey suggests the concept is still at less than 50% national brand awareness,
*Current and a year ago
                                           (3) Double-digit SSS growth in recent quarters is being driven almost entirely by incremental traffic growth to
                                           existing store locations and (4) Early stage international expansion and the impending launch of a second
                                           restaurant concept provide upside growth optionality.
                                           This said, our enthusiasm is dampened a bit by the current inflationary commodity environment. (1) CMG
                                           operates 100% of its own restaurants (vs. the franchised model which is favored by several competitors), (2)
                                           CMG does not do much hedging and (3) CMG has exposure to some particular inputs which have gone up
                                           substantially in recent months due to supply disruptions (i.e. tomatoes and peppers). We believe CMG has
                                           pricing power if needed, but are concerned that the company may fall behind a bit if the current pace of food
                                           inflation continues. Our 2011E/2012E EPS rise to $7.00/$9.15 from $6.83/$8.51 to reflect higher SSS
                                           assumptions and fixed cost leverage, offset in part by higher food costs. We introduce our 2013E EPS of
                                           $11.64.
                                           Valuation
                                           We raise our P/E and DCF-based 12-month price target by $25 to $310 to reflect our higher earnings
                                           estimates.
                                           Key risks
                                           A moderation in recent comp trends and continued food inflation.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                 February 11, 2011




Blue Nile, Inc. (NILE): Sales strong but marketing holds back flow through, lowering EPS                                                              17

NILE, $63.66                                Morry Brown, CFA (New York): morry.brown@gs.com, (212) 357-0648
Market cap                   $926.8 mn
                                            Goldman Sachs & Co.
                                            Adrianne Shapira (New York): adrianne.shapira@gs.com, (212) 357-4174
Target price                      $57.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E     Stephen Grambling, CFA (New York): stephen.grambling@gs.com, (212) 902-7832
EPS ($)                    1.05     1.22    Goldman Sachs & Co.
                                            Scott Kaufman-Ross (New York): scott.kaufman-ross@gs.com, (212) 934-4206
P/E                       60.5X    52.0X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        0.16     0.16

Investment Lists
                                            What's changed
                                  Neutral   NILE reported 4Q EPS of $0.41, falling below GS/consensus of $0.43/$0.41 and at the bottom end of the
Coverage view                     Neutral   company’s $0.41-$0.46. While sales demonstrated the sequential acceleration we anticipated (+11.5% vs.
                                            our 10.9% estimate), higher marketing expenses held back flow through to the bottom line. 1Q guidance was
*Current and a year ago
                                            pegged at $0.14-$0.16 (including $0.01 related to HQ expenses) on +3-6% revenue growth, below
                                            GS/consensus of $0.19/$0.20. Given a lower revenue trajectory post Holiday and higher anticipated
                                            marketing expenses going forward, we are lowering our FY2011/FY2012 EPS to $1.05/$1.22 from
                                            $1.17/$1.37. We are also introducing our 2013 estimate of $1.40.
                                            Implications
                                            Sales trends have slowed 1Q to date, as MasterCard SpendingPulse data suggests jewelry category spend
                                            declined 3% in January (with online down 10%). While NILE sales were said to be above these trends,
                                            management noted a deceleration from 4Q levels, driving the softer 1Q revenue guidance. On the marketing
                                            front, the company expects to continue to invest in long-term oriented marketing, particularly within under-
                                            penetrated international markets. These marketing dollars should prove to be positive long-term investments;
                                            however, we continue to believe a return to sustained double-digit revenue growth is necessary to drive
                                            shares higher. With 1Q unlikely to sustain this trend, we remain Neutral-rated.
                                            Valuation
                                            We lower our 12-month price target to $57 from $60 based on lower estimates. We now apply a 15x EV/FCF
                                            multiple on our 2012 FCF vs. 16x prior, in line with our lowered growth rate of 15% for FCF.
                                            Key risks
                                            Slowing consumer demand, diamond prices and FX fluctuations are key risks.



Wyndham Worldwide Corp. (WYN): Updating estimates after 4Q results                                                                                    18

WYN, $29.64                                 Steven Kent, CFA (New York): steven.kent@gs.com, (212) 902-6752
Market cap                   $5,276 mn
                                            Goldman Sachs & Co.
                                            Eli Hackel (New York): eli.hackel@gs.com, (212) 902-9672
Target price                      $34.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E     Sinu Padmanabhan (Bangalore): sinu.padmanabhan@gs.com, (212) 934-8950
EPS ($)                    2.11     2.40    Goldman Sachs India SPL
P/E                       14.0X    12.4X

EPS Quarter/Interim
                      *
                           0.39     0.34
                                            Changes and Implications
                                            We have updated our estimates. We do not view these changes as material, and there is no change to our
Investment Lists                            investment thesis, rating or price target.
                                  Neutral   After 4Q results we are maintaining our 2011 EPS estimates, raising our 2012 EPS estimate to $2.40 from
Coverage view                 Attractive    $2.30 and introducing our 2013 estimate of $2.59.
*Current and a year ago




Americas: Retail: With jewelry prices up DD, how much do you love your valentine?                                                                     19

                                            Adrianne Shapira (New York): adrianne.shapira@gs.com, (212) 357-4174




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   February 11, 2011



                                           Goldman Sachs & Co.
                                           Morry Brown, CFA (New York): morry.brown@gs.com, (212) 357-0648
                                           Goldman Sachs & Co.
                                           Stephen Grambling, CFA (New York): stephen.grambling@gs.com, (212) 902-7832
                                           Goldman Sachs & Co.
                                           Scott Kaufman-Ross (New York): scott.kaufman-ross@gs.com, (212) 934-4206
                                           Goldman Sachs & Co.

                                           Rising commodity costs drive prices up double-digits
                                           Rising commodity costs have driven precious metal prices up as much as 60% year over year. While food
                                           and apparel sectors are wrestling with how to deal with inflationary pressures, the jewelry sector is quicker to
                                           pass along. The first sign of higher prices will become apparent to customers this Valentine’s Day and
                                           elasticity of demand will be key to assess margin implications.
                                           Tiffany raising prices more on diamonds than silver
                                           Tiffany has consistently raised prices and, given its strong brand, there has been little resistance. On its 3Q
                                           conference call, Tiffany executives noted that they had already taken price increases with plans for more
                                           hikes early this year. We conducted a pricing study across 30-plus items online and found that half of
                                           diamond items saw prices rise on average by 10%; this is in contrast to silver jewelry, where only a third of
                                           the items saw prices rise by a more modest 5%. Given that the silver category has lagged over the past three
                                           quarters, it seems as if last year’s price hike has already met with some resistance with this more price
                                           sensitive consumer.
                                           TIF prices have risen since their 3Q conference call
                                           TIF pricing study in February 2011 vs. November 2010

                                           Source Goldman Sachs Research:
                                           Mastercard pulse cites slowing jewelry sales in January
                                           Tiffany reported strong holiday sales, with SSS +8%; however, since then, Mastercard Pulse data reported
                                           that jewelry sales in January declined -3% yoy. While the category might have taken a breather post a strong
                                           holiday season, it was at the same time that most jewelers have taken prices up to pass along higher
                                           commodity costs. January’s pause might be early resistance to price or building pent-up demand ahead of
                                           Valentine’s Day. Either way, the year does not look to be off to a strong start, especially as Tiffany laps its
                                           toughest 1Q comparison of 15%.



Consumer Staples

International Flavors & Fragrances Inc. (IFF): EPS holding up but gross profit growth slowing sharply;                                                  20
Neutral

IFF, $54.80                                Andrew Sawyer, CFA (New York): andrew.sawyer@gs.com, (212) 902-5488
Market cap                  $4,380 mn
                                           Goldman Sachs & Co.
                                           Christine Cho (New York): christine.cho@gs.com, (212) 902-1896
Target price                     $58.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E     Stephanie Whited (New York): stephanie.whited@gs.com, (212) 855-9812
EPS ($)                   3.71     3.99    Goldman Sachs & Co.
P/E                    14.8X      13.7X

EPS Quarter/Interim*      0.91     0.86
                                           What's changed
                                           We raise our 2011/2012/2013 EPS estimates to $3.71/$3.99/$4.30 from $3.58/ $3.88/$4.22 principally to
Investment Lists                           reflect lower incentive comp in 2011 versus a high 2010 base. We also raise our organic sales growth
                                 Neutral   assumption by 100 bp to an average of 2-3% in 2011 on indications of solid momentum early in the year. A
Coverage view                    Neutral   lower tax rate and better currency are offset by raw material inflation.
*Current and a year ago
                                           Implications
                                           We remain Neutral rated on IFF and take a “wait and see” approach despite the recent sell-off. We have a
                                           mixed view on fundamentals:
                                           On the minus-side, we expect gross profit dollar growth to slow to 4% in 2011 from 17% in 2010. We expect
                                           sales to slow sharply against a 2010 sales base that may be somewhat inflated by customer re-stocking. We
                                           also forecast a modest gross margin decline. Raw materials are set to climb MSD-HSD. IFF has some offset




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   February 11, 2011



                                          from restructuring savings and productivity programs. However, we see pricing power as limited since IFF is
                                          an unbranded supplier in a fragmented industry. The last time commodities spiked in 2008, IFF’s GM
                                          contracted by 120 bp.
                                          On the plus-side, IFF has, in our view, some further earnings flexibility below the gross profit line. Reductions
                                          in incentive compensation expenses alone could boost 2011 EPS by around $0.25-$0.30 (or approximately
                                          8%). Strong cash-flow also supports EPS. We expect IFF to announce an increase in its dividend and
                                          resumption in share repurchases at its March analyst day.
                                          Valuation
                                          We raise our 12-month P/E and DCF-based price target to $58, from $57, or 14.5X our 2012 EPS estimate.
                                          Key risks
                                          Swings in commodity prices, 2010 base is inflated by customer inventory re-stocking, and ability to price to
                                          recover cost inflation.



PepsiCo, Inc. (PEP): Highly visible high-single-digit EPS growth good enough                                                                            21

PEP, $63.36                               Judy E. Hong (New York): judy.hong@gs.com, (212) 902-0490
Market cap                $106,001 mn
                                          Goldman Sachs & Co.
                                          Tyler Walling (New York): tyler.walling@gs.com, (212) 934-0495
Target price                     $77.00
                                          Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E    Michael Luddy (New York): michael.luddy@gs.com, (212) 902-9592
EPS ($)                   4.55     5.03   Goldman Sachs & Co.
P/E                    13.9X     12.6X

EPS Quarter/Interim*      0.73     0.76
                                          What's changed
                                          PEP’s 4Q10 EPS of $1.05 was in-line with our estimate. The company introduced guidance of 7%-8%
Investment Lists                          constant currency EPS growth for 2011 and expects forex to be 1%-2% positive for the year.
                   Americas Buy List      Implications
Coverage view                Attractive   We maintain our Buy rating on PEP shares and believe that management has now set a conservative bar,
*Current and a year ago
                                          giving investors increased confidence that downward EPS revisions are now behind us.
                                          2011 EPS growth outlook of high-single-digits is still healthy and has room for upside, in our view. PEP’s EPS
                                          should benefit from +$0.13 of incremental cost synergies, +$0.08 from the Wimm Bill Dann acquisition, and
                                          +$0.05 from share repurchases in 2011. We are now estimating that PEP grows underlying profit only 4% in
                                          2011, which could prove to be conservative if macros improves and competition remains rational in both
                                          beverage and snacks.
                                          PEP shares should grind higher on consistent performance. While sentiment is unlikely to turn quickly, we do
                                          believe the stage is now set for PEP shares to grind higher as PEP delivers against its EPS targets and top-
                                          line trends continue to show improvement.
                                          Valuation remains attractive. We tweak down our 2011 EPS to $4.55 from $4.60 driven by softer underlying
                                          profit on higher input cost and lower pricing. 2012/2013 EPS is revised to $5.03/$5.56 from $5.12/$5.62 on a
                                          lower 2011 base. Even on a modestly lower EPS estimate, PEP shares are trading at 14x our 2011 estimate,
                                          at the low-end of large-cap Staples peers.
                                          Valuation
                                          We tweak our 12-month P/E price target down $1 to $77 on lower EPS.
                                          Key risks
                                          Higher commodity costs, weaker pricing in NA beverage market




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                     February 11, 2011




Kraft Foods Inc. (KFT): Overhangs shrink (but do not disappear) after guidance reset                                                                      22

KFT, $31.11                                 Judy E. Hong (New York): judy.hong@gs.com, (212) 902-0490
Market cap                  $46,136 mn
                                            Goldman Sachs & Co.
                                            Jason English (New York): jason.english@gs.com, (212) 902-3293
Target price                       $35.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E    2012E

EPS ($)                    2.24      2.53   What's changed
P/E                       13.9X    12.3X    Kraft (KFT, Neutral) posted an in-line 4Q2010 last evening that included a number of puts and takes. Organic
                      *                     sales growth was a bit stronger (even ex. an unexpected calendar shift benefit) than we expected, while the
EPS Quarter/Interim        0.48      0.51
                                            EBIT margin was a bit weaker (11.6% vs. our 11.8% estimate). Below the line, KFT benefited from a lower
Investment Lists                            tax rate (+$0.04), but incurred debt repurchase fees (-$0.03). FY11 sales guidance was reiterated at 5%+ but
                                  Neutral   the operating EPS outlook was cut to +11-13%, from the prior mid-teens guidance.
Coverage view                     Neutral   Implications
                                            Top-line delivery a plus. We are encouraged that that KFT ended up delivering on its full year organic sales
*Current and a year ago
                                            goal – a feat we originally viewed as difficult. We have higher confidence in KFT’s ability to achieve its target
                                            in 2011, particularly given the inflation/price back drop.
                                            Lower guidance removes overhang – We had viewed mid-teens guidance in 2011 as out of reach, as
                                            reflected in our below-consensus estimate.
                                            The potential impact of the SBUX distribution agreement ending remains a risk. EPS risk could be sizeable
                                            (around $0.05) and is not accounted for in current guidance.
                                            Price lag versus mounting inflation poses margin risk. KFT’s price growth decelerated while inflation pressure
                                            accelerated, which raises margin risk for FY11.
                                            We are maintaining our $2.24 FY11 estimate (implying 9.6% FX neutral growth). Our estimate applies a
                                            handicap to KFT’s coffee segment in effort to account for the Starbuck’s distribution risk.
                                            Valuation
                                            We maintain our 12-month, P/E-derived price target of $35.
                                            Key risks
                                            Upside: better volume growth; Downside: inflation.



Lorillard, Inc. (LO): Some drama, but limited insight from today's TPSAC meeting                                                                          23

LO, $76.49                                  Judy E. Hong (New York): judy.hong@gs.com, (212) 902-0490
Market cap                  $12,873 mn
                                            Goldman Sachs & Co.
                                            Tyler Walling (New York): tyler.walling@gs.com, (212) 934-0495
Target price                      $100.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E    2012E    Michael Luddy (New York): michael.luddy@gs.com, (212) 902-9592
EPS ($)                    7.50      8.08   Goldman Sachs & Co.
P/E                       10.2X      9.5X

EPS Quarter/Interim
                      *
                           1.68      1.50
                                            News
                                            We attended Day 1 of 2/10-2/11 meeting of the Tobacco Products Scientific Advisory Committee (TPSAC).
Investment Lists                            Much of the meeting was a re-hashing or clarification of previously presented data and offered little
                      Americas Buy List     incremental insight as to what the TPSAC is likely to recommend. By far, the most dramatic part of the
Coverage view                     Neutral   meeting was former committee member Greg Connolly’s presentation on his study of menthol and initiation in
                                            Japan.
*Current and a year ago
                                            Analysis
                                            This meeting furthered our view that the topic of initiation is the key area of contention, but is also an area
                                            where the committee recognizes that there is a lack of substantial scientific research. Key takeaways include:
                                            (1) Initiation remains the area of greatest contention – During his presentation, Dr. Greg Connolly commented
                                            that the real question is whether menthol increases smoking initiation. Given that the physical health effects
                                            of menthol appear no different than non-menthol, it does appear that the committee is focusing on whether
                                            menthol creates more smokers which inherently has an adverse health effect on society. Research around
                                            initiation remains thin and the committee alluded to having insufficient research when discussing the input
                                            data they would need for the scenario analysis model being put together.
                                            (2) Covance concludes current studies on menthol are insufficient to warrant a recommendation – Covance




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                    February 11, 2011



                                           (funded by LO) evaluated the validity of 38 studies on menthol‘s effects on initiation, cessation, etc., and said
                                           that the data was insufficient to make a recommendation.
                                           (3) Altria suggests black market would not be constrained by capacity – Altria reported that China’s
                                           counterfeit cigarette capacity is upwards of 125% of the current US cigarette market.
                                           Implications
                                           We still find a ban by the FDA as unlikely, but admit that there is still headline risk around TPSAC. We
                                           believe today’s meeting added little new scientific data to support an onerous ruling on menthol. Our PT is
                                           unchanged.



Energy

EnCana Corp. (ECA): Cutbank value above NAV; raise price target, maintain relative Sell                                                                  24

ECA, $32.15                                Brian Singer, CFA (New York): brian.singer@gs.com, (212) 902-8259
Market cap                 $24,158 mn
                                           Goldman Sachs & Co.
                                           Andre Benjamin (New York): andre.benjamin@gs.com, (212) 855-0470
Target price                     $30.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E     Pavan Hoskote (New York): pavan.hoskote@gs.com, (917) 343-9044
EPS ($)                   0.61     0.54    Goldman Sachs & Co.
P/E                    52.6X      59.4X

EPS Quarter/Interim*      0.13     0.56
                                           What's changed
                                           EnCana announced PetroChina plans to buy 50% of ECA’s Cutbank Ridge assets (1 Tcfe of proved
Investment Lists                           reserves, 635K acres of land in W. Canada that includes the Montney formation) for $5.4 bn. ECA reported:
                   Americas Sell List      4Q10 results below expected, 2011 guidance that includes a full year of Cutbank production of $4.7 bn in
Coverage view                    Neutral   capex (-4% yoy) and 6% production growth. 2011E/2012E/2013E EPS is now $0.61/$0.54/$0.32 from
                                           $0.26/$0.27/$0.24 to reflect updated production/ costs/capital spending/asset sales/interest expense.
*Current and a year ago
                                           Implications
                                           For EnCana: We raise our DCF-/multiples-based target to $30 from $27 to reflect $4/shr higher NAV for
                                           Cutbank than previously assumed, offset by $1/shr reduction to reflect higher capex/lower cash flow
                                           elsewhere. After the Feb. 9 rally, with the sale now announced shares may resume trading more closely with
                                           the gas price outlook, where we/the Street are largely cautious, and give back some outperformance. We
                                           retain our Sell rating, as we see more favorable catalysts/valuation/upside for oilier stocks. Before
                                           considering lost EBITDA (offset by lower debt) from the PetroChina sale, we see 22% downside to 2012
                                           consensus EBITDA. We could become more positive on ECA shares if (1) we become more constructive on
                                           gas prices or (2) we believe ECA may do additional material asset sales near term.
                                           For industry: We view valuation positively for North American producers with Montney/W. Canadian assets
                                           and those looking to sell gas assets with shale exposure – TLM, APA, EOG, FST, CHK, COG. While we have
                                           largely seen JVs and asset sales, the longer gas prices stay depressed the more likely we could see
                                           corporate M&A among pure-play gas E&Ps.
                                           Valuation
                                           6.1X/5.4X 2012E/2014N EV/EBITDA vs. 5.2X/4.8X for large-cap E&Ps.
                                           Key risks
                                           Commodity volatility, drilling results, costs, gov’t pronouncements.



EnerSys Inc. (ENS): EnerSys continues to benefit from cyclical recovery in F3Q11                                                                         25

                                           Mark Wienkes, CFA (New York): mark.wienkes@gs.com, (212) 357-1986
                                           Goldman Sachs & Co.
                                           Lily Parshall, Ph.D. (New York): lily.parshall@gs.com, (212) 902-7494
                                           Goldman Sachs & Co.
                                           David Lefty (New York): david.lefty@gs.com, (212) 902-9429
                                           Goldman Sachs & Co.

                                           What's changed




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                         February 11, 2011



                                 Better-than-expected F3Q11 and a strong volume outlook drive higher FY11 and FY12 estimates. EnerSys
                                 reported F3Q11 revenue of $509mn, 2%/4% above our estimate/consensus of $500mn/$489mn and an
                                 8%/21% increase qoq/yoy. Non-GAAP EPS of $0.71 set a historical record and was $0.09 above our
                                 estimate, primarily due to higher revenue and a favorable tax settlement of $2.5 million. EnerSys expects
                                 non-GAAP EPS of $0.68-$0.72 in F4Q11, ex. an expected $0.05 restructuring charge. We are raising our
                                 adjusted FY11E EPS by 9% to $2.50 on the back of the beat and our expectation for sequential volume
                                 growth. We are also raising our FY12/FY13 adjusted EPS to $2.80/$2.95 from $2.70/$2.76 given our
                                 increasing confidence in the economic outlook for the US and Europe, and growth opportunities in China and
                                 India. Our new $36 price target is inline with the current share price of $36.20. Accordingly, we believe the
                                 cyclical recovery is already priced in to shares.
                                 Implications
                                 EnerSys continues to deliver solid execution despite commodity and currency headwinds. We have a
                                 favorable view of the company’s targeted growth plan, with a core focus on maintaining/improving operating
                                 performance in the Americas/Europe and pursuing targeted growth opportunities in Asia and TPPL. However,
                                 with the recovery now well underway – and understood – we expect modest growth in FY2012-2013 relative
                                 to the cyclical recovery in F2H10-FY2011. We remain Neutral rated as we see more relative upside in other
                                 names.
                                 Valuation
                                 We raise our 6-month, DCF-based price target to $36 (from $34) based on higher volumes and a lower tax
                                 rate. Our price target implies a CY11 P/E of 13X. The stock currently trades at a CY11/CY12 P/E of
                                 13X/12.5X.
                                 Key risks
                                 Upside: Higher-than-expected volume growth and/or operating leverage. Downside: Unfavorable commodity
                                 and/or currency movements.



Americas: Energy: Tankers: Tankers: Tough start to 2011, lowering estimates and price targets                                                 26

                                 Daniel Boyd, CFA (New York): daniel.boyd@gs.com, (212) 357-1804
                                 Goldman Sachs & Co.
                                 Kyle Jenke (New York): kyle.jenke@gs.com, (917) 343-3196
                                 Goldman Sachs & Co.
                                 Dimitry Dayen, CFA (New York): dimitry.dayen@gs.com, (212) 855-0497
                                 Goldman Sachs & Co.

                                 Tough start to 2011, lowering estimates and price targets
                                 The tanker market is off to a tough start to 2011 with dayrates remaining at depressed levels despite 4Q
                                 being a typically strong period seasonally and healthy oil demand growth. VLCC rates have fallen to $20,000,
                                 a decline from $27,700 in 4Q10 and $60,000 at this time last year. The fact that rates remain low despite a
                                 robust oil demand environment gives us increased confidence in our bearish outlook for industry
                                 fundamentals. However, we have a Neutral coverage view, as the stocks have already traded down with
                                 rates and we see more upside than downside from here as we expect rates to normalize towards breakeven
                                 levels of high-cost operators.
                                 We are Buy rated on just one tanker stock, NAT, given that it is built for the downturn. It has a strategy of no
                                 to very low debt, pays an attractive dividend, and is well positioned to take advantage of any distressed asset
                                 sales. We see 14% upside to our $28, six-month price target (from $29 due to lower estimates). We are Sell-
                                 rated on OSG, given its high leverage to weak VLCC rates, high debt (51% debt/cap) and high all-in cost
                                 structure. We see 19% downside to our new $27, six-month price target (from $29).
                                 For exposure to the energy sector we prefer oil services (BHI, SLB, HAL) and offshore drillers (DO). These
                                 industries are approaching a key inflection point in 2011 (new highs in international activity) and we expect
                                 the stocks to outperform the tanker sector stocks, which are likely to be range bound.
                                 Lowering our 2011 rate forecast: VLCC $32,500/Suez $24,000
                                 We are lowering our 2011 rate forecast by about 10% to reflect 1Q2011 weakness and our expectation for
                                 rates to remain range-bound in the near-term. We expect 2011 rates to average $32,500 for VLCCs and
                                 $24,000 for Suezmax vs. $36.5k/$28.5k previously. This negatively impacts our 2011 EBITDA estimates by
                                 14% on average and we are lowering 2011 dividend forecasts by 20%. We are also lowering our six-month
                                 price targets (NAV/ DCF based) by 6% on average and now see 2% upside for the group. We are now 20%
                                 below consensus EBITDA for 2011 and 19% below for 2012.
                                 4Q10 earnings: Stocks move with outlook not quarterly results




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  February 11, 2011



                                            We are broadly inline with 4Q10 consensus and do not expect any major surprises. We expect management
                                            teams to remain hopeful on the 2011 outlook but expect the sell-side to lower earnings and dividend
                                            expectations; investor expectations already appear to be closer to ours.



Financial Services

CBOE Holdings, Inc. (CBOE): A solid quarter overshadowed by surging industry volumes                                                                   27

CBOE, $26.87                                Daniel Harris, CFA (New York): daniel.harris@gs.com, (212) 357-7512
Market cap                   $2,628 mn
                                            Goldman Sachs & Co.
                                            Jason Harbes, CFA (New York): jason.harbes@gs.com, (212) 357-4319
Target price                      $28.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E

EPS ($)                    1.50     1.75    What's changed
P/E                       17.9X    15.4X    CBOE reported 4Q10 operating EPS of $0.31 this morning compared with our $0.27 estimate – the upside
                      *                     owed equally to lower expenses and a lower tax rate. However, both expenses and tax rate are likely to
EPS Quarter/Interim        0.34     0.24
                                            move up in 2011 per CBOE guidance, though the uptick is likely to be outweighed by extremely robust option
Investment Lists                            trading activity in both core products and VIX option and futures products. We raise our 2011/2012 estimates
                                  Neutral   to $1.50/$1.75 from $1.40/$1.60 on better industry volume and RPC trends. We introduce our 2013 estimate
Coverage view                     Neutral
                                            of $1.95 and raise our 12-month price target to $28 from $25 on higher estimates.
                                            Implications
*Current and a year ago
                                            The quarter was better than expected on non-revenue items, with CBOE managing expenses tightly and
                                            driving pre-tax margins up to 43.5% from 38.2% in 1H10. That said, the more interesting story is the
                                            proliferation of option volumes, which are up 21% yoy compared with a 13% decline in US cash equities. The
                                            divergence owes to a variety of factors, but likely includes more high-frequency/algo traders, more firms
                                            using options for alpha generation, and increased retail usage. We view US equity options as one of the few
                                            global growth products, and expect industry volumes to be up more than 10% in each of the next few years.
                                            CBOE noted that, while its intended launch of SPX options on its C2 platform (0.8% market share in
                                            February) was delayed more than expected, it is likely to submit its rules filing to the SEC in the near term,
                                            and then within 1-2 months could launch the electronic SPX product. We expect this to be a substantial
                                            growth area for CBOE, and estimate index volumes will grow 25%-26% in 2011/2012.
                                            Valuation
                                            CBOE trades at 17X our 2011 EPS estimate. Our P/E- and M&A-derived price target of $28 is based on 16X
                                            our 2012 EPS estimate.
                                            Key risks
                                            Upside: higher industry volumes, SPX contract on C2 is more successful than expected; Downside: higher
                                            expenses, lower volumes, competition.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                     February 11, 2011




Och-Ziff Capital Management Group LLC (OZM): AuM growth and income; raise price target to $18                                                             28

OZM, $16.56                                 Marc Irizarry (New York): marc.irizarry@gs.com, (212) 902-4175
Market cap                   $6,048 mn
                                            Goldman Sachs & Co.
                                            Alexander Blostein, CFA (New York): alexander.blostein@gs.com, (212) 357-9976
Target price                      $18.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E     Neha Killa (New York): neha.killa@gs.com, (646) 446-1770
EPS ($)                    1.44     1.60    Goldman Sachs & Co.
P/E                       11.5X    10.4X

EPS Quarter/Interim
                      *
                           0.13     0.12
                                            What's changed
                                            OZM’s 4Q10 DEPS of $0.74 was ahead of our $0.60 estimate and the Street’s $0.66. The beat reflected
Investment Lists                            strong performance fees (delta of $0.10/sh contribution), a lower comp to revenue ratio (delta of $0.02/sh)
                                  Neutral   and $0.02 from a lower tax rate. Fee-related earnings were in-line with our expectations at $0.14/sh. OZM
Coverage view                 Attractive    also declared a $0.71/sh distribution, bringing 2010's total distribution to $1.01 or 90% of 2010 distributable
                                            EPS. Overall, performance in 2010 was solid with OZ Master Fund up 8.5% on less than one quarter of the
*Current and a year ago
                                            volatility of SPX and 2010 flows were +$411 mn, a robust 12% organic growth rate. OZM’s AuM was $28.4
                                            bn at February 1. We raise our 2011/2012 DEPS estimates to $1.44/$1.60 from $1.38/$1.50 mostly reflecting
                                            higher performance fees mainly from OZM’s PE-like special investments. We introduce 2013 EPS estimates
                                            of $1.62.
                                            Implications
                                            4Q10 capped off another solid year of growth in AuM for OZM and solid distributions for unit holders. We
                                            expect 2011 will bring more of the same. We forecast continued solid investment performance (9.9% in 2011)
                                            as opportunities in OZM’s bailiwick (equity event-driven, merger arbitrage) appear to be ripening. We forecast
                                            a +12% organic growth rate for 2011 as OZM’s institutionally oriented business model takes share of rising
                                            institutional allocations toward alternatives. Importantly, we see OZM distributing $1.29 or a 7.8% 2011 yield.
                                            That said, the good news appears to be baked in, as we see modest upside to our $18 price target (raised
                                            from $16), keeping us at Neutral.
                                            Valuation
                                            Our 12-month P/E based price target goes to $18 (from $16), implying an 11.3X P/E to our 2012 estimate.
                                            Key risks
                                            Upside: strong hedge fund flows; downside: higher volatility, unfavorable tax changes.



Post Properties Inc. (PPS): Growth picking up but still Sell on valuation                                                                                 29

PPS, $37.60                                 Jonathan Habermann (New York): jonathan.habermann@gs.com, (917) 343-4260
Market cap                   $1,853 mn
                                            Goldman Sachs & Co.
                                            Sloan Bohlen (New York): sloan.bohlen@gs.com, (212) 902-2796
Target price                      $33.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E     Conor Fennerty (New York): conor.fennerty@gs.com, (212) 902-4227
EPS ($)                    1.60     1.76    Goldman Sachs & Co.
                                            Ji Young Kim (New York): jiyoung.kim@gs.com, (212) 902-4736
P/E                       23.5X    21.4X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        0.36     0.31

Investment Lists
                                            What's changed
                      Americas Sell List    Southeast- and Atlanta-focused apartment REIT Post Properties (PPS) reported 4Q2010 results ahead of
Coverage view                     Neutral   expectations, posting FFO per share of $0.43 including a $3.8 million (+$0.08 per share) gain on condo
                                            sales, reflecting better-than-expected expense growth and higher condo sales activity. While we recognize
*Current and a year ago
                                            the progress the company has made in both reducing leverage (7.1X net debt to EBITDA) and expenses
                                            (same-store expenses down 1.2% in 2010 from 2009), we continue to prefer other multifamily names with
                                            larger external growth opportunities and greater market diversification. As a result, with the shares trading at
                                            23.7X the mid-point of Post’s 2011 FFO outlook ($1.58 per share) vs. the multifamily 2011E average of
                                            21.3X, we maintain our Sell rating.
                                            Implications
                                            We raise our 2011 FFO per share estimate to $1.60 from $1.50 to reflect 4Q2010 results driven by higher
                                            property NOI and gains on condo sales activity. Our estimate includes +$0.06 per share of condo sales




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                 February 11, 2011



                                           activity compared to the company’s 2011 outlook of $0.00-$0.08 per share of gains. We are also raising our
                                           2012 estimate to $1.76 (from $1.70) to account for results and development activity. We introduce our 2013
                                           FFO estimate of $1.93.
                                           Valuation
                                           PPS currently trades at 22.1X our 2011E FFO versus its long-term average of 14.8X and the REIT average
                                           of 17.5X. We maintain our Sell rating but raise our 12-month price target to $33 (from $31), which is based on
                                           our forward NAV estimate at a 6.0% cap rate, to reflect 4Q2010 results including higher property NOI.
                                           Key risks
                                           Risks to our view and price target include stronger-than-expected condo sales, relative fundamental strength
                                           in Atlanta, and higher-than-expected employment and GDP growth.



Mack Cali Realty Corporation (CLI): Still Neutral as 2011 growth seems flat but we favor CLI's 5.2% yield                                             30

CLI, $34.52                                Sloan Bohlen (New York): sloan.bohlen@gs.com, (212) 902-2796
Market cap                  $2,712 mn
                                           Goldman Sachs & Co.
                                           Jonathan Habermann (New York): jonathan.habermann@gs.com, (917) 343-4260
Target price                     $34.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E     Conor Fennerty (New York): conor.fennerty@gs.com, (212) 902-4227
EPS ($)                   2.85     2.90    Goldman Sachs & Co.
                                           Ji Young Kim (New York): jiyoung.kim@gs.com, (212) 902-4736
P/E                    12.1X      11.9X
                                           Goldman Sachs & Co.
EPS Quarter/Interim*      0.72     0.72

Investment Lists
                                           What's changed
                                 Neutral   Suburban NJ-focused office REIT Mack-Cali reported 4Q2010 FFO/sh of $0.69/sh excluding $0.10/sh of non-
Coverage view                    Neutral   cash charges. Results were in-line with our estimate as CLI’s occupancy and market rents held relatively flat
                                           in 4Q. Specific operating highlights from the quarter included: (1) CLI increased occupancy 10 bp to 89.1% in
*Current and a year ago
                                           4Q but rent spreads remain weak on renewals. Renewal rents in 4Q were down 7.7% vs. previous rents
                                           (down 6.7% ex NYC), which is roughly in line with rent spreads in 3Q. (2) CLI maintained its 2011 outlook for
                                           FFO/sh of $2.75 - $2.95 but we believe there is upside bias to CLI’s occupancy and SS NOI ranges.
                                           Specifically we believe CLI may exceed its year-end occupancy target of 87% and similarly we believe SS
                                           NOI may be slightly better than negative 3-5%. (3) We do not expect very much capital activity in 2011. CLI
                                           may begin one or two build-to-suit developments with returns in the 8-10% range but we do not expect larger
                                           investment or divestiture actions to occur in 2011.
                                           Implications
                                           We maintain our Neutral rating and continue to view CLI as a solid income investment. We believe CLI’s FAD
                                           payout may temporarily climb above 100% in 2011 but believe investors are compensated as the company’s
                                           5.2% dividend yield is 200 bp above the REIT average. Our 2011/12 FFO/sh estimates remain $2.85/$2.90
                                           and we introduce a 2013 estimate of $3.00 which assumes recovering leasing trends and firming rental rates.
                                           Valuation
                                           We see modest returns for CLI relative to our unchanged, 12-month target of $34. We believe the shares are
                                           appropriately valued with a approximately 30% discount vs. REITs but again note an attractive 5.2% dividend
                                           yield.
                                           Key risks
                                           Upside risks to our target include better-than-expected rent growth and acquisition opportunities. Downside
                                           risk includes tenant departures.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                         February 11, 2011



Healthcare

Cephalon, Inc. (CEPH): 4Q brings strength but still LT uncertainty and sizable cash balance                                                                    31

CEPH, $60.11                                Randall Stanicky, CFA (New York): randall.stanicky@gs.com, (212) 357-3292
Market cap                   $4,491 mn
                                            Goldman Sachs & Co.
                                            Gregory Waterman, CFA (New York): gregory.waterman@gs.com, (212) 855-7725
Target price                      $68.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E     Stephan Stewart (New York): stephan.stewart@gs.com, (212) 934-4218
EPS ($)                    8.40     6.58    Goldman Sachs & Co.
P/E                        7.2X     9.1X

EPS Quarter/Interim
                      *
                           2.00     1.76
                                            What's changed
                                            Cephalon reported diluted EPS of $2.19, above our $2.05 estimate and the Street at $1.93. Relative to our
Investment Lists                            model, revenue and gross margin came in above, partially offset by higher spending. Similar to last quarter,
                                  Neutral   CEPH delivered upside with 2011 guidance now moving higher, but limited visibility around long-term
Coverage view                     Neutral   sustainable growth will trump any enthusiasm and likely leave share reaction largely muted, in our view.
                                            There are two primary themes we took from tonight’s earnings call (1) how to value the company’s pipeline
*Current and a year ago
                                            given risky projects and limited data, and (2) how to think about uses of capital in the context of what is
                                            around $1.2 bn in cash. In our view, capital allocated to deals that bring on-market revenue and help fill in the
                                            longer-term growth picture would be received well, but visibility here is low. Bottom line, we see little new
                                            from 4Q to influence the post 2011 outlook and make no change to our Neutral rating or price target.
                                            Implications
                                            We are making several adjustments to our 2011 to 2013 EPS estimates, which now move to $8.40, $6.58,
                                            and $4.76, respectively (from $8.25, $6.58, and $4.77). Our 2011 EPS sits above guidance though 2013
                                            remains well below consensus with our longer-term growth reservations unchanged. Our new forecasts
                                            reflect several changes including (1) Higher Provigil sales on slower conversion to Nuvigil, moderating
                                            franchise declines, and higher price; (2) Higher SG&A spending given the greater 4Q level; and (3) Increased
                                            R&D spend, reflecting the impact of recent deals.
                                            Valuation
                                            We maintain our 12-month price target of $68 in light of minimal change to our long-term estimates. Our price
                                            target is based on a combination of P/E and EV/EBITDA and further supported by our DCF analysis.
                                            Key risks
                                            Key swing factors: (1) potential for acquisitions, (2) reinvigoration in total Provigil / Nuvigil trends, (3) pipeline
                                            surprises, and (4) generic threats.



DaVita Inc. (DVA): 4Q wrap-up: Positioning for bundle on track; Maintain Buy                                                                                   32

DVA, $76.17                                 Shelley Gnall (New York): shelley.gnall@gs.com, (212) 902-2068
Market cap                   $7,545 mn
                                            Goldman Sachs & Co.
                                            Matthew Borsch, CFA (New York): matthew.borsch@gs.com, (212) 902-6784
Target price                      $90.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E

EPS ($)                    4.80     6.05    What's changed
P/E                       15.9X    12.6X    DaVita reported 4Q2010 EPS of $1.13, a penny ahead of the Street and $0.03 below our $1.16. Relative to
                                            our model, revenues were largely in-line while EBIT was modestly below expectations on higher G&S.
EPS Quarter/Interim*       1.08     1.04
                                            Volumes were strong (s/s +4.4%, total +6.8%), partly offset by weaker pricing due to payor mix-shift. Pharma
Investment Lists                            utilization was down in 4Q, consistent with our expectations DVA would position ahead of bundled
                      Americas Buy List     reimbursement.
Coverage view                     Neutral
                                            DVA’s historically conservative management team sees EBIT flat to modestly down in 2011 compared to
                                            2010 (compare to Street at +1%). While there were few details, management indicated the company was
*Current and a year ago                     making “solid progress” with twelve different initiatives underway to reduce costs to offset bundled
                                            reimbursement cuts.
                                            Implications
                                            We maintain our Buy rating and continue to see a material long-term benefit from bundling. Based on 4Q
                                            trends, commentary provided on the conference call, and recent Epogen and Vitamin D data points from
                                            Amgen and Abbott, we are refining our model to reflect a 15% reduction in pharma costs in 2011 (from prior




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                               February 11, 2011



                                           13%), offset by a reduction in VA revenue and higher 2011 G&A to reflect announced IT investments. We
                                           continue to model a $12/tx (5%) 2011 Medicare payment cut pending clarity on DVA’s ability to capture
                                           coding for case mix adjustors, though commentary on the call implies upside potential. Net impact: 2011-12E
                                           EPS revised to $4.80 and $6.05 (from $4.90 and $6.15); we introduce 2013E of $6.85. Our 2011E EBIT
                                           reflects 2% growth.
                                           Valuation
                                           Our $90 6-month PT reflects 40% 9X EV/EBITDA, 40% 17x P/E, 20% DCF.
                                           Key risks
                                           DaVita still does not have an Epogen contract signed with Amgen for 2H2011, though commentary on this
                                           evening’s call implied negotiations for a long-term contract are proceeding favorably.



Mettler-Toledo International Inc. (MTD): 4Q2010: Strong 4Q and guidance but shares look fairly valued                                               33

MTD, $159.35                               Isaac Ro (New York): isaac.ro@gs.com, (212) 902-6393
Market cap                  $5,355 mn
                                           Goldman Sachs & Co.
                                           Jeff Ares (New York): jeff.ares@gs.com, (212) 902-5166
Target price                     $169.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E      2011E    Anesu Nyamuda (New York): anesu.nyamuda@gs.com, (917) 343-0571
EPS ($)                   6.94      7.89   Goldman Sachs & Co.
P/E                    23.0X      20.2X

EPS Quarter/Interim*      2.56      2.09
                                           What's changed
                                           Mettler-Toledo (MTD/Neutral) reported 4Q revenues/EPS of $593mn/$2.56, handily beating consensus of
Investment Lists                           $541mn/$2.30. This represents 17% reported growth, which includes a 2% benefit from acquisitions. Growth
                                 Neutral   in the Americas was 17%, Europe grew 13%, and Asia/ROW grew 23%. Management raised FY2011 organic
Coverage view                    Neutral   growth guidance 50bps to 6%-7% when considering the 4Q divestiture of a small food/retail software
                                           business. FY2011 EPS guidance of $7.70-7.80 is likewise higher vs. the previous $7.35 - $7.55 range and
*Current and a year ago                    consensus of $7.53.
                                           Implications
                                           We are raising our FY2011/FY2012/FY2013 EPS estimates to $7.89/$8.96/$10.01 from $7.57/$8.48/$9.57.
                                           This reflects our positive view on management’s ability to execute and sound investments for long-term
                                           growth. In the near-term, management believes some industrial end markets and regions such as Russia are
                                           still below 2008 spending levels, implying continued upside to growth rates in those areas. We do note,
                                           however, that growth in China (now 16% of MTD sales) will likely moderate somewhat in FY2011. At current
                                           levels, MTD shares trade at 18x our FY2012E, which is a 15% premium to our Life Science Tools universe
                                           and a 40% premium to the S&P 500. While we believe MTD is executing well and that end markets remain
                                           favorable, we continue to view MTD shares as fairly valued and maintain our Neutral rating.
                                           Valuation
                                           Our 12-month price target of $169 is up from $161, on the back of unchanged multiples and revised
                                           estimates, and is based on P/E (50%) and EV/EBITDA (50%), implying 19x our FY2012 EPS estimate.
                                           Key risks
                                           Risks to the upside include: (1) better than expected growth in industrial end markets, (2) operational
                                           improvements. Risks to the downside include: (1) slowing industrial growth, (2) reduced pricing power, and
                                           (3) declines in academic/government funding.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                      February 11, 2011




Momenta Pharmaceuticals (MNTA): Regulatory and litigation risk persists; we remain on the sidelines                                                        34

MNTA, $13.16                                Sapna Srivastava (New York): sapna.srivastava@gs.com, (212) 357-7528
Market cap                   $604.6 mn
                                            Goldman Sachs & Co.
                                            Hema Srinivasan (New York): hema.srinivasan@gs.com, (212) 902-6761
Target price                      $15.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E     Yogesh Ahuja (New York): yogesh.ahuja@gs.com, (212) 902-0871
EPS ($)                    3.05     3.05    Goldman Sachs & Co.
P/E                        4.3X     4.3X

EPS Quarter/Interim
                      *
                           0.81    (0.27)
                                            What's changed
                                            Momenta reported 4Q10 earnings this morning. Results were relatively unsurprising, as Novartis reported M-
Investment Lists                            enoxaparin sales on its earnings call last week. Management also provided updates on the ongoing legal and
                                  Neutral   regulatory issues facing its generic Lovenox and Copaxone programs.
Coverage view                 Cautious      Implications
*Current and a year ago
                                            We remain on the sidelines until there is more clarity on Lovenox and Copaxone programs; several catalysts
                                            that could change our view follow.
                                            (1) Updates on Teva’s generic Lovenox application – Teva has yet to respond to the FDA’s minor deficiency
                                            letter regarding its generic Lovenox ANDA. Any updates on the timeline and likelihood of approval will be
                                            defining to MNTA shares.
                                            (2) MNTA/MYL vs. Teva trial on generic Copaxone – Momenta management stated that it is optimistic they
                                            can get a trial date in 2H11. We believe that the outcome of this trial will be crucial in defining the value that
                                            investors ascribe to the M356 program.
                                            (3) Potential follow-on biologics partnership – Given the clear utility of Momenta’s technology in
                                            characterizing biologics, we expect the company will be a leader in the development of biosimilars.
                                            Management is trying to secure a broad partnership on biosimilars and stated that it is working to advance its
                                            biosimilar strategy this year.
                                            We revise our 2011E/2012E/2103E EPS to $3.05/$3.05/$3.09 from $2.47/$2.75/ $2.90 on higher expected
                                            revenue and greater market share.
                                            Valuation
                                            We maintain our Neutral rating and DCF-based, 12-month price target of $15.
                                            Key risks
                                            Upside: (1) FDA rejects Teva’s enoxaparin; (2) Teva loses Copaxone trial. Downside: (1) FDA approves
                                            Teva’s enoxaparin; (2) FDA rejects M356.



Laboratory Corporation of America Holdings (LH): Volume improvement in 4Q trends; maintain 2011-2012                                                       35
EPS

LH, $87.73                                  Matthew Borsch, CFA (New York): matthew.borsch@gs.com, (212) 902-6784
Market cap                   $9,168 mn
                                            Goldman Sachs & Co.
                                            Shelley Gnall (New York): shelley.gnall@gs.com, (212) 902-2068
Target price                      $90.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E

EPS ($)                    5.85     6.75    What's changed
P/E                       15.0X    13.0X    LabCorp reported 4Q operating EPS of $1.34, ahead of our/Street estimates of $1.31. The organic volume
                      *                     run-rate increased to 2.7% (excl. acquisitions and contract losses), an improvement from 9M2010 trend of flat
EPS Quarter/Interim        1.36     1.32
                                            to +1%.
Investment Lists                            The midpoint of first-time 2011 guidance reflects 10.5% revenue growth, with Genzyme Genetics (GG)
                                  Neutral   contributing roughly 6%. Management sees 2011 EPS, adjusted to exclude acquisition amortization, of $6.12
Coverage view                     Neutral
                                            - $6.32. Excluding Genzyme Genetics dilution for comparability, the EPS guidance midpoint implies 8%
                                            growth versus 10%+ guidance in recent years.
*Current and a year ago
                                            Implications
                                            Factors contributing to intraday share pressure (LH-3% vs SPX flat) likely include a slower-than-expected
                                            earnings growth outlook for 2011 as well as negative reaction to management’s new reporting methodology
                                            (i.e., excluding intangible amortization expense while discontinuing quarterly volume and payer mix
                                            disclosure). However, positives to highlight include better volumes and potential upside with low Genzyme




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                               February 11, 2011



                                           Genetics attrition.
                                           For comparability (e.g., DGX), we have maintained our methodology for EPS and have not added back
                                           acquisition amortization expense. Therefore, we update our model for 4Q results but make no change to our
                                           2011-12 EPS of $5.85 and $6.75. Our 2011 adjusted EPS is $0.13 ahead of the guidance midpoint, and
                                           assumes $0.08 repurchase (not in guidance). We introduce our 2013 EPS estimate of $7.40.
                                           Valuation
                                           We are making no change to our 6-month price target of $90 reflecting 7.5x EV/EBITDA (40%), 15x P/E
                                           (40%), and DCF (20%).
                                           Key risks
                                           Repurchase or acquisition-driven upside; increasing regulation on lab developed tests presents longer-term
                                           risk.



Industrials

Republic Services, Inc. (RSG): 4Q2010 beats expectations on higher margins; Solid FCF story                                                         36

RSG, $30.41                                Richard Skidmore, CFA (New York): richard.skidmore@gs.com, (212) 357-5509
Market cap                 $11,738 mn
                                           Goldman Sachs & Co.
                                           Alex Ovshey (New York): alex.ovshey@gs.com, (212) 902-6751
Target price                     $34.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E     Usha Chundru (Bangalore): usha.chundru@gs.com, (212) 934-5057
EPS ($)                   1.90     2.10    Goldman Sachs India SPL
P/E                    16.0X      14.5X

EPS Quarter/Interim*      0.43     0.41
                                           What's changed
                                           Republic Services (RSG) reported 4Q2010 EPS of $0.42 (excluding one-time charges of $0.04) beating our
Investment Lists                           and consensus estimate of $0.40. Stronger operating margins drove the upside to our forecasts despite
                   Americas Buy List       modestly weaker than expected price (1.0% vs our estimate of 1.6%) and volume (-1.1% vs -0.6%). RSG
Coverage view                    Neutral   expects 2011 EPS to be between $1.86-$1.89 on modest volume and price improvement and 50bps higher
                                           EBITDA margins. RSG expects to generate $875-$900 mn of free cash flow in 2011.
*Current and a year ago
                                           Implications
                                           We maintain our 2011-2012 EPS estimates of $1.90 and $2.10 as the flow through of stronger 4Q2010
                                           margins is offset by slightly lower price and volume growth assumptions than we previously forecasted. Our
                                           2011 EPS estimate is modestly above RSG’s outlook as RSG has assumed that old corrugated container
                                           (OCC) prices average 4Q2010 levels in 2011 whereas we expect OCC to be approximately $20 higher in
                                           2011 vs 4Q2010 levels. We introduce our 2013 EPS estimate of $2.25, which assumes 2.0% core pricing
                                           and 1.5% volume growth. We rate RSG shares Buy given its valuation discount to peers, accelerating return
                                           of cash to shareholders in 2011, and strong free cash flow generation.
                                           Valuation
                                           Our $34 per share 12-month price target for RSG is unchanged. Our price target is based on 2012 EPS
                                           estimates and 5-year average forward and market relative P/E multiples. RSG is the least expensive
                                           municipal solid waste (MSW) company trading at 16.0X 2011 P/E and 7.0X EV/EBITDA vs the peer group
                                           averages of 18.9X and 7.9X. Based on RSG’s 2011 outlook, the stock is trading at a 7.7% free cash flow
                                           yield.
                                           Key risks
                                           Weaker than expected MSW volume and pricing than expected; lower OCC prices; higher inflationary costs
                                           (i.e. diesel pricing).




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   February 11, 2011




Northrop Grumman Corp. (NOC): Adjusting estimates for Ships; reiterate Sell given Defense outlook                                                       37

NOC, $71.16                                Noah Poponak, CFA (New York): noah.poponak@gs.com, (212) 357-0954
Market cap                  $21,127 mn
                                           Goldman Sachs & Co.
                                           Chun-Yai Wang (New York): chun-yai.wang@gs.com, (212) 902-9610
Target price                      $61.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E    Alexandria Carroll (New York): alexandria.carroll@gs.com, (212) 902-7894
EPS ($)                    6.95     7.10   Goldman Sachs & Co.
P/E                       10.2X   10.0X

EPS Quarter/Interim
                      *
                           1.59     1.51
                                           What's changed
                                           4Q10 EPS of $1.27 compared to GS/consensus of $0.98/$1.01. Revenue of $8.6 bn was modestly below our
Investment Lists                           estimate, but EBIT margin of 9.2% was 70 bp better than estimate, as NOC remains squarely focused on
                      Americas Sell List   margin and execution improvement. Total book-to-bill ratio was 1.1, as strength in Aerospace bookings offset
Coverage view                  Cautious    weaker order activity in the other segments. Management stated that significant additional awards remain on
                                           hold as a result of the continuing resolution. NOC also issued initial 2011 guidance, after moving Ships to
*Current and a year ago
                                           discontinued ops, for revenue of $27.5 bn and EPS of $6.40-$6.60. However, the range does not
                                           contemplate potential use of proceeds from strategic actions with Ships, which we estimate would add $0.40-
                                           $0.50 if used entirely for share repurchase, implying consensus is close to embedding the full EPS potential
                                           of the legacy/remaining business. We revise our 2011/2012E EPS to $6.95/7.10 from $7.05/$6.80 as we
                                           adjust for FAS/CAS pension expense, move Ships in to discontinued operations, and increase share
                                           repurchase. We introduce a 2013E of $6.90.
                                           Implications
                                           We remain Sell rated on Northrop. The company continues to show steady execution improvement, but the
                                           outlook for U.S. focused platform Defense spending remains very challenging, and with the stock now trading
                                           at a premium to the large-cap Defense peer group (compared to a historical average discount) we believe the
                                           stock discounts a favorable outcome with the Ships strategy.
                                           Valuation
                                           We raise our 12-month price target to $61 from $54, as we mark-to-market for a higher S&P multiple in our
                                           relative methodology (that targets 0.60X for large-cap Defense).
                                           Key risks
                                           Strategic actions at Ships, potential for further margin improvement, DoD spending priorities.



Caterpillar, Inc. (CAT): Construction equipment recovery accelerating, acute focus on cost control                                                      38

CAT, $100.60                               Jerry Revich, CFA (New York): jerry.revich@gs.com, (212) 902-4116
Market cap                  $63,524 mn
                                           Goldman Sachs & Co.
                                           Tong Tong Xu (New York): tongtong.xu@gs.com, (212) 357-5020
Fiscal y/e Dec            2011E   2012E
                                           Goldman Sachs & Co.
EPS ($)                    6.30     8.20

P/E                       16.0X   12.3X    News
EPS Quarter/Interim*       1.42     0.36   We come away from CAT management meetings with a continued positive outlook for CAT's key mining and
                                           construction equipment end markets, and incrementally more positive on management's ability to deliver
Investment Lists
                                           improved cost control in this cycle.
                             Not Rated
                                           Analysis
                                           (1) Improving supply chain performance, with 75% on-time delivery in 2010, up from 50% in 2009, vs. an end
*Current and a year ago
                                           of 2011 target of 95%. CAT is in the early stages of further consolidating suppliers, targeting a 30% cut to
                                           4,500.
                                           (2) CEO Doug Oberhelman is acutely focused on cost control and has tied Machines management
                                           compensation to aggressive profit targets. Well-timed 2010 capex may contribute to improved execution vs.
                                           the prior cycle when maintenance costs sharply accelerated.
                                           (3) CAT is bullish on the global construction equipment capex cycle and expects Machines demand to
                                           outstrip its production capacity in 2011.
                                           (4) Material inflation risk balanced by pricing power. CAT’s guidance implies ~200 bps of purchasing and re-
                                           engineering savings, by our estimates, offsetting material inflation. We believe both inflation and CAT
                                           realized pricing will be higher in 2011. Tire availability is emerging as a concern, with increased tire pricing




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                       February 11, 2011



                                           driving surcharges.
                                           (5) Lane availability is improving at a measured pace, with management targeting 70% of shipments from
                                           Lane 1-2 by year-end, up from 60% today.
                                           (6) Light construction equipment (BCP) turnaround is complete, with a reduced product cost structure driven
                                           by simplified design and logistics.
                                           (7) Solid acquisition integration plans, with segment level management responsible for the integration of each
                                           target. Electromotive Diesel execution has been solid with cost cuts driving margin expansion.
                                           (8) Peoria tractor facility tour highlights improved capital velocity, though still not great at 25x inventory turns,
                                           with paint capacity the key bottleneck.
                                           Implications
                                           We are Not Rated on CAT.



Spirit AeroSystems Holdings, Inc. (SPR): Growth story on track, but cash far from strong; reiterate Neutral                                                  39

SPR, $24.87                                Noah Poponak, CFA (New York): noah.poponak@gs.com, (212) 357-0954
Market cap                  $3,527 mn
                                           Goldman Sachs & Co.
                                           Chun-Yai Wang (New York): chun-yai.wang@gs.com, (212) 902-9610
Target price                     $26.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E     Alexandria Carroll (New York): alexandria.carroll@gs.com, (212) 902-7894
EPS ($)                   1.90     2.50    Goldman Sachs & Co.
P/E                    13.1X      10.0X

EPS Quarter/Interim*      0.40     0.40
                                           What's changed
                                           SPR reported in line 4Q EPS that lacked any major charges, and provided initial 2011 EPS guidance that
Investment Lists                           captured consensus at the high end, but also forecasted it will burn significant cash again in 2011.
                                 Neutral   4Q10 EPS of $0.44 was a penny below consensus of $0.45 and below GS of $0.48. However, results
Coverage view                Attractive    included a $0.02 charge related to a union plan stock award, and a $0.05 unfavorable cumulative catch up on
                                           the 787 program. Revenue of $1.07 bn was slightly better than our $1.05 bn estimate, while EBIT margin of
*Current and a year ago
                                           9.0% was below our 9.5% estimate. FCF in the quarter was strong, as it included roughly $230 mn from the
                                           settlement with Boeing on the 787 program.
                                           Spirit provided initial 2011 EPS guidance of $1.70-$1.90, which captured consensus of $1.89 at the high end.
                                           However, SPR also provided an initial 2011 cash flow outlook that calls for cash from ops of $75 mn and
                                           capex of $325mn, implying free cash use of $250 mn, as 787 delays continue to drive working capital use
                                           and other new programs drive a capital ramp.
                                           Implications
                                           We lower our 2011/2012E to $1.90/$2.50 from $2.05/$2.60, as operating margin improvement is not
                                           materializing quite as fast as we expected. We introduce 2013E of $2.95. We reiterate our Neutral rating on
                                           SPR, as the lack of visibility in to cash flow improvement offsets the very strong long-term growth outlook
                                           driven by the shift from Boeing-only to all-of-Aerospace.
                                           Valuation
                                           We raise our 12-month price target to $26 from $24 on a higher target P/E (11.0X vs. 9.5X prior), given the
                                           787 settlement and as development programs move closer to production.
                                           Key risks
                                           Upside risks: (1) new aircraft orders, (2) new program milestones; Downside risks: (1) 787 risk, (2) cash flow.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                 February 11, 2011




FLIR Systems, Inc. (FLIR): Impressive Commercial performance in 4Q; Government still tough                                                            40

FLIR, $33.27                                Noah Poponak, CFA (New York): noah.poponak@gs.com, (212) 357-0954
Market cap                   $5,375 mn
                                            Goldman Sachs & Co.
                                            Chun-Yai Wang (New York): chun-yai.wang@gs.com, (212) 902-9610
Target price                       $32.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E    2012E    Alexandria Carroll (New York): alexandria.carroll@gs.com, (212) 902-7894
EPS ($)                    1.80      2.00   Goldman Sachs & Co.
P/E                       18.5X    16.6X

EPS Quarter/Interim
                      *
                           0.38      0.35
                                            What's changed
                                            FLIR reported 4Q10 EPS just below consensus and provided initial 2011 EPS guidance that captured the
Investment Lists                            Street at the high-end. Thermography and CVS were very strong in the quarter, while Government was below
                                  Neutral   expectations. FLIR also announced its first ever dividend, and stated it will accelerate share repurchase.
Coverage view                 Cautious      Reported 4Q10 EPS of $0.43 compares to GS of $0.45 and consensus of $0.44. Both revenue and EBIT
                                            margin at Thermography and CVS were ahead of our expectations, while Government EBIT was slightly
*Current and a year ago
                                            below our estimate. Book-to-bill at Government (ex ICX) was 0.65x, and bookings could remain weak going
                                            forward given the CR. Initial 2011 revenue guidance was stronger than expected, while the initial EPS range
                                            of $1.65-1.75 compared to consensus of $1.74. At the end of the call management alluded to its track record
                                            of beating the initial outlook. We raise our 2011/2012E EPS to $1.80/2.00 from $1.75/1.95 on stronger
                                            Commercial growth, and introduce 2013E of $2.25.
                                            Implications
                                            In our view, 4Q results support a Neutral rating. Performance on the commercial side was actually much
                                            better than we expected, yet total company EPS was worse because Government was slightly worse than
                                            our model. We expect more strong growth and positive developments ahead in Commercial (new products,
                                            EPA regulation, auto model intros, and the Thermography recovery) but Government (70% of EBIT) should
                                            struggle to see strong order flow, growth and margins.
                                            Valuation
                                            We raise our 12-month DCF derived price target to $32 from $30 reflecting stronger growth at CVS and
                                            Thermography.
                                            Key risks
                                            Upside: Large Government orders, new product traction, M&A potential. Downside: Leverage to the operating
                                            tempo, acquisition integration.



Parker Hannifin Corp. (PH): PH management meetings reinforce positive view                                                                            41

PH, $91.82                                  Terry Darling (New York): terry.darling@gs.com, (212) 357-0379
Market cap                  $15,068 mn
                                            Goldman Sachs & Co.
                                            Adam Samuelson (New York): adam.samuelson@gs.com, (212) 902-6764
Target price                      $107.00
                                            Goldman Sachs & Co.
Fiscal y/e Jun            2011E    2012E    Eddie Szeto, CFA (New York): eddie.szeto@gs.com, (212) 357-3320
EPS ($)                    6.25      7.20   Goldman Sachs & Co.
                                            Ankit Rastogi, CFA (Bangalore): ankit.rastogi@gs.com, (212) 934-6798
P/E                       14.7X    12.7X
                                            Goldman Sachs India SPL
EPS Quarter/Interim*       1.51      0.94

Investment Lists
                                            News
                      Americas Buy List     Meetings held with PH management in Cleveland Thursday reinforced our positive view that consensus EPS
Coverage view                 Attractive    estimates remain too low (GS 3% and 4% above consensus for CY2011-12) and that our estimates also
                                            have upside. On M&A, PH believes it still has potential to add 5% revenue growth in CY11 from acquisitions
*Current and a year ago
                                            vs. our estimate of 0% and sees opportunities that can be accretive in year one. PH continues to have the
                                            best balance sheet optionality in our Multi-Industry coverage at 18% of market cap. The company also
                                            reiterated confidence that material headwinds, which impacted FY2Q margins, are manageable via price
                                            increases that will take effect in FY3Q and begin to benefit margins in FY4Q. PH also remains confident that
                                            labor and supply chain inefficiencies that impacted FY2Q are quite manageable.
                                            Analysis
                                            We reiterate our Buy rating, with 17% upside to our 12-month price target of $107 (13.7x CY2012 P/E) and




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   February 11, 2011



                                           believe the next catalyst is an upward revision to FY2011 (June) guidance following FY3Q earnings in April.
                                           Announcements of accretive acquisitions could also be a near-term catalyst, with PH particularly focused on
                                           adding to its franchise in aerospace, life sciences, power gen, filtration, sealing and renewables.
                                           Implications
                                           While it is early in the process, PH was positive on January price increases through distribution sticking with
                                           little impact on demand or market share. This has a positive read across to ETN (CL-Buy, $111.93).
                                           Surcharges to OEMs are also scheduled for February-April. Meetings with managers of CIC and
                                           Instrumentation corroborated discussions on the reconciliation of labor and supply chain inefficiencies, with
                                           recent demand commentary also positive – in line with recent order data across industrials (truck,
                                           distributors, etc) as well as a stronger than expected US ISM, which suggest upside to revenue guidance, in
                                           our view. Downside risks include price/cost pressures and M&A execution.



Graham Packaging Company Inc. (GRM): Stronger than expected 4Q results; Reiterate Buy on FCF,                                                           42
valuation

GRM, $16.64                                Richard Skidmore, CFA (New York): richard.skidmore@gs.com, (212) 357-5509
Market cap                  $1,168 mn
                                           Goldman Sachs & Co.
                                           Alex Ovshey (New York): alex.ovshey@gs.com, (212) 902-6751
Target price                     $21.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E     Usha Chundru (Bangalore): usha.chundru@gs.com, (212) 934-5057
EPS ($)                   1.90     2.40    Goldman Sachs India SPL
P/E                       8.8X     6.9X

EPS Quarter/Interim*      0.46     0.50
                                           What's changed
                                           Graham Packaging (GRM) reported 4Q2010 EPS of $0.17 (excluding one-time gains of $0.58) inline with our
Investment Lists                           estimate and better than ThomsonOne consensus of $0.16. On an adjusted EBITDA basis, GRM generated
                   Americas Buy List       $125.1 mn of EBITDA, beating our estimate of $119 mn. GRM expects full-year 2011 EBITDA to be $583
Coverage view                    Neutral   million compared to current consensus of $560 mn. GRM also revised up its synergy target for Liquid
                                           Container (acquired in 3Q2010) to $25mn from $20mn.
*Current and a year ago
                                           Implications
                                           We view GRM’s 4Q2010 as positive and we reiterate our Buy rating on the stock. We are raising our 2011-
                                           2012 EPS estimates to $1.90 and $2.40 from $1.80 and $2.30, respectively, to reflect the stronger than
                                           expected 4Q2010 results and increased synergy expectation. We introduce our 2013 EPS estimate of $2.85.
                                           We are buyers of GRM stock for the following reasons: (1) we expect plastic container volumes to grow faster
                                           than glass or metal cans; (2) strong EPS and EBITDA growth outlook; (3) we expect free cash flow to be
                                           used primarily to delever; and (4) the stock trades at a discount to its peers on P/E, EV/EBITDA, and P/FCF.
                                           Valuation
                                           We raise our 12-month price target to $21 from $17 to reflect higher 2012 estimates and multiples. Our price
                                           target is based on 2012 EPS and EBITDA forecasts and forward P/E and EV/EBITDA multiples of 9.0X and
                                           6.5X (from 7.0x and 6.0x, respectively); we raise our multiple assumptions to reflect GRM’s faster EPS
                                           growth than previously expected. GRM shares trade at 8.8X 2011 P/E and 6.6X EV/EBITDA vs its peer group
                                           averages of 13.6X and 7.5X, respectively. We believe the current discount is unwarranted given GRM’s
                                           above average margins and returns.
                                           Key risks
                                           Weaker volume growth in the US and Europe, higher LIBOR rates, less debt reduction than expected, and
                                           slower realization of synergies.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   February 11, 2011



Technology

Equifax, Inc. (EFX): 4Q tops, 1H11 investments higher, but fundamentals are improving                                                                   43

EFX, $35.83                                 Julio C. Quinteros Jr. (San Francisco): julio.quinteros@gs.com, (415) 249-7464
Market cap                   $4,497 mn
                                            Goldman Sachs & Co.
                                            Vincent Lin, CFA (New York): vincent.lin@gs.com, (212) 934-0510
Target price                      $41.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E     John T. Williams (New York): john.t.williams@gs.com, (212) 357-3948
EPS ($)                    2.52     2.87    Goldman Sachs & Co.
                                            Roman Leal (San Francisco): roman.leal@gs.com, (415) 249-7468
P/E                       14.2X    12.5X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        0.58     0.54    Snigdha Sharma (Bangalore): snigdha.sharma@gs.com, (212) 934-5056
Investment Lists                            Goldman Sachs India SPL
                                  Neutral

Coverage view                     Neutral   What's changed
*Current and a year ago
                                            Following reported 4Q 2010 results we are adjusting our estimates to reflect: (1) higher investments in 1H11,
                                            but a recovery in 2H11; and (2) modestly lower revenue growth (now 7% vs. previous 9%). Longer term, our
                                            expectations remain unchanged with c.8% annual revenue growth, sustained annual operating margin
                                            expansion, and annual FCF of $300 mn+ (7% FCF yield). Our EPS estimates for CY11-CY13 now stand at
                                            $2.52/$2.87/$3.24 down from $2.59/$2.90/$3.28. Reflecting our reduced EPS and lower CY11 implied
                                            multiple of 16.3X (from 16.6X) we have reduced our 12-month PT to $41 (from $43), suggesting 14% upside
                                            potential.
                                            Implications
                                            Although the turn in EFX’s revenue growth is now evident, we believe that the next catalyst for the shares will
                                            hinge on improvements in its margin profile as we move into 2H11. As such, we retain our Neutral rating, but
                                            are constructive on the prospects for EFX given its comprehensive set of data assets, analytics, and
                                            decisioning technologies.
                                            Valuation
                                            Our 12-month price target of $41 is based on a weighted-average model incorporating our sector-relative
                                            framework, CY2011E P/E, and EV/EBITDA multiples; and implies 16.3X our CY11 EPS of $2.52.
                                            Key risks
                                            Upside risks include faster revenue growth and margin expansion. Downside risks include lower volume
                                            growth, margins, and pricing.
                                            Impact on related securities
                                            Comments on improved credit trends, lending activity, credit decision volumes, and pre-screening activity by
                                            banks support our view on improved prospects for credit issuance, which bodes well for Buy-rated MA
                                            ($252.1) and V ($74.7) over the long term, as this product should provide some offsets to any pressure on
                                            debit after regulatory changes.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                February 11, 2011




Expedia Inc. (EXPE): 4Q2010 review: Running harder to stay in place or to jump ahead?                                                                44

EXPE, $25.69                                 Ingrid Chung (New York): ingrid.chung@gs.com, (212) 902-2360
Market cap                    $7,338 mn
                                             Goldman Sachs & Co.
                                             Jordan Monahan (New York): jordan.monahan@gs.com, (212) 902-1879
Target price                       $26.00
                                             Goldman Sachs & Co.
Fiscal y/e Dec            2011E    2012E     James Mitchell, CFA (New York): james.mitchell@gs.com, (212) 357-1849
EPS ($)                    1.92      2.19    Goldman Sachs & Co.
                                             Fred Krom (New York): fred.krom@gs.com, (212) 902-8618
P/E                       13.3X     11.7X
                                             Goldman Sachs & Co.
                      *
EPS Quarter/Interim        0.28      0.26

Investment Lists
                                             What's changed
                                   Neutral   Expedia reported in-line 4Q bookings and revenue, though OIBA and EPS missed our estimates even after
Coverage view                      Neutral   adding back $10 mn in one-time items. Full-year 2011 OIBA growth guidance of mid-single-digit growth
                                             compared to our prior estimate of +12%. Expedia reported 4Q bookings, revenue, OIBA, and EPS of $5.8 bn
*Current and a year ago
                                             (+14% yoy), $808 mn (+16%), $175 mn (+7%), and $0.32 (+9%). Domestic bookings grew 13% yoy, while
                                             international grew 16% yoy (19% ex-FX). Global hotel room nights were up 15% yoy, from up 14% yoy in 3Q.
                                             4Q net revenue rate increased 23 bp yoy. 2010 OIBA growth was 9% yoy (10% ex-one-time items, in-line
                                             with full-year guidance). On about 1% lower bookings and revenue, but lighter margins on more
                                             reinvestment, we lower 2011/2012E EPS by around 6% to $1.92/$2.19. We introduce 2013E EPS of $2.49.
                                             Implications
                                             (1) While we accept that the company is investing in new products and geographic areas to drive future
                                             growth, we anticipated more leverage on growing ADRs in 2011, and see risk that higher investment levels
                                             continue into 2012. (2) TripAdvisor revenue grew 35% yoy in 4Q and 38% in 2010. Management expects
                                             click growth to be in the mid-20% range or greater, though margins should drop several hundred bp due to
                                             investments in new products, such as SniqueAway, vacation rentals, and mobile. (3) ADRs grew 2% yoy,
                                             while revenue per room night was flat yoy. We believe the revenue per room night disappointment was due to
                                             a mix shift toward agency hotel with lower net revenue rates.
                                             Valuation
                                             We lower our DCF-based, 6-month target price to $26 from $29. At $26, shares would trade at 14X 2011E
                                             EPS and 8X 2011E EBITDA.
                                             Key risks
                                             Marketing spending, access to promotional hotel inventory, advertising revenue, search engine placement,
                                             Google Places, and FX.



GSI Commerce, Inc. (GSIC): Adjusting interest expense and share count; lower target, estimates                                                       45

GSIC, $20.78                                 Ingrid Chung (New York): ingrid.chung@gs.com, (212) 902-2360
Market cap                    $1,390 mn
                                             Goldman Sachs & Co.
                                             James Mitchell, CFA (New York): james.mitchell@gs.com, (212) 357-1849
Target price                       $25.00
                                             Goldman Sachs & Co.
Fiscal y/e Dec            2011E    2012E     Fred Krom (New York): fred.krom@gs.com, (212) 902-8618
EPS ($)                    0.83      1.20    Goldman Sachs & Co.
                                             Jordan Monahan (New York): jordan.monahan@gs.com, (212) 902-1879
P/E                       25.1X     17.4X
                                             Goldman Sachs & Co.
EPS Quarter/Interim*      (0.14)    (0.02)

Investment Lists
                                             What's changed
                                   Neutral   On further evaluation of the Fanatics transaction terms and discussion with GSI Commerce, we are adjusting
Coverage view                      Neutral   our interest expense and share count to reflect the purchase, which is slated to close in 2Q2011. As we had
                                             already reflected Fanatics in our revenue and EBITDA, adjusting the below-the-line items reduces our 2011,
*Current and a year ago
                                             2012, and 2013 EPS estimates by 4%, 2%, and 2%, respectively, to $0.83, $1.20, and $1.52. Based on
                                             these changes, we lower our 6-month price target to $25 from $27. We remain Neutral rated on GSIC shares.
                                             Implications
                                             As stated in our February 9 report, 4Q2010 review: more revenue, more investment, we view the acquisition
                                             of privately held Fanatics as a good strategic fit for GSIC’s existing business, though it does represent




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                    February 11, 2011



                                          another in a long line of large acquisitions that could be viewed as obscuring visibility into the core business.
                                          Valuation
                                          We lower our 6-month, DCF-based price target to $25 to reflect higher interest expense and share count. At
                                          $25, GSIC would trade at 9X 2011E EBITDA. We maintain our Neutral rating as we believe that margins will
                                          be under pressure for the foreseeable future given investments in ShopRunner, RueLala, international, and
                                          in GSIC’s e-commerce technology platform. Long term, we hold a favorable view of GSI Commerce’s
                                          opportunities within outsourced e-commerce services, as well as interactive marketing services, but we do
                                          not expect any significant margin expansion in the next 12 months.
                                          Key risks
                                          Downside risks to our target price include: new deal/acquisition integration; partner renewal risk; and any
                                          variance to trends in the broader consumer economy. Upside risks include: faster growth for RueLaLa and
                                          ShopRunner than anticipated; faster same store sales growth.



Ingram Micro Inc. (IM): Maintaining our Street-high EPS of $2.40 for 2011; reiterate CL-Buy                                                              46

IM, $20.78                                Craig Hettenbach (New York): craig.hettenbach@gs.com, (212) 902-9959
Market cap                  $3,357 mn
                                          Goldman Sachs & Co.
                                          Brian Cho (New York): brian.cho@gs.com, (212) 357-7710
Target price                     $24.00
                                          Goldman Sachs & Co.
Fiscal y/e Dec         2011E     2012E

EPS ($)                   2.40     2.75   What's changed
P/E                       8.7X    7.5X    Ingram reported very strong revenue growth in the December quarter, beating expectations by $350mn, or
                                          3%. Unfortunately, the company did not deliver the operating leverage we expected, and EPS was only in-
EPS Quarter/Interim*      0.52     0.41
                                          line with the Street excluding a one-time gain and tax items. Management attributed the higher than expected
Investment Lists                          opex to over-staffing its logistics business and increased compensation on the heels of record EPS
                    Americas Buy List     performance. While we are disappointed about the muted leverage last quarter, we stress that our 2011 EPS
          Americas Conviction Buy List    estimate is unchanged at $2.40, which was around 15% above the Street prior to the earnings release. In
Coverage view                Attractive   addition, Ingram has net cash of $520mn—15% of its market cap—and a buyback authorization of $400mn,
                                          which should provide a source for enhancing shareholder value. Our EPS estimates are unchanged at $2.40
*Current and a year ago
                                          in CY11 and $2.75 in CY12. We are introducing CY13 EPS of $3.10.
                                          Implications
                                          We are reiterating our Buy rating (on Conviction List) on IM and recommend adding to positions on any
                                          pullback following the recent run-up (IM is up 9% YTD vs. the S&P and Nasdaq each up 5%). With the stock
                                          trading just above tangible book value of $19.55 and a P/E of 8.5X on 2011 (a 40% discount to the market
                                          vs. recent average of 20%), we see an excellent opportunity for investors to participate in Ingram’s sharply
                                          higher EPS power this cycle. Case in point, IM is trading 8% below its peak in 2007, while our EPS estimate
                                          this year is 35% above the EPS of that year.
                                          Valuation
                                          Our 12-month price target of $24 is based on a target P/TBV multiple of 1.25X, consistent with its historical
                                          average. Our target also equates to a P/E of 10X, representing a 20% discount to its recent historical
                                          average.
                                          Key risks
                                          Gross margin pressure due to aggressive pricing and execution on capital allocation.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                     February 11, 2011




Altera Corp. (ALTR): Meetings highlight growth opportunity; still Neutral on cyclical risks                                                               47

ALTR, $41.00                                James Schneider, Ph.D. (New York): james.schneider@gs.com, (917) 343-3149
Market cap                  $13,267 mn
                                            Goldman Sachs & Co.
                                            James Covello (New York): james.covello@gs.com, (212) 902-1918
Target price                      $32.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2011E   2012E     Gabriela Borges (New York): gabriela.borges@gs.com, (212) 357-2692
EPS ($)                    2.25     2.20    Goldman Sachs & Co.
P/E                       18.2X    18.6X

EPS Quarter/Interim
                      *
                           0.64     0.50
                                            What's changed
                                            We hosted investor meetings with VP of Investor Relations Scott Wylie. Our key takeaways are: (1)
Investment Lists                            Management does not believe customers have accumulated significant levels of inventory, and anticipates
                                  Neutral   that turn levels (currently in thigh 30% range) should return to normal levels of 50%-60% in the next 2
Coverage view                     Neutral   quarters; (2) Altera believes the transition from extended to normal product lead times remains orderly, with
                                            minimal order cancellations and customers no longer placing long-dated backlog on Altera; (3) In terms of
*Current and a year ago
                                            GM (now at about 71%, well above the 65% long-term target), Altera continues to plan new products and
                                            customer contracts assuming a 65% target, with the current upside being driven by operational cost
                                            efficiencies such as improved yield and supplier costs; (4) Part of Altera's significant R&D increase in 2011 is
                                            funding a series of new products that target specific verticals (e.g. wireline, wireless telecom) and incorporate
                                            a number of HardCopy IP blocks in an attempt to take share from ASSPs and embedded processors; (5)
                                            Altera expects to continue to gain PLD market share through at least 2012 due to the fast ramp of 40nm
                                            products where it has leading share (69% in 2010) and the decline of mature products (150nm and above)
                                            where it has low share (20% in 2010).
                                            Implications
                                            Although Altera continues to execute very well and we see clear long-term growth drivers for the business
                                            such as LTE, we are Neutral on the stock as we remain concerned about a potential customer inventory
                                            correction in the near term. We still see risk to 2011 Street estimates as comms PLD revenue is running 15%
                                            - 20% above normalized, but prefer Altera to Xilinx (Sell, $33.42) on a relative basis given superior product
                                            and customer positioning.
                                            Valuation
                                            Our 12-month price target is $32, based on 16X normalized EPS of $2.00.
                                            Key risks
                                            Risks include excess inventory and stronger-than-expected CapEx trends.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                       February 11, 2011



Telecom Services

BCE, Inc. (BCE): Investing for growth in the right places, but competitive risk looms                                                                         48

BCE, $36.32                                   Matthew Niknam (New York): matthew.niknam@gs.com, (212) 357-3372
Market cap                  $27,629 mn
                                              Goldman Sachs & Co.
                                              Jason Armstrong, CFA (New York): jason.armstrong@gs.com, (212) 902-8156
Target price                       $35.00
                                              Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E      Dan Pellegrinelli (New York): dan.pellegrinelli@gs.com, (212) 902-7516
EPS (C$)                   2.84      2.99     Goldman Sachs & Co.
P/E                       12.7X     12.1X

EPS Quarter/Interim
                      *
                           0.60      0.51
                                              What's changed
                                              Following 4Q10 results, we raise our 2011-2012 EPS to C$2.99/C$3.13 (+C$0.04/+C$0.08), reflecting
Investment Lists                              accretion from higher postpaid customer growth. We are also introducing our 2013 EPS estimate of C$3.34.
                                   Neutral    As a result of increased estimates, our 12-month price target moves to C$35 (+C$1).
Coverage view                      Neutral    Implications
*Current and a year ago
                                              Investing for growth in the right places. The 4Q10 operating metrics demonstrated the benefits Bell’s
                                              investments are producing across its business. Despite near-term margin pressure from these investments,
                                              we believe Bell is targeting growth in the right areas. In Wireless, accelerating postpaid share gains help lock-
BCE.TO, C$36.14                               in customers ahead of rising competition, while higher smartphone uptake is substantially accretive to ARPU,
Market cap                 C$27,492 mn        helping close the gap with peers. In broadband, Bell’s FTTN upgrade puts it on better footing against Cable,
                                              and is helping drive mid-single-digit ARPU growth. Finally, minimal share in urban Video markets (4%)
Target price                      C$35.00     means room for substantial growth when the company increases its IPTV push in 2011. A continued focus on
Fiscal y/e Dec            2011E    2012E      cost controls in other parts of the business has helped support these investments, keeping total margins
EPS (C$)                   2.99      3.13
                                              stable.
                                              Competitive risks remain elevated, keeping us Neutral. While we believe Bell is moving in the right direction,
P/E                       12.1X     11.6X     we remain concerned about competitive risk from current/new peers alike. Both Wireless/Video churn
EPS Quarter/Interim*       0.74      0.65     increased 20bp yoy this quarter, and we believe further targeted share gains from Bell could elicit more
                                              aggressive responses from competition. In addition, elevated churn and share gains to date mean Bell will
Investment Lists
                                              need to increase retention spend near-term, an additional margin headwind.
                                   Neutral
                                              Valuation
Coverage view                      Neutral    Our 12-month, C$35 (US$35) price target is an average of DCF and SOP.
*Current and a year ago                       Key risks
                                              Upside: Cost cuts, new entrant missteps; Downside: Rising competition.



Reports Published


                                             Healthcare Presentation: Utilization in the context of 2011 guidance


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Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                            February 11, 2011




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Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                              February 11, 2011



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Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                                February 11, 2011



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