CIF Stock Recommendation Report (Spring 2013)directly with CFN’s Medical Systems business segment....
Transcript of CIF Stock Recommendation Report (Spring 2013)directly with CFN’s Medical Systems business segment....
1
Date: 3/22/13
Analyst Name: Jacob Allen
CIF Stock Recommendation Report (Spring 2013)
Company Name and Ticker: CareFusion Corp. (CFN)
Section (A) Summary
Recommendation Buy: Yes No Target Price: Stop-Loss Price:
Sector: Healthcare Industry: Medical Equipment/ Supplies/ Distribution
Market Cap (in Billions): $7.556
# of Shrs. O/S (in Millions): 222.69
Current Price: $33.82 52 WK Hi: $34.65 52 WK Low: $23.77 EBO Valuation: $26.01
Morningstar (MS) Fair Value Est.: $37.00
MS FV Uncertainty: Medium
MS Consider Buying: $25.90
MS Consider Selling: $49.95
EPS (TTM): 1.43 (Yahoo!) EPS (FY1): 2.16 EPS (FY2): 2.42 MS Star Rating: 3
Next Fiscal Yr. End ”Year”: 2013 “Month”: June
Last Fiscal Qtr. End: Less Than 8 WK: Y N
If Less Than 8 WK, next Earnings Ann. Date:
Analyst Consensus Recommendation: Outperform
Forward P/E: 13.98 Mean LT Growth: 11.42% PEG: 1.22 Beta: 0.94
% Inst. Ownership: 92.12%
Inst. Ownership- Net Buy: Y N
Short Interest Ratio: 1.10 Short as % of Float: 1.00
Ratio Analysis Company Industry Sector
P/E (TTM) 19.64 30.76 27.52
P/S (TTM) 2.08 6.16 11.54
P/B (MRQ) 1.38 3.02 2.23
P/CF (TTM) 13.03 17.46 15.52
Dividend Yield N/A 1.23 1.66
Total Debt/Equity (MRQ) 21.07 39.50 19.40
Net Profit Margin (TTM) 10.73 4.95 -22.82
ROA (TTM) 4.65 6.47 4.31
ROE (TTM) 7.29 11.94 7.26
2
Investment Thesis: CareFusion Corp. (CFN) is a very young company with good potential. They are a dominant player in their product market and are expected to continue this trend with the possibility of capturing even more market share. That being said, they are a slow growth company who will not see a great increase in margins very quickly. Their progress will come over the next 5-10 years. Their ratios put them as slightly undervalued but I believe their stock price is a little bit too high to purchase at the moment. If the current price was in the range of $28-30 I would advise a buy recommendation, however I believe it is too high currently. Pros:
Good ratios
High market share
International exposure with good potential for international growth
Doing very well for a new company
Good history of positive earnings surprises
Products are always in demand by medical facilities, demand could increase with implementation of Affordable Health Care Act.
Cons:
Price could be run up too high
High growth in recent month means a missed window of opportunity
No dividends + slow growth rate = a long time until solid returns are seen
Summary Provide brief summary of your analysis in each section that follows
Company Profile: CareFusion Corp. (CFN) is a medical equipment supplier that focuses on improving the safety and lowering the cost of healthcare. They are headquartered in San Diego, CA and operate primarily in the United States. They have an international presence as well. Their operations consist of two segments: Medical Systems and Procedural Solutions; these are the two segments that they spun from Cardinal Health.
Fundamental Valuation: I chose a 5-year growth rate for CFN and the fundamental valuation came to be $26.01 suggesting a major overvaluation currently. However I do not agree with this evaluation because it does not incorporate market share or any other macroeconomic impact affects a stock’s price.
Relative Valuation: The relative valuation has CFN currently slightly overvalued at its current trading price. Forward P/E is the most prominent ratio in the health care industry which provided the valuation of $32.14.
Revenue and Earnings Estimates: Revenue estimates have been decreasing however earnings have been rising. This is due to the expected single-digit growth over the next 5-10 years.
Analyst Recommendations: Analysts have become more bearing on CFN over the past three months bringing their rating from 1.87 three months ago to 2.12 currently. Their overall recommendation is a hold.
Institutional Ownership: Net buyers has had a positive increase. JP Morgan Asset Management and The Vanguard Group both have > 5% ownership in CFN. The ownership combined with a net by is a bullish sign for the stock.
3
Affordable Health Care Act tax expected to increase expenses by up to $40 million a year in the future
Will be hard to increase margin with increased taxes from AHC Act
Believe it will drop a few dollars in the coming week/months while the XLV will continue upward trend
Short Interest: CFN has a very good short interest ratio. Their current days to cover is 1.00 suggesting a bullish sentiment from investors. Their short interest is much better than competitors.
Stock Price Chart: Great growth since incorporation in 2009. Very good growth in past few months compared to XLV, S&P 500 and competitors. Technical analysis shows no death crosses in the near future. However a very high RSI suggests a dip in the stock price will occur soon
Section (B) Company Profile (two pages maximum)
Company Summary
CareFusion Corp. (CFN) is a medical equipment supplier that focuses on improving the
safety and lowering the cost of healthcare. They are headquartered in San Diego, CA and
operate primarily in the United States. They have an international presence as well. CFN
employs over 15,000 people across the globe, with 6,300 employed in the U.S. CFN completed
their spinoff from Cardinal Health on August 31, 2009 to become their own entity. Their
operations consist of two segments: Medical Systems and Procedural Solutions; these are the
two segments that they spun from Cardinal Health.
Medical Systems incorporates three business units: Infusion Systems, Dispensing
Technologies and Respiratory Technologies. The Medical Systems area is organized around its
medical equipment business. CFN develops, manufactures and markets the equipment and
related supplies needed for medical management.
The Procedural Solutions segment is organized around disposable products and reusable
surgical instruments. The Procedural Solutions segment consists of three business units:
Infection Prevention, Medical Specialties and Special Disposables. CFN also develops,
manufactures and markets these products.
CFN’s total revenue for FY 2012 was $3,598 million. Medical Systems accounted for
$2,314 million, or 64.31%, and Procedural Solutions accounted for $1,284 million, or 35.69%.
The largest source of revenue for Medical Systems was Dispensing Technologies with $1,038
million in revenues, equating to 44.86% of Medical Systems income. The largest source of
revenue for Procedural Solutions was Infection Prevention with $576 million in revenues,
equating to 44.86% of Procedural Solutions income.
4
Total revenues increased by 4.6% from FY 2011 to FY 2012. International Revenue for FY
2012 was $790 million, or 22% of total revenue.
*All information from summary is taken from CFN’s 2012 10-K Report located on their website
www.CareFusion.com.
Business Model, Competition, Environment and Strategy
As mentioned, CFN operates in two segments: Medical Systems and Procedural
Solutions. Because they operate in these two segments, their main competitors are Baxter
International (BAX) and Becton Dickinson and Co. (BDX). These two main competitors compete
directly with CFN’s Medical Systems business segment. With regards to medical systems, CFN
currently holds a dominate market share in infusion pumps and medication-dispensing, with
25% and 70% global market share respectively (MorningStar.com). CFN’s focus is on improving
the safety and reducing the costs of healthcare on a global scale.
Because health care is a constant need, CFN is not a seasonal or cyclical company. They
operate with stead demand throughout the entire year. With the new health care act passed,
the Affordable Health Care Act, one could predict that CFN will see increased demand of their
products from medical facilities in the future due to more people being insured in the U.S. The
Affordable Health Care Act legislation will also add a 2.3% annual excise tax on the sales of
certain medical devices in the U.S. CFN currently expects the impact of the tax to be
approximately $15 million to $20 million in FY 2013, rising to approximately $30 million to $40
million annually thereafter (CFN 10-K).
Revenue and Earnings History
Discuss any pattern in revenue and earnings (e.g., increasing year over year; seasonal; etc.)
**From Morningstar
There does not seem to be any pattern between higher or lower revenues during a
specific season/quarter. The only trend notable is that higher revenues lead to a higher EPS.
Earnings Per Share (recent four quarters, 2012):
Q1: 0.14
Q2: 0.45
Q3: 0.38
Q4: 0.49
Total: 1.46
Revenue (recent four quarters, 2012):
Q1: $919M
Q2: $965M
Q3: $837M
Q4: $909M
Total: $3,630M
5
This is a trend that is consistent is most companies. The only outlier was in the first quarter in
2012 when the EPS was 0.14. I could not find an explanation as to why the number was so low.
The most recent earnings report on February 7, 2013, saw CFN just beat Wall Street’s
earnings estimates with an EPS of $0.48. The stock responded well to this news, continuing its
climb. CFN had been rising the weeks prior to the report and has continued to climb since.
6
Section (C) Fundamental Valuation (EBO)
Include the following here:
Inputs (provide below input values used in your analysis)
EPS forecasts (FY1 & FY2): 2.16 & 2.42
Long-term growth rate: 11.42%
Book value /share (along with book value and number of shares outstanding):
Book value: $5.231 Billion
# of shares outstanding: 217.3
Book value / share: 24.07
Dividend payout ratio: N/A
Next fiscal year end: 2013
Current fiscal month: 9
Target ROE: 10.85
Output
Above normal growth period chosen: 5
EBO valuation (Implied price from the spreadsheet): $26.01
CFN PARAMETERS FY1 FY2 Ltg
EPS Fore casts 2.16 2.42 11.42% Mode l 1: 12-ye ar fore casting horiz on (T=12).
Book value /share (last fye ) 24.07 and a 7-ye ar growth pe riod.
Discount Rate 9.57%
Divide nd Payout Ratio (POR) 0.00% Please download and save this template to your own storage device
Ne xt Fsc Ye ar e nd 2013 You only ne e d to input value s to ce lls highlighte d in "ye llow"
Curre nt Fsc Mth (1 to 12) 9 The re st o f the spre adshe e t is calculate d automatically
Targe t ROE (industry avg .) 10.85% Ple ase re ad "Guide line s_for_Fundame ntalValuation_ProfLe e _Spre adshe e t" file care fully
Ye ar 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Long-term EPS Growth Rate (Ltg) 0.1142 0.1142 0.1142 0.1142 0.1142
Forecasted EPS 2.16 2.42 2.70 3.00 3.35 3.73 4.16
Beg. of year BV/Shr 24.070 26.230 28.650 31.346 34.351 37.698 41.428
Implied ROE 0.092 0.094 0.096 0.097 0.099 0.100
ROE (Beg. ROE, from EPS forecasts) 0.090 0.092 0.094 0.096 0.097 0.099 0.100 0.102 0.104 0.105 0.107 0.109
Abnormal ROE (ROE-k) -0.006 -0.003 -0.002 0.000 0.002 0.003 0.005 0.006 0.008 0.010 0.011 0.013
growth rate for B (1-POR)*(ROEt-1) 0.000 0.090 0.092 0.094 0.096 0.097 0.099 0.100 0.102 0.104 0.105 0.107
Compounded growth 1.000 1.090 1.190 1.302 1.427 1.566 1.721 1.894 2.087 2.303 2.545 2.817
growth*AROE -0.006 -0.004 -0.002 0.000 0.002 0.005 0.008 0.012 0.016 0.022 0.028 0.036
required rate (k) 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096
Compound discount rate 1.096 1.201 1.315 1.441 1.579 1.730 1.896 2.077 2.276 2.494 2.733 2.994
div. payout rate (k) 0.000
Add to P/B PV(growth*AROE) -0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.01 0.01 0.01
Cum P/B 0.99 0.99 0.99 0.99 0.99 0.99 1.00 1.00 1.01 1.02 1.03 1.04
Add: Perpetuity
beyond current yr (Assume this yr's AROE forever) -0.06 -0.03 -0.01 0.00 0.02 0.03 0.04 0.06 0.08 0.09 0.11 0.13
Total P/B (P/B if we stop est. this period) 0.94 0.96 0.98 0.99 1.01 1.03 1.04 1.06 1.09 1.11 1.14 1.17
Implie d price 24.19 24.74 25.15 25.58 26.01 26.45 26.90 27.45 28.05 28.70 29.40 30.15
Che ck:
Beg. BV/Shr 24.07 26.23 28.65 31.35 34.35 37.70 41.43 45.58 50.23 55.43 61.27 67.81
Implied EPS 2.16 2.42 2.70 3.00 3.35 3.73 4.16 4.65 5.20 5.83 6.55 7.36
Implied EPS growth 0.120 0.114 0.114 0.114 0.114 0.114 0.118 0.120 0.121 0.122 0.124
7
Sensitivity Analysis
EBO valuation would be (you can include more than one scenario in each of the following):
$25.15 if changing above normal growth period to 3 years
$26.84 if changing growth rate from mean (consensus) to the highest estimate 12.60
$25.03 if changing growth rate from mean (consensus) to the lowest estimate 10.00%
$32.60 if changing discount rate to 8%
$26.01 if changing target ROE to 15%
*Discount Rate: 0.0279 + 0.94(0.1 – 0.0279) = 9.57%
8
Section (D) Relative Valuation
From the top panel
CFN has competitive ratios across the board with many of its ratios falling below or near the
industry average. The most notable ratios to look at are forward P/E, P/B and PEG. These ratios
value the company in line or possibly slightly undervalued compared to the competitors. The
PEG of 1.22 is low enough to suggest that there is a good potential for future growth. The P/S
and P/CF are also in line with competitors and suggest it is currently valued correctly.
From the bottom panel
When looking at the derived stock prices from competitors, it would seem that CFN is
either valued correctly at the moment or is slightly over valued. With P/E being the most
relevant ratio to the healthcare sector, the median value of $32.14 would put the stock at a
very slight overvaluation currently. The median prices from the PEG and P/S have the company
currently undervalued while the P/CF has the company overvalued. The P/B has some very high
numbers and therefore make it irrelevant to this evaluation of derived stock prices.
The current 52-week high is $34.65. The PEG and P/s have CFN valued above this. With
the forward P/E and P/CF valuing CFN under this number. CFN is currently trading at $34.17.
I Chose Baxter, Becton Dickinson, and C R Bard because they all compete directly with
CareFusion in the medical equipment production and distribution. Baxter and Becton Dickinson
CFN
Mean FY2
Earnings Estimate Forward Mean LT PEG P/B ROE Value P/S P/CF
Ticker Name Mkt Cap Current Price (next fiscal year) P/E Growth Rate (MRQ) 5 yr ave Ratio TTM TTM
1 BAX Baxter International 37,614.48$ 69.37$ 5.22$ 13.29 8.51% 1.56 5.42 30.42% 0.18 2.65 12.18
2 BDX Becton Dickinson & Co 17,815.33$ 91.74$ 6.24$ 14.70 7.70% 1.91 3.99 23.06% 0.17 2.29 10.87
3 BCR C R Bard Inc 8,337.81$ 100.98$ 7.61$ 13.27 9.89% 1.34 4.30 23.38% 0.18 2.82 12.64
4 CAH Cardinal Health Inc. 15,723.86$ 42.35$ 3.82$ 11.09 10.50% 1.06 2.40 12.29% 0.20 0.15 10.56
CFN CareFusion Corp. 7,555.95$ 33.82$ 2.42$ 13.98 11.42% 1.22 1.38 5.69% 0.24 2.08 13.03
Implied Price based on: P/E PEG P/B Value P/S P/CF
1 BAX Baxter International $32.16 $43.16 $132.83 $24.85 $43.09 $31.61
2 BDX Becton Dickinson & Co $35.58 $52.77 $97.78 $24.13 $37.23 $28.21
3 BCR C R Bard Inc $32.11 $37.08 $105.38 $25.65 $45.85 $32.81
4 CAH Cardinal Health Inc. $26.83 $29.18 $58.82 $27.23 $2.44 $27.41
High $35.58 $52.77 $132.83 $27.23 $45.85 $32.81
Low $26.83 $29.18 $58.82 $24.13 $2.44 $27.41
Median $32.14 $40.12 $101.58 $25.25 $40.16 $29.91
Cougar Investment Fund Relative Valuation Template
Please download and save this template to your own storage device
You only need to input values to ce lls highlighted in "ye llow"
The rest of the spreadsheet is calculated automatically
Please read "Stock Recommendation Guide lines" document carefully
9
are larger cap companies than CareFusion but CFN still competes directly with them because of
their specialized approach in their products. I chose Cardinal Health because CareFusion is a
spin-off of Cardinal. They spun off in 2009 taking the Medical Systems and Procedural Solutions
business segments with them.
10
Section (E) Revenue and Earnings Estimates
Copy/Paste the “Historical Surprises” Table from Reuters.com, “Analysts” tab (include both
revenue and earnings; make note that revenues might be in “millions”)
HISTORICAL SURPRISES
Sales and Profit Figures in US Dollar (USD) Earnings and Dividend Figures in US Dollar (USD)
Estimates vs Actual Estimate Actual Difference Surprise %
SALES (in millions)
Quarter Ending Dec-12 907.48 909.00 1.52 0.17
Quarter Ending Sep-12 840.80 837.00 -3.80 -0.45
Quarter Ending Jun-12 956.24 968.00 11.76 1.23
Quarter Ending Mar-12 893.39 919.00 25.61 2.87
Quarter Ending Dec-11 914.18 915.00 0.82 0.09
Earnings (per share)
Quarter Ending Dec-12 0.53 0.54 0.01 2.16
Quarter Ending Sep-12 0.42 0.44 0.02 3.99
Quarter Ending Jun-12 0.49 0.51 0.02 3.28
Quarter Ending Mar-12 0.45 0.49 0.04 9.33
Quarter Ending Dec-11 0.44 0.44 0.00 0.92
CFN has a pattern of positively surprising the market with higher number than expected.
For the past five quarters reported in the above graph, CFN only missed estimates once in
revenues. This was during the 3rd quarter of 2012. However, in earnings, CFN has not missed
estimates once in the past five reports. In all instances, the stock has responded appropriately
to the positive surprises with gains that day. There were no extreme jumps or declines when
these reports came out either.
11
Copy/paste the “Consensus Estimates Analysis” Table from Reuters.com, “Analysts” tab
(include both revenue and earnings)
CONSENSUS ESTIMATES ANALYSIS
Sales and Profit Figures in US Dollar (USD) Earnings and Dividend Figures in US Dollar (USD)
# of Estimates Mean High Low 1 Year
Ago
SALES (in millions)
Quarter Ending Mar-13 14 910.12 942.00 889.00 925.21
Quarter Ending Jun-13 14 1,004.20 1,029.69 979.00 1,033.20
Year Ending Jun-13 16 3,661.69 3,696.03 3,644.00 3,758.96
Year Ending Jun-14 16 3,787.26 3,875.07 3,745.00 3,894.53
Earnings (per share)
Quarter Ending Mar-13 16 0.53 0.56 0.48 0.49
Quarter Ending Jun-13 16 0.65 0.70 0.59 0.59
Year Ending Jun-13 17 2.16 2.19 2.13 2.02
Year Ending Jun-14 17 2.42 2.45 2.35 2.23
LT Growth Rate (%) 5 11.42 12.60 10.00 9.49
The range of estimates does not seem to be too extreme. The high and low estimates
are relatively close together for both revenues and earnings. The high revenue is 0.94% higher
than the mean and the low revenue is 0.48% lower than the mean for FY 13. For earnings, the
high estimate is 1.39% higher than the mean and the low estimate is 1.39% lower than the
mean. The divergent are very similar, with neither the high or low estimate being very far from
the mean.
12
Currently, there are only five analysts providing a LT-Growth rate. The rate rages from
10.00% to 12.60% providing a mean of 11.42%.
Copy/paste the “Consensus Estimates Trend” Table from Reuters.com, “Analysts” tab (include
both revenue and earnings)
CONSENSUS ESTIMATES TREND
Sales and Profit Figures in US Dollar (USD) Earnings and Dividend Figures in US Dollar (USD)
Current 1 Week
Ago 1 Month
Ago 2 Month
Ago 1 Year
Ago
SALES (in millions)
Quarter Ending Mar-13 910.12 910.12 911.64 918.49 925.21
Quarter Ending Jun-13 1,004.20 1,004.20 1,004.48 982.99 1,033.20
Year Ending Jun-13 3,661.69 3,661.69 3,663.07 3,654.88 3,758.96
Year Ending Jun-14 3,787.26 3,787.26 3,786.18 3,752.00 3,894.53
Earnings (per share)
Quarter Ending Mar-13 0.53 0.53 0.53 0.55 0.49
Quarter Ending Jun-13 0.65 0.65 0.65 0.64 0.59
Quarter Ending Jun-13 2.16 2.16 2.16 2.15 2.02
Quarter Ending Jun-14 2.42 2.42 2.41 2.40 2.23
The consensus estimates for revenue are trending down for both quarter and year
ending estimates. There is no significant difference between the downward trend for FY1 or FY2
for revenues.
13
On the other hand, earnings estimates are trending upward as of a year ago until now.
The most notable trend visible is the large jump from 2.23 EPS at FY2 one year ago to a 2.42 EPS
for FY2 as the current estimate. I believe this is because analysts see the potential growth of
this new company whereas one year ago there was more skepticism.
Copy/paste the “Estimates Revisions Summary” Table from Reuters.com, “Analysts” tab
(include both revenue and earnings)
ESTIMATES REVISIONS SUMMARY
Last Week Last 4 Weeks
Number Of Revisions: Up Down Up Down
Revenue
Quarter Ending Mar-13 0 0 0 0
Quarter Ending Jun-13 0 0 0 0
Year Ending Jun-13 0 0 1 1
Year Ending Jun-14 0 0 2 0
Earnings
Quarter Ending Mar-13 0 0 0 1
Quarter Ending Jun-13 0 0 1 0
Year Ending Jun-13 0 0 0 1
Year Ending Jun-14 0 0 2 0
There are very few revisions. In the past four weeks 6 analysts total have increased their
revenue estimates for revenue and earnings alike. In that same time period one analyst
14
decreased the revenue estimate for FY 13 and two analysts decreased their earnings estimate
for the quarter ending March-13 as well as for FY 13. There is no notable trend, with so few
analysts making changes to their estimates it is tough to find a pattern. If there was to be any
sort of pattern, it would be trending toward upward revisions, a positive sign for the company.
The financial outlook for the company is positive. Growth is expected but not at a high
rate (MorningStar.com). CFN is a new company who is still growing. Their product line will not
see a sharp increase in demand because the medical equipment is a relatively consistent
industry with neither sharp increases nor decreases.
15
Section (F) Analysts’ Recommendations
Copy/paste the “Analyst Recommendations and Revisions” Table from Reuters.com,
“Analysts” tab. NOTE: Make sure you copy the entire table including the “Mean Rating” at the
bottom of the table.
ANALYST RECOMMENDATIONS AND REVISIONS
1-5 Linear Scale Current 1 Month
Ago 2 Month
Ago 3 Month
Ago
(1) BUY 5 6 7 7
(2) OUTPERFORM 4 3 2 3
(3) HOLD 7 6 6 5
(4) UNDERPERFORM 0 0 0 0
(5) SELL 0 0 0 0
No Opinion 0 0 0 0
Mean Rating 2.12 2.00 1.93 1.87
The trend of analyst recommendations over the last three months has been bearish. The
mean rating three months ago was 1.87 and it is currently at 2.12. The most significant
movement tends to be from buy to hold. The hold rating has increased from 5 analysts three
months ago to 7 analysts currently. This is consistent with what I have read elsewhere about
CFN. Their growth potential is starting to be seen as slow and very long term
(MorningStar.com). I believe this is the main reasoning for the reduced recommendations.
Currently there are no analysts who rate CFN as underperform or sell. This was true
three months ago and is true today.
16
Revision Date
Upgrade or Downgrade
Current Recommendation
Previous Recommendation
Firm Last Revision
The most recent revision date
The earliest revision date in the last two months
**** When searching CNBC.com I found no revisions by analysts during the past two months.
17
Section (G) Institutional Ownership
Copy/paste the completed “CIF Institutional Ownership” spreadsheet here.
Cougar Investment Fund Institutional Ownership Template
Please download and save this template to your own storage device
You only need to input values to cells highlighted in "yellow"
The rest of the spreadsheet is calculated automatically
Please read "Stock Recommendation Guidelines" document carefully
CFN
Ownership Activity # of Holders % Beg. Holders Shares
% Shares
Shares Outstanding 222,693,258 100.00%
# of Holders/Tot Shares Held 514 100.98% 205,145,029 92.12%
# New Positions 40 7.86%
# Closed Positions 35 6.88%
# Increased Positions 213 41.85%
# Decreased Positions 201 39.49%
Beg. Total Inst. Positions 509 100.00% 207,374,931 93.12%
# Net Buyers/3 Mo. Net Chg 12 51.45% -2,229,902 -1.00%
Ownership Information % Outstanding
Top 10 Institutions % Ownership 39.30%
Mutual Fund % Ownership 1.67%
Float % 99.75%
> 5% Ownership
Holder Name % Outstanding Report Date JP Morgan Asset Management
5.8 12/31/2012
Vanguard Group, Inc. 5.8 12/31/2012
18
On a net basis, institutions have increased their positions by 12. The interest in this
stock medium, with two big name owners holding more than five percent. JP Morgan Asset
Management and The Vanguard Group both hold 5.8% of CFN. This can be seen as a bullish
indicator for the future. These two owners are very well known in the investment world and
obviously see potential for this stock to grow in the future. The investment by JP Morgan and
Vanguard combined with a positive net buy provide a bullish outlook on CFN.
19
Section (H) Short Interest (two pages)
From http://www.nasdaq.com/ (NASDAQ’s website)
CFN
Settlement Date Short Interest Avg Daily Share Volume Days To Cover
2/28/2013 2,211,605 2,373,587 1.000000
2/15/2013 2,015,916 2,170,246 1.000000
1/31/2013 1,640,934 1,312,239 1.250484
1/15/2013 1,326,721 1,203,320 1.102550
12/31/2012 1,403,791 1,070,765 1.311017
12/14/2012 2,003,198 836,333 2.395216
11/30/2012 2,331,245 1,180,022 1.975595
11/15/2012 2,361,665 1,533,352 1.540198
10/31/2012 2,360,133 1,173,615 2.010994
10/15/2012 2,419,591 1,003,316 2.411594
9/28/2012 2,946,669 1,729,623 1.703648
9/14/2012 2,956,375 2,446,749 1.208287
8/31/2012 2,192,355 1,436,729 1.525935
8/15/2012 2,023,013 2,893,890 1.000000
7/31/2012 2,533,318 1,332,505 1.901170
7/13/2012 2,644,994 1,101,522 2.401218
6/29/2012 2,501,589 1,396,963 1.790734
6/15/2012 3,838,202 1,576,713 2.434306
5/31/2012 4,717,890 1,911,650 2.467967
5/15/2012 4,776,331 1,976,009 2.417161
4/30/2012 4,409,139 1,654,157 2.665490
4/13/2012 3,283,373 1,934,646 1.697144
3/30/2012 2,772,818 1,267,072 2.188367
3/15/2012 2,136,751 1,310,331 1.630696
20
BAX
21
BDX
22
From http://finance.yahoo.com/
Complete the following table with information from the “share statistics” table.
Avg Vol Avg Vol Shares Float (3 month) (10 day) Outstanding
1,663,940 1,537,010 222.59M 222.04M
Shares Short Short Ratio Short % of Float Shares Short
(Most recent date) (Most recent date) (Most recent date) (2 weeks prior)
2.21M (2/28/13) 1.10 (2/28/13) 1.00% (2/28/13) 2.02M
The market sentiment has become more bullish over the last year. The current days to
cover for CFN is 1.00 which is very good. The highest it reached over the past year was 2.5 days
suggesting that investors have been bullish on the stock almost all year long. The same cannot
be said for its competitors. BAX is currently at 1.8 days to cover with a high of 4 days to cover
over the past year and BDX is currently at 7.2 days to cover with a high during the year of 10.8
days to cover.
When comparing these competitors against CFN, investors seem much more bullish
towards CFN than they are toward either BAX or BDX.
Settlement Date
2/28/2013
Short Interest
2,211,605
Average Daily Shares
Volume
# of
Days to cover
1.00
2,373,587
23
Section (I) Stock Charts
A three months price chart
Copy/paste the “3 Mos.” stock chart here
A one year price chart
Copy/paste the “1 Yr” stock chart here
24
A five year price chart
Copy/paste the “5 Yrs.” stock chart here
Additional price chart
Technical Analysis:
6-Month
25
2-year
The results from the 3-month, 1-year and 5-year graphs show consistent growth since
their IPO in 2009. Their stock price has risen over 30% in the past year, higher than the S&P 500,
the XLV, and its two main competitors, BAX and BDX. This is seen in all three price charts. More
recently, CFN has started to outgrow their competitors, the S&P, and the XLV at a greater rate
than before. They have also recently reached a 52-week high and are trading very near that
currently.
The technical analysis is promising. The technical graphs show good moving averages
with no death crosses in the near future. RSI is very high at the moment suggesting that CFN
will more than likely drop a few points in the very near future. This is to be expected because
the price has been driven higher at a fast rate the past couple months and should be expected
to drop soon before it will be able to grow at a consistent rate again.