THE MONTHLY RESEARCH CONFERENCE CALL HEALTHCARE: OPPORTUNITIES IN A STABILIZING SECTOR ARGUS MODERATOR. Jim Kelleher, CFA Director of Research

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1 TH MONTHLY RSARCH CONFRNC CALL HALTHCAR: OPPORTUNITIS IN A STABILIZING SCTOR ARGUS MODRATOR Jim Kelleher, CFA Director of Research John M. ade Argus President David Toung Director of Healthcare Research Jasper Hellweg Argus Analyst Wednesday, June 6, :00 a.m. T 61 Broadway NYC, N.Y Telephone: (212)

2 WHAT'S NW AT ARGUS JUN 2018 New to the Portfolio Selector-Focus List Unilever well-run consumer products company in tune with shifting tastes Noble nergy Top &P company with significant Shale exposure American Tower a leading RIT in the cell phone tower space Marvell Technology Group storage semiconductor leader is preparing to acquire Cavium New to Coverage VF Corp. (NYS: VFC) Leading retail brands from Timberland to Wrangler's to Dickie's Old Dominion Freight Lines (NSM: ODFL) Major U.S. trucker in the LTL delivery space Argus Quick Notes: Recent Weeks Momentum Stocks (DKS, TWTR) nergy Stock Values (DVN, VLO) Sustainable Impact Investing (HUM, MSFT) Sports Betting Stocks (MGM, BYD) - 2 -

3 MACRO FORCASTS RAL GDP W/FORCASTS (%) TRASURY YILD CURV (%) Source: Bureau of conomic Analysis, Argus Research Corp. 4 3 Year-Ago Current 6-Month Forecast '00 '01 '02 '03 '04 ' Mo bill 2-Yr Note 5-Yr Note 10-Yr Bond 30-Yr Bond S&P 500 QUARTRLY ARNINGS GROWTH MARKT SCTOR DISTRIBUTION - PRCNT OF S&P % 80% 60% 40% 20% 0% -20% -40% '00 '01 '02 '03 '04 '05 06 '07 '08 '09 '10 '11 '12 '13 '14 '15 ' Sectors in Green are Recommended Overweight; Blue are Marketweight; Red are Underweight Telecom Basic Materials Utilities Consumer Discretionary Industrial Consumer Staples nergy Healthcare Real state Financial Services Technology 19 0% 5% 10% 15% 20% 25% 30% - 3 -

4 MARKT PRFORMANC DATA AS MAY 31, 2018 MAJOR INDX SCTOR Nasdaq Composite Growth Stocks (Wilshire Large Growth) Russell 2000 S&P 500 DJIA Value Stocks (Wilshire Large Value) Lehman US Aggregate Bond Index Real state Technology Consumer Discretionary nergy Health Care Industrials Financials Materials Utilities Telecom Consumer Staples NM -5% 0% 5% 10% 15% -15% -10% -5% 0% 5% 10% 15% GLOBAL QUITY MARKTS China Russia US India UK Brazil DJ World Index uro Zone Canada Japan Mexico -10% -5% 0% 5% 10% - 4 -

5 CURRNT DVLOPMNTS PHARMA AND BIOTCH SCTORS Will Trump Administration take substantive actions to address high cost of drugs or are the recent comments from the WH and cabinet leaders mere rhetoric without real financial impact on companies? Pharma stocks and Biotech index (XBI) rally in May as HHS Secretary Azar decides against giving Medicare power to directly negotiate pricing. (Biotech TF XBI +13.9% YTD through June 4). Nonetheless, we do see the government and the FDA seeking to increase price competition by encouraging entries of generics and biosimilars. Such actions may include curbing drug makers moves to extend patent exclusivity and accelerating review of new drugs, particularly biosimilars that would compete against biologics drugs. Stock prices of pharmaceutical companies and biotechs may be impacted by headline risks as government leaders continue to comment on drug pricing. U.S. pharma and biotech companies are bringing back from overseas billions of dollars following new U.S. corporate tax law. Repatriated funds will likely be used for increased biologics manufacturing capacity, increased R&D, M&A and stock buybacks

6 CURRNT DVLOPMNTS MD-TCH SCTOR Med-Tech sector has large addressable markets as aging populations in the U.S., urope and Asia seek active lives. Devices such as orthopedic implants for large joints and the spine and cardiovascular implants improve quality of life and mobility. Medical Device companies are advancing capabilities in robotics and data analysis to improve patient outcomes. Outcomes data can also assist in demonstrating added value of procedures that utilize devices and assist in securing reimbursement coverage of such procedures. Such device companies are partnering with Google and others with data and informatics expertise to develop smart devices and systems

7 STOCK RCOMMNDATIONS Merck (MRK) Stryker (SYK) Charles River Labs (CRL) - 7 -

8 ADDITIONAL STOCK RCOMMNDATIONS Illumina Inc (ILMN) Target Price: $310 Medicare coverage expansion for next generation sequencers (NGS) and new partnerships greatly expand opportunities in oncology. Full range of flow cells helps accelerate product transition to the NovaSeq sequencer. Quest Diagnostics Incorporated (DGX) Target Price: $122 New multi-year strategic partnership with UnitedHealthcare could sustain higher earnings. With an eye on the future, Quest has entered a partnership to transform healthcare data management though the blockchain. PAMA pricing headwinds could generate an acquisition tailwind as impact hits smaller organizations more severely

9 DISCLAIMR The Argus trademark, service mark and logo are the intellectual property of The Argus Research Group, Inc. Investing in any security or investment strategy discussed in this presentation may not be suitable for you and it is recommended that you consult an independent investment advisor. Investments involve risk and an investor may incur either profits or losses. Past performance should not be taken as an indication or guarantee of future performance. Argus officers, employees, agents and/or affiliates may have positions in funds or stocks discussed in this presentation. The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but Argus makes no representation as to their timeliness, accuracy or completeness or for their fitness for any particular purpose. Argus shall accept no liability for any loss arising from the use of this presentation or the materials contained in this presentation