EFTA02665718.pdf

From: Richard Kahn Sent: Thursday, December 15, 2016 5:46 PM To: Jeffrey E. Subject: Fwd: US Healthcare Year Ahead...Buy ACAD, AGN, ANTM, CELG, CVS, DI-IR, EW, EVHC, RARE, REGN, WBA attached are equity healthcare ideas Richard =ahn HBRK Associates Inc. 575 Lexington =venue 4th Floor New York, NY 10022 tel fax cel Begin forwarded message: From: =/b>"Ens, Amanda" Subject: =/b>US Healthcare =ear Ahead...Buy ACAD, AGN, ANTM, CELG, CVS, DHR, EW, EVHC, RARE, REGN, =BA Date: =/b>December 15, 2016 at 10:59:39 =M EST To: =/b>"Rich Kahn' Reply-To: =/b>"Ens, Amanda" The =S team is out with their 2017 Year Ahead this morning (link) running through =LL sub-sectors with each analysts top pick into the new year. Top =icks — ACAD, AGN, ANTM, CELG, CVS, DHR, EW, EVHC, =ARE, REGN, WBA Washington =C Backdrop Given =he clean sweep by the GOP & uncertainty around the ACA, key =ttention is paid by Andy Bressler to a review of the various scenarios =hat could play out early next year. With a repeal likely to happen well before a =eplace (essentially via the Budget Reconciliation process in Jan/Feb), =ndy notes this is likely to include a repeal of both health EFTA_R1_01916332 EFTA02665718 insurance =xchange subsidies & a phase-down of Medicaid expansion funding =albeit with a two or three year transition period). He also expects a =epeal of many of the larger HC related taxes in the ACA, including the =IX ($14.3bn in 2018), Medtech Tax (2.3%), =span class="SpellE">pharma industry tax ($4.1bn in 2018) & =adillac tax (effective 2020). As for the views by analysts... Biotech (+) —=believe sector will outperform largely as pricing risk has diminished =although will remain in pockets) but pipelines/growth remains. Ying's top =icks are CELG =amp; REGN;=Tazeen's top picks are ACAD =amp; RARE. Spec Pharma (-) — =eadwinds remain w/ Sumant's top =ick AGN =iven lower risk to reimbursement pressures & an underappreciated =ipeline. =/span>Leverage & CF remain the key focus for investors. Tools/Animal Health ==) — Derik notes more "headline" than =E244oreal" risks from policy which will create opportunities =or a group growing MSD, although valuations remain above peers. DHR =US 1 name) top pick, also A, ZTS in Animal Health, BDX =n Diagnostics & CTLT in Services. Medtech (=) — =opkins' expects a mixed bag in 2017 w/ stocks trading close to =yr valuation lows; EW top pick given best growth / purest innovation =tory. Facilities (-) 4>=93 Fischbeck notes that uncertainty will =emain an overhang for hospitals as repeal/replace a negative for the =roup (est losing 2-3mm Medicaid lives =amp; 2-3mm exchange lives would be a 1-2% EBITDA hit on avg). Focus on company-specific stories like EVHC. MCOs (+) — Fischbeck =enerally +ve under Trump (especially =round MA given historical support from GOP) w/ tailwinds from corporate =ax & rising rates. =/span>ANTM =op pick in given valuation & tailwinds. Distribution/Tech (=) — Valiquette prefers pharmacies CVS/WBA given benefits from decelerating generic =rices (which will remain an overhang for Distributors). HHS appointment a =E2$4ve for HCIT. Daniel Lundquist 2 EFTA_R1_01916333 EFTA02665719 Healthcare Specialist =ales Global Equities Bank of America Merrill =ynch One Bryant Park I New York, 10036 I United =tates T: I M: mailto The power of global =onnectionsw Find all Conference Events via the =ollowing Link: https://gems.bankofamerica.com Disclaimer: This material was =repared by Sector Specialist Sales personnel of Merrill Lynch and is =ubject to the terms available at the following link: http://corp.bankofamerica.com/business/smb/landing/emaildisclai=er/americas/global-markets This message, and any attachments, is =or the intended recipient(s) only, may contain information that is =rivileged, confidential and/or proprietary and subject to important =erms and conditions available at http://www.bankofamerica.com/emaildisclaimer. If =ou are not the intended recipient, please delete this message. 2175434 This message, and any attachments, is for the intended =ecipient(s) only, may contain information that is privileged, =onfidential and/or proprietary and subject to important terms and =onditions available at http://www.bankofamerica.com/emaildisclaimer. If you are =ot the intended recipient, please delete this message. 3 EFTA_R1_01916334 EFTA02665720 2175890 4 EFTA_R1_01916335 EFTA02665721