Standard and Poor's 500 Guide, 2012 Edition

By Standard & Poor's

The most accurate, up-to-date market intelligence for superior investment decisions—from the world’s premier financial index!

The Standard & Poor’s 500 Index is the most watched index in America—if not the world. Whether you’re an individual investor purchasing stocks, an executive researching corporate competitors, or a job seeker looking for concise and up-to-the-minute overviews of potential employers, you’ll find the critical, often hard-to-find information you need in Standard & Poor’s® 500 Guide, 2012 Edition. Easy to use and packed with market intelligence on all 500 companies listed in the S&P 500 Index, this authoritative reference includes:

• Information on the bluest of blue chip stocks—from Abbott Labs and GE to Microsoft and Yahoo!
• Summaries of each company’s business activity, sales history, and recent developments
• Earnings and dividends data, with four-year price charts
• Exclusive Standard & Poor’s Quality Rankings (from A+ to D)
• New introduction by David M. Blitzer, Ph.D., Managing Director and Chairman of the Index Committee, Standard & Poor’s

In addition, you get unique at-a-glance details about:

• Stocks with A+ Quality Rankings
• Companies with five consecutive years of earnings increases—a key indicator of strong long-term performance
• Per share data, income statement analyses, and balance sheet overviews of each company covered

Put the comprehensive, updated data and analysis expertise of the world’s premier securities information firm at your fingertips with Standard & Poor’s® 500 Guide, 2012 Edition.

• Language: English
• Publisher: McGraw-Hill Education
• Release date: Dec 16, 2011
• ISBN: 9780071776158

Book preview

Abbott Laboratories

S&P Recommendation

Price $52.05 (as of Nov 25, 2011)

12-Mo. Target Price $61.00

Investment Style Large-Cap Growth

GICS Sector Health Care

Sub-Industry Pharmaceuticals

Summary This diversified life science company is a leading maker of drugs, nutritional products, diabetes monitoring devices, and diagnostics. In mid-October 2011, Abbott announced plans to split the company.

Key Stock Statistics (Source S&P, Vickers, company reports)

Price Performance

Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst Herman Saftlas on Oct 31, 2011, when the stock traded at $54.14.

Highlights

Based on operations as presently constituted, we project 2012 revenues to rise 4% from the $39 billion that we estimate for 2011. The key pharmaceutical driver, in our opinion, should be Humira, which we expect to soon rank as the world’s leading biologic for autoimmune diseases. We also see gains in the Solvay vaccines business. However, sales in ABT’s cholesterol franchise are expected to decline, impacted by generic competition. In the medical products area, we see new launches and overseas market expansion powering Abbott’s drug-eluting stents, and nutritional and diagnostic products.

We expect adjusted gross margins to expand modestly from the near 60% that we forecast for 2011. Results should also benefit from cost cutting measures, reduced net interest expense and greater accretion from Solvay. These positives should more than offsett U.S. healthcare reform and European pricing pressures.

After a projected adjusted tax rate similar to the 16% that we see for 2011, we forecast operating EPS of $4.95 for 2012, up from the $4.66 that we estimate for 2011.

Investment Rationale/Risk

In mid-October 2011, ABT announced a planned split-up of the company, to be accomplished through the spinoff to shareholders of the research based pharmaceuticals business (estimated sales of $18 billion) as a separate firm to be named. Abbott will retain its legacy medical products operations (sales of $22 billion), comprising diagnostics, devices, nutritional and generic drug operations. We believe this move will result in higher valuations for each company, with investors better able to focus and appreciate the respective growth potentials of each firm. We expect the planned tax-free spinoff, subject to customary approvals, to be completed by the end of 2012.

Risks to our recommendation and target price include failure to successfully execute the planned split-up of the company, as well as more intense competitive pressures, and possible pipeline setbacks.

Our 12-month target price of $61 applies a peer-level multiple of 12.3X to our 2012 EPS estimate. Our discounted cash flow model, which assumes a WACC of about 8.3% and terminal growth of 2%, also implies intrinsic value of $61.

Qualitative Risk Assessment

Our risk assessment reflects Abbott’s operations in competitive markets and its exposure to the potential for generic competition. However, we believe the company has a relatively strong new product pipeline, with possible significant launches in medical device and pharmaceutical areas. We see the company financially strong, with a strong balance sheet.

Revenue/Earnings Data

Revenue (Million $)

Earnings Per Share ($)

Fiscal year ended Dec. 31. Next earnings report expected: NA. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data (Dates: mm/dd Payment Date: mm/dd/yy)

Dividends have been paid since 1926. Source: Company reports.

Business Summary October 31, 2011

CORPORATE OVERVIEW. Abbott Laboratories is a leading player in several growing health care markets. Through acquisitions, product diversification and R&D programs, ABT offers a wide range of prescription pharmaceuticals, infant and adult nutritionals, diagnostics, and medical devices.

During 2010, pharmaceuticals accounted for 56% of operating revenues, while nutritionals represented 16%, diagnostics contributed 11%, and vascular represented 9%. Sales of other products represented 8% of 2010 sales. Foreign sales accounted for 57% of total sales in 2010.

ABT’s Pharmaceutical Products Group markets a wide array of human therapeutics. Major products include: Humira to treat rheumatoid arthritis and psoriatic arthritis ($6.5 billion in 2010 sales); Kaletra, an anti-HIV medication ($1.3 billion); TriCor/Trilipix, cholesterol treatments ($1.6 billion); Niaspan, a niacin-based cholesterol treatment ($927 million); and Lupron, a treatment for prostate cancer ($748 million). This division was augmented by the $6.2 billion purchase of the Solvay drug business in February 2010.

Nutritionals fall under U.S.-based Ross Products and Abbott Nutrition International. Products include leading infant formulas sold under the Similac and Isomil names, as well as adult nutritionals, such as Ensure and ProSure for patients with special dietary needs, including cancer and diabetes patients. ABT also markets enteral feeding items.

Abbott Diabetes Care markets the Precision and FreeStyle lines of hand-held glucose monitors for diabetes patients. This division also markets data management and point-of-care systems, insulin pumps and syringes, and Glucerna shakes and nutrition bars tailored for diabetics.

Abbott Vascular markets coronary and carotid stents, catheters and guide wires, and products used for surgical closure. The principal product is the new Xience drug-eluting stent (DES), which was launched in July 2008 and is presently the leading product in the domestic DES market. Boston Scientific markets the Xience stent manufactured by Abbott under the Promus name, pursuant to an agreement with ABT.

Company Financials Fiscal Year Ended Dec. 31

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Office: 100 Abbott Park Road, Abbott Park, IL 60064-6400.

Telephone: [phone].

Website: http://www.abbott.com

Chrmn & CEO: M. D. White

EVP & CFO: T. C. Freyman

EVP, Secy & General Counsel: L. J. Schumacher

Chief Acctg Officer & Cntlr: G. W. Linder

Treas: V. Yien

Investor Contact: L. Peepo (847-935-6722)

Board Members: R. J. Alpern, R. S. Austin, W. J. Farrell, H. L. Fuller, P. N. Novakovic, W. A. Osborn, S. C. Scott, III, G. F. Tilton, M. D. White

Founded: 1888

Domicile: Illinois

Employees: 90,000

Abercrombie & Fitch Co.

S&P Recommendation

Price $44.65 (as of Nov 25, 2011)

12-Mo. Target Price $55.00

Investment Style Large-Cap Growth

GICS Sector Consumer Discretionary

Sub-Industry Apparel Retail

Summary This apparel retailer, which specializes in lifestyle branding, operates about 1,100 retail apparel stores across four brands.

Key Stock Statistics (Source S&P, Vickers, company reports)

Price Performance

Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst Jason N. Asaeda on Nov 17, 2011, when the stock traded at $49.51.

Highlights

We see net sales reaching $4.19 billion in FY 12 (Jan.) and $4.97 billion in FY 13. International expansion is the dominant theme at ANF as it penetrates global markets with 4-5 A&F flagship stores and at least 40 Hollister mall locations annually. We believe the recent opening of Gilly Hicks in London will determine if this young woman’s intimate brand has global demand. The company expects to close 55 to 60 U.S. stores as leases expire in FY 12. We project same-store sales growth of 8% in FY 12 and 5% in FY 13, versus FY 11’s 7% gain.

Despite promotional activity in U.S. stores and product cost inflation, we project 90 basis points of operating margin expansion in FY 12 to 9.1% on selective price increases, expense leverage, and a more favorable sales mix as ANF’s international and e-commerce businesses continue to grow more rapidly than in the U.S. Sales productivity and margins are substantially higher internationally (in FY 11, 35% 4-wall return, versus 20% in the U.S.).

We see opportunity for further margin expansion in FY 13 as product cost pressures ease. We estimate EPS of $2.75 in FY 12 and $4.30 in FY 13.

Investment Rationale/Risk

We view the shares as appropriately valued at recent levels. ANF reported that business slowed in Europe during the October quarter, including negative same-store sales for flagship stores. While it is still unclear to us whether this is a temporary slowdown or a reflection of a fundamental change in consumer sentiment, we think headwinds in Europe, coupled with ongoing challenges in Japan and Canada, could compromise the company’s ability to drive improved operating metrics and margin recovery beyond FY 12. We also think ANF will have a tough time weaning U.S. shoppers off of its highly successful promotional strategy in FY 13.

Risks to our recommendation and target price include weaker global economic growth than we project, a slowing of same-store sales trends in the U.S., and fashion and inventory risk.

Given near-term headwinds for the company in Europe, we think the shares should trade at a discount to their 10-year historical average forward P/E multiple of 16.1X. We arrive at our 12-month target price of $55 by applying a multiple of 12.7X to our FY 13 EPS estimate.

Qualitative Risk Assessment

Our risk assessment reflects our view of ANF’s strong balance sheet and cash flows, offset by a consumer base whose tastes change constantly.

Revenue/Earnings Data

Revenue (Million $)

Earnings Per Share ($)

Fiscal year ended Jan. 31. Next earnings report expected: NA. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data (Dates: mm/dd Payment Date: mm/dd/yy)

Dividends have been paid since 2004. Source: Company reports.

Business Summary November 17, 2011

CORPORATE OVERVIEW. Abercrombie & Fitch, established in 1892, operates four branded retail concepts: Abercrombie & Fitch (316 domestic, 10 international stores as of November 2011), abercrombie kids (179, four), Hollister Co. (501, 63), and Gilly Hicks (18, one), and e-commerce sites for each concept. Each targets a different age demographic, minimizing cannibalization, and all employ casual luxury positioning.

MARKET PROFILE. The company participates in the specialty apparel retail market targeted at youth, spanning the tween to young adult demographic. While the U.S. apparel market is considered mature, with demand mirroring population growth and a modicum related to fashion, the youth marketplace is generally considered attractive based on its spending clout. According to NPD consumer data, collectively, this group accounts for approximately 35% of total apparel spending, with the sweet spot being teenagers, who represent about 20%.

COMPETITIVE LANDSCAPE. The retail landscape is consolidating, with share accruing to the mass merchants and specialty chains while the traditional department store is losing ground. Specialty chains compete on customer knowledge garnered from daily interactions, focus groups and marketing intelligence, and this knowledge is often combined with high customer service levels to result in an attractive price/value equation for the consumer. ANF’s target demographic is attracted to strong brands, as well as fashion and value, when determining apparel selections. The specialty channel holds the largest share of the apparel market at about 31% according to NPD Group and the sub-segment serving the youth demographic represents about 3% of total retail sales. With barriers to entry minimal (capital investment in merchandise, rent and labor expense) and potential returns on investment high and quick (four wall return on investment exceed 30% in 12 months for many specialty retailers), there was a steady flow of new industry participants through most of this decade, but more recently we’ve seen more store closures and slowed expansion plans. In addition to competing with other apparel retailers, regardless of channel, for youth discretionary spending, ANF competes with merchandise and services, especially consumer electronics and entertainment services.

Company Financials Fiscal Year Ended Jan. 31

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Office: 6301 Fitch Path, New Albany, OH 43054.

Telephone: [phone].

Email: [e-mail]

Website: http://www.abercrombie.com

Chrmn & CEO: M.S. Jeffries

EVP, CFO & Chief Acctg Officer: J.E. Ramsden

SVP & Treas: E.E. Gallagher, Jr.

SVP, Secy & General Counsel: R.A. Robins, Jr.

Investor Contact: T.D. Lennox (614-283-6751)

Board Members: J. B. Bachmann, L. J. Brisky, M. E. Greenlees, A. M. Griffin, K. S. Huvane, M. S. Jeffries, J.W. Kessler, E. M. Lee, C. R. Stapleton

Founded: 1892

Domicile: Delaware

Employees: 85,000

Accenture Plc

S&P Recommendation

Price $53.70 (as of Nov 25, 2011)

12-Mo. Target Price $62.00

Investment Style Large-Cap Growth

GICS Sector Information Technology

Sub-Industry IT Consulting & Other Services

Summary Ireland-based Accenture is a global management consulting, technology services and outsourcing company.

Key Stock Statistics (Source S&P, Vickers, company reports)

Price Performance

Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst Dylan Cathers on Sep 30, 2011, when the stock traded at $52.68.

Highlights

We look for revenue growth of 8.0% in FY 12 (Aug.), down from FY 11’s 18% gain, as we believe ACN will have less of a currency tailwind. Further, we have some concerns about the weakening economic outlook. Still, the company’s total bookings in the August quarter were $8.4 billion. Outsourcing bookings were very strong, at $4.28 billion, and included a large Nokia (NOK 6 Hold) deal. Strength in consulting remained firmly in place. We find it encouraging that the company has been able to quickly convert signed contracts to revenue generators and that customers seem to be interested in longer-term deals, which is the opposite of the way the overall market is trending.

ACN has been making incremental improvements in operating margins over the past few fiscal years, and we expect this trend to continue in FY 12. We believe solid execution, increased sales of higher-margin consulting services, steady levels of attrition, and cost-containment measures will offset rising wages, the use of subcontractor labor, and continued investments in the business.

We see EPS of $3.81 in FY 12, aided by fewer shares outstanding, increasing to $4.14 in FY 13.

Investment Rationale/Risk

Our buy recommendation on the shares is based on valuation. We believe the company will continue to benefit from robust customer interest in ACN’s IT and management consulting services. Additionally, IT outsourcing should be solid, as clients look for help containing costs and improving their operations. Over the long term, we view ACN as well diversified across geographies, verticals and horizontals, which should give it an edge over competitors, in our view.

Risks to our recommendation and target price include the possibility of increased competition in the IT services and business process outsourcing markets, leading to pressure on pricing and profit margins, and a slowdown in demand for IT services in general.

Our 12-month target price of $62 is based on a peer-premium P/E of 15.9X our calendar 2012 EPS estimate of $3.90. We think a premium P/E is warranted given what we see as ACN’s healthy new bookings and a solid balance sheet that has nearly $5.7 billion in cash and cash equivalents and little total debt.

Qualitative Risk Assessment

Our risk assessment reflects what we see as the highly competitive nature of the IT consulting and outsourcing market, offset by what we consider ACN’s strong balance sheet and widely diversified customer base.

Quantitative Evaluations

Revenue/Earnings Data

Revenue (Million $)

Earnings Per Share ($)

Fiscal year ended Aug. 31. Next earnings report expected: NA. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data (Dates: mm/dd Payment Date: mm/dd/yy)

Dividends have been paid since 2005. Source: Company reports.

Business Summary September 30, 2011

CORPORATE OVERVIEW. Accenture (formerly Andersen Consulting) is a leading global management consulting, technology services and outsourcing enterprise, with operations in 48 countries, serving 17 industries. The company seeks to use its extensive knowledge of industries and business processes to help clients identify new business and technology trends, and to formulate and implement solutions to boost revenue, enter new markets, and deliver products and services more efficiently. Clients include Fortune Global 500 and Fortune 1000 companies, as well as mid-sized enterprises and government entities.

ACN divides its efforts among five operating groups, which together represent 17 industries. The Communications and High Tech group is the largest, and includes the communications, electronics and high tech markets, and media and entertainment. Services, aimed at solutions in these markets, include mobile technology applications, network optimization, broadband, and Internet protocol solutions. Financial Services includes banking, capital markets and insurance. In its Government group, the company works with agencies on all levels in 24 countries, helping transform back-office operations and build Web interfaces and Internet-based functions. The Products group serves a broad array of industries from automotive to health services, to consumer, retail, transportation and pharmaceutical. The Resources group focuses on commodity-based industries, including chemicals, energy, forest products, metals and mining, and utilities.

Company Financials Fiscal Year Ended Aug. 31

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Office: 1 Grand Canal Square, Dublin, Ireland 2.

Telephone: [phone].

Email: [e-mail]

Website: www.accenture.com

Chrmn: W.D. Green

Pres: L. Sherman

CEO: P. Nanterme

COO: J.G. Deblaere

CFO: P.J. Craig

Investor Contact: R. Clark (877-226-5659)

Board Members: D. Dublon, C. H. Giancarlo, W. D. Green, D. F. Hightower, N. Idei, W. L. Kimsey, R. I. Lipp, M. Magner, B. J. McGarvie, M. Moody-Stuart, P. Nanterme, W. von Schimmelmann

Founded: 1995

Domicile: Ireland

Employees: 236,000

ACE Ltd

S&P Recommendation

Price $64.93 (as of Nov 25, 2011)

12-Mo. Target Price $83.00

Investment Style Large-Cap Value

GICS Sector Financials

Sub-Industry Property & Casualty Insurance

Summary This specialty insurer provides commercial insurance and reinsurance for a diverse group of international clients. In July 2008, ACE redomesticated its holding company to Switzerland from the Cayman Islands.

Key Stock Statistics (Source S&P, Vickers, company reports)

Price Performance

Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst Cathy Seifert on Nov 10, 2011, when the stock traded at $70.42.

Highlights

We expect earned premiums to increase 5% to 7% in 2011 and 2012. This compares to growth of 2.0% in 2010 and only 0.3% in 2009. Our outlook reflects our view that opportunities for market share gains and contributions from acquisitions are being partly offset by competitive pricing pressure that we believe has begun to abate. Net written premiums rose 3.1% in 2010, reflecting modest growth across most lines of business.

We believe underwriting results in coming periods will remain under pressure amid a projected lower level of favorable prior-year loss development and an increase in the level of catastrophe losses. Nine-month 2011 underwriting profits declined 31%, year to year, largely due to a catastrophe-driven surge in loss costs ($7.2 billion, versus $5.6 billion). The rebound in operating profits expected in 2012 assumes a "normal’ level of catastrophe losses.

We see operating EPS of $6.71 in 2011 and $7.54 in 2012, versus $7.79 reported for 2010, $8.17 reported for 2009, $7.72 in 2008, and $8.07 in 2007.

Investment Rationale/Risk

Our buy recommendation reflects our view that the shares are undervalued versus historical averages, both on a price-to-book and P/E basis. We believe ACE is well positioned to exploit opportunities for growth amid an economic recovery and in light of its ability to garner market share from certain competitors (particularly in certain specialty lines). We also see ACE benefiting from an improved pricing environment for property-casualty insurance -- likely in the aftermath of record industrywide catastrophe losses.

Risks to our opinion and target price include deteriorating claim trends and reserve levels, and deterioration in the credit quality of ACE’s investment portfolio.

Our 12-month target price of $83 assumes the shares will trade at a multiple of approximately 11X our 2012 operating EPS estimate. This multiple is a slight premium to the peer group average.

Qualitative Risk Assessment

Our risk assessment reflects our view of ACE as an opportunistic underwriter, offset by concerns we have about reserve levels in certain lines of business and the potential that credit quality in ACE’s fixed income investment portfolio could deteriorate.

Revenue/Earnings Data

Revenue (Million $)

Earnings Per Share ($)

Fiscal year ended Dec. 31. Next earnings report expected: Early February. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data (Dates: mm/dd Payment Date: mm/dd/yy)

Dividends have been paid since 1993. Source: Company reports.

Business Summary November 10, 2011

CORPORATE OVERVIEW. ACE Ltd. underwrites an array of insurance and reinsurance, and also provides funds to support underwriting capacity for Lloyd’s syndicates managed by Lloyd’s managing agencies. Net earned premiums totaled $13.5 billion in 2010 (up 2.3% from $13.2 billion in 2009), with North American Insurance operations accounting for 42%, Overseas General Insurance for 39%, Global Reinsurance for 8%, and Life Insurance and Reinsurance for 11%. Underwriting results deteriorated slightly in 2010, but remained profitable. The combined loss and expense ratio ended the year at 90.2%, versus 88.3% in 2009. Included in these results was the loss ratio, which totaled 59.2% in 2010, versus 58.8% in 2009. The expense ratio also deteriorated a bit, to 31.0% in 2010, from 29.5% in 2009.

Insurance - North America provides property and casualty insurance and reinsurance coverage, including excess liability, professional lines, satellite, excess property and political risk, to a diverse group of industrial, commercial and other enterprises.

Insurance - Overseas General includes the operations of ACE International, which provides property and casualty insurance, accident and health insurance and consumer-oriented products to individuals, mid-sized firms and large commercial clients. It also provides customized and comprehensive insurance policies and services to multinational companies and their cross-border subsidiaries. In addition, the segment includes the insurance operations of ACE Global Markets, which mainly encompasses operations in the Lloyd’s market.

Global Reinsurance includes the operations of ACE Tempest Re and several other subsidiaries that mainly provide property catastrophe reinsurance worldwide to insurers of commercial and personal property.

Life Insurance and Reinsurance includes the operations of ACE Tempest Re and ACE International Life and businesses of Combined Insurance. ACE Tempest Re offers traditional life reinsurance products, and an array of other reinsurance products aimed at helping life insurance companies manage their mortality, morbidity, lapse and/or capital market risks. ACE International Life offers individual life and group insurance and savings products in Indonesia, Thailand, Vietnam, Taiwan, UAE, China, Egypt, Europe and Latin America. On April 28, 2004, ACE sold approximately 65% of Assured Guaranty Ltd. (NYSE: AGO) in an initial public offering that netted ACE about $835 million.

Company Financials Fiscal Year Ended Dec. 31

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. Data for 2004 and prior years restated based on 2004 SEC Form 10-K/A. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Office: Barengasse 32, Zurich, Switzerland 8001.

Telephone: [phone].

Email: [e-mail]

Website: www.acelimited.com

Chrmn, Pres & CEO: E.G. Greenberg

Vice Chrmn & COO: J. Keogh

CFO: P.V. Bancroft

Chief Acctg Officer: P.B. Medini

Treas: K. Koreyva

Investor Contact: H.M. Wilson (441-299-9283)

Board Members: M. G. Atieh, M. A. Cirillo-Goldberg, M.P. Connors, B. L. Crockett, E. G. Greenberg, R. M. Hernandez, J. Keogh, J. A. Krol, P. Menikoff, L. F. Mullin, T. J. Neff, R. Ripp, E. B. Shanks, Jr., T. E. Shasta, O. Steimer

Founded: 1985

Domicile: Switzerland

Employees: 16,000

Adobe Systems Inc

S&P Recommendation

Price $25.83 (as of Nov 25, 2011)

12-Mo. Target Price $35.00

Investment Style Large-Cap Growth

GICS Sector Information Technology

Sub-Industry Application Software

Summary This company provides software for multimedia content creation, distribution, and management.

Key Stock Statistics (Source S&P, Vickers, company reports)

Price Performance

Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst Zaineb Bokhari on Sep 26, 2011, when the stock traded at $24.74.

Highlights

We estimate that sales will rise nearly 10% in FY 11 (Nov.) to $4.16 billion, on our outlook for sales growth from client migration to new versions of existing products such as Creative Suite, and contributions from new versions of Acrobat and from acquisitions such as Day Software. We see global economic conditions influencing the ultimate sales trajectory of Creative Suite 5 and subsequent releases (including 5.5). Recent natural disasters in Japan and ongoing weakness in Europe temper our outlook. We see sales rising 8.5% in FY 12 to approximately $4.5 billion.

On the projected sales growth, we think FY 11 non-GAAP operating margins will widen modestly to 37.1% from 36.6% in FY 10. We expect the company to benefit from cost containment measures, but expect expenses such as R&D and sales and marketing to trend higher due to hiring as well as added headcount from Day Software. We look for operating margins to widen slightly in FY 12, as ADBE continues to invest in support of new and acquired products.

We estimate non-GAAP EPS of $1.91 in FY 11 and $2.15 in FY 12, excluding restructuring and amortization.

Investment Rationale/Risk

We are encouraged by the recent strength in sales of products such as Acrobat and Creative Suite, and by growth in subscriptions. However, we are concerned about growth in certain regions, including Europe and Japan. We view favorably Adobe’s move to release mid cycle versions of Creative Suite, which incorporate more frequent updates amid rapid technological change. We look for strategic acquisitions ahead as ADBE targets higher FY 12 sales, but expect much of ADBE’s growth to be organic.

Risks to our recommendation and target price include weak demand for new products, loss of share to competing products or standards, and lack of support from makers of popular hardware platforms. Prolonged weakness in key markets is also a concern.

We blend our relative and intrinsic valuation measures to derive our 12-month target price of $35. In our DCF model, we assume a 10.2% WACC and 3% terminal growth, yielding an intrinsic value of $42. In our P/E analysis, we apply a 14X multiple to our forward EPS estimate of $2.03, below the three-year average 18.1X we calculate for the shares, resulting in a $28 value.

Qualitative Risk Assessment

Our risk assessment reflects the regularly changing nature of the software industry and our view that the success of new products will be impacted by the global economic environment. These factors are offset by our view of the company’s size and market leadership, strong operating history, and solid balance sheet.

Revenue/Earnings Data

Revenue (Million $)

Earnings Per Share ($)

Fiscal year ended Nov. 30. Next earnings report expected: Late December. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data

No cash dividends have been paid since 2005.

Business Summary September 26, 2011

CORPORATE OVERVIEW. Adobe Systems (founded in 1982) is one of the world’s largest software companies. It offers creative, business and mobile software and services used by consumers, artistic professionals, designers, knowledge workers, original equipment manufacturers, developers and enterprises for producing, managing, delivering and experiencing content across multiple operating systems, devices and media. Some of the company’s core products include: Acrobat (for document creation, distribution and management); Illustrator (to make graphic artwork); and Photoshop (for photo design, enhancement and editing). In December 2005, ADBE acquired Macromedia, a leading developer of software that enables the creation and consumption of digital content, for $3.5 billion in stock and related costs. Through this transaction, the company gained Macromedia’s significant products, including Dreamweaver (Web development) and Flash (which provides an environment to produce dynamic digital content).

While acquisition activity had been minor in the two subsequent fiscal years, ADBE acquired Web analytics company Omniture for $1.8 billion in late FY 09 (Nov.). The company reasoned that its products offered the tools to create online content and, with Omniture, it could now help customers measure the efficacy of such content and thus allow them to better monetize it. The company recently (October 2010) completed the purchase of Swiss enterprise content management software provider Day Software, for about $240 million. In January 2011, Demdex, a data management platform company was acquired. However, the impact on Adobe from this purchase was not considered material.

The company’s software runs on Microsoft Windows, Apple Mac OS, Linux, UNIX and other non-PC platforms. ADBE is making a push to provide solutions that can develop content for connected devices such as smartphones. ADBE participates in the Open Screen Project, with the aim of allowing developers of content to deliver their creations across connected devices that use the company’s Flash and Adobe Air technologies. Begun in May 2008, the Open Screen Project included many top smartphone manufacturers as participants.

CORPORATE STRATEGY. ADBE’s indicated strategy is to address the needs of a variety of customers with offerings that support industry standards and can be deployed in a variety of contexts. We believe ADBE is focused on leveraging its market-leading software franchises with bundles and enhancements. Selling multiple products together has enabled ADBE to gain market share, increase penetration with existing customers, and expand its overall customer base. The Creative Suite is the company’s flagship bundled offering. Macromedia was acquired to further this strategy.

Company Financials Fiscal Year Ended Nov. 30

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Office: 345 Park Avenue, San Jose, CA, USA 95110-2704.

Telephone: [phone].

Email: [e-mail]

Website: http://www.adobe.com

Co-Chrmn: J. Warnock

Co-Chrmn: C. Geschke

Pres & CEO: S. Narayen

EVP & CFO: M. Garrett

SVP & CTO: K. Lynch

Board Members: E. W. Barnholt, R. K. Burgess, M. R. Cannon, J. E. Daley, C. Geschke, S. Narayen, D. Rosensweig, R. Sedgewick, J. Warnock

Founded: 1983

Domicile: Delaware

Employees: 9,117

Advanced Micro Devices Inc

S&P Recommendation

Price $4.99 (as of Nov 25, 2011)

12-Mo. Target Price $7.00

Investment Style Large-Cap Value

GICS Sector Information Technology

Sub-Industry Semiconductors

Summary This company is a leading producer of semiconductors that are used principally in computers and related products.

Key Stock Statistics (Source S&P, Vickers, company reports)

Price Performance

Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst Angelo Zino, CFA on Nov 07, 2011, when the stock traded at $5.58.

Highlights

We expect revenues to rise around 4.9% in 2012, following a projected 1.9% increase in 2011, reflecting fair PC growth over the next several quarters. Although the company has lost market share in the server and notebook markets, we think new products are likely to gain traction in the coming quarters, bucking this trend. We also see further penetration of the desktop PC and graphics markets.

We look for AMD’s non-GAAP gross margins to remain in the 45% to 47% area through 2012. Although we expect modest changes in margins due to varying sales mix and prices, AMD outsources its manufacturing process, which we see keeping gross margins relatively stable. We positively view AMD’s cost optimization strategy, intended to reduce its workforce by 10%, with plans to reinvest the savings into growth opportunities within low power, emerging markets as well as the cloud. Nonetheless, we still expect the non-GAAP operating margin to expand to 8.6% for 2012 from an estimated 8.0% in 2011.

We think AMD’s interest payments will weigh on its bottom line. Our non-GAAP estimates exclude non-recurring charges.

Investment Rationale/Risk

Our hold recommendation reflects our view of improving fundamentals, balanced by fair valuations. Although we expect gross margins to remain relatively flat, we believe AMD’s revamped product portfolio and more flexible business model will lead to above-industry earnings advances as sales accelerate next year. In addition, we think margins should benefit from better execution of 32 nanometer manufacturing technology. We also see adjusted profits and free cash flows leading to debt reduction, alleviating some financial risks. Based on these anticipated improvements, we think multiples should be above recent historical averages and near the industry average.

Risks to our recommendation and target price include less-than-anticipated demand for computers, ineffective execution of new products, greater market share losses, and notable financial risk.

Our 12-month target price of $7 is based on a price-to-earnings (P/E) multiple of 13X, near the industry average to reflect our view of AMD’s relative growth, return on equity, and risks, applied to our 2012 EPS estimate.

Qualitative Risk Assessment

AMD is subject to the cyclical swings of the semiconductor industry, demand fluctuations for computer end-products, vacillation in average selling prices for chips, and strong competition from Intel, which is a much larger rival in microprocessors.

Revenue/Earnings Data

Revenue (Million $)

Earnings Per Share ($)

Fiscal year ended Dec. 31. Next earnings report expected: Late January. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data

No cash dividends have been paid.

Business Summary November 07, 2011

CORPORATE OVERVIEW. Advanced Micro Devices designs and sells digital integrated circuits (IC), including x86 microprocessors and chipsets for computers, embedded microprocessors for commercial and consumer applications, and, as a result of the company’s acquisition of ATI Technologies in October 2006, graphics processors.

A microprocessor is an IC that serves as the central processing unit, or brain, of a computer. The performance of a processor is a critical factor for the performance of the computer. The main measures for microprocessor performance include: work-per-cycle, or how many instructions per cycle, clock speed, how fast the CPU’s internal logic operates as measured by units of hertz, and power consumption. Other factors impacting performance include the number of cores on a microprocessor, bit rating of the microprocessor, memory size, and data access speed. AMD also sells chipsets, which send data between the microprocessor and the computer’s input, display, and storage devices.

Embedded microprocessors are used in applications, such as industrial controls, point of sale/self-service kiosks, and casino gaming machines, among others. These chips require moderate-to-high performance and are relatively lower in cost, size, and power. The embedded market has grown at a healthy pace as customers, who generally used to design the embedded chips, are increasingly opting to use industry-standard x86 instruction architecture as a way to reduce costs and speed up time to market.

Graphics processors are used in computers to increase the speed of rendering images and to improve image resolution and color definition. In this business, AMD’s discrete graphics processing unit (GPU) includes the relatively popular ATI Radeon products, which are widely utilized to improve graphics for video games and other multimedia functions.

The company has two reportable segments: Computing Solutions and Graphics. The Computing Solutions segment includes sales of microprocessors, chipsets, and embedded processors. The Graphics segment includes graphics, video and multimedia products, as well as revenues from the sale of video game consoles that include its technology.

Company Financials Fiscal Year Ended Dec. 31

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Office: One AMD Place, Sunnyvale, CA 94088-3453.

Telephone: [phone].

Email: [e-mail]

Website: http://www.amd.com

Chrmn: B.L. Claflin

Pres & CEO: R.P. Read

SVP, CFO & Chief Acctg Officer: T. Seifert

SVP & CTO: M. Papermaster

SVP, Secy & General Counsel: H.A. Wolin

Investor Contact: R. Cotter (408-749-3887)

Board Members: W. A. Al Muhairi, W. M. Barnes, J. E. Caldwell, H. W. Chow, B. L. Claflin, C. A. Conway, N. M. Donofrio, H. P. Eberhart, R. B. Palmer, R. P. Read

Founded: 1969

Domicile: Delaware

Employees: 11,100

AES Corporation (The)

S&P Recommendation

Price $11.09 (as of Nov 25, 2011)

12-Mo. Target Price $14.00

Investment Style Large-Cap Growth

GICS Sector Utilities

Sub-Industry Independent Power Producers & Energy Traders

Summary The world’s largest independent power producer, AES produces and distributes electricity in international and domestic markets.

Key Stock Statistics (Source S&P, Vickers, company reports)

Price Performance

Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst C. Muir on Nov 21, 2011, when the stock traded at $11.49.

Highlights

We estimate a 9.3% revenue increase for 2011. We believe 2011 unregulated revenues will be helped by new projects and a weaker U.S. dollar, which makes overseas earnings more valuable. We expect regulated revenues to rise, helped by customer growth. In 2012, we see revenues rising 7.5%, helped by the completion of additional projects.

Our operating margin estimates are 21.5% for 2011 and 23.1% for 2012, versus 21.8% in 2010. For 2011, we expect higher per-revenue cost of sales for the regulated businesses, offset by lower per-revenue unregulated cost of sales and lower per-revenue general and administrative expenses. Our pretax margin estimates are 15.5% for 2011 and 17.3% for 2012, versus 14.8% in 2010. In 2011, we see higher non-operating income partly offset by higher net interest expense.

We estimate 2011 recurring EPS, excluding $0.35 of net mark-to-market and nonrecurring losses, of $1.11, an 18% increase from 2010’s $0.94, which excluded $1.05 of net mark-to-market and nonrecurring losses. Our 2012 EPS forecast is $1.26, up 14%.

Investment Rationale/Risk

On April 20, 2011, AES agreed to acquire DPL Inc. (DPL 30, Hold) for $4.7 billion in cash and assumed debt. We think the purchase will reduce AES’s business risk by increasing earnings stability. We believe AES is a superior independent power producer and think it will see above-average earnings growth and an improving balance sheet over the next couple of years, partly due to expansion projects. Results should also be helped by cost controls and strategic growth initiatives. AES has committed to start paying a dividend in the fourth quarter of 2012.

Risks to our recommendation and target price include financial statement revisions, currency fluctuations, political and regulatory uncertainty regarding utility rates and U.S. power margins, and counterparty default risk.

The stock recently traded at 9.1X our 2012 EPS estimate, a 33% discount to independent power producer peers. Our 12-month target price of $14 is 11.1X our 2012 EPS estimate, a discount to peers’ valuation, as we see risk related to volatile exchange rates being partly offset by improved earnings stability that is likely as a result of the planned DPL acquisition.

Qualitative Risk Assessment

Our risk assessment reflects the company’s relatively large capitalization and mix of lower-risk regulated utility businesses in North America, offset by higher-risk merchant power operations and utility operations in emerging markets in South America, Eastern Europe, Central America and Asia.

Revenue/Earnings Data

Revenue (Million $)

Earnings Per Share ($)

Fiscal year ended Dec. 31. Next earnings report expected: Early March. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data

No cash dividends have been paid.

Business Summary November 21, 2011

CORPORATE OVERVIEW. AES Corporation (AES) owns and operates a portfolio of electricity generation and distribution business in 29 countries through its subsidiaries and affiliates. The company has two principal businesses: generation and regulated utilities.

The generation business provides power for sale to utilities and other wholesale customers while the regulated utilities business distributes power to retail, commercial, industrial and governmental customers. In 2010, the generation unit contributed 50% of total revenues. It primarily sells electricity to utilities or other wholesale customers under power purchase agreements that are generally for five years or longer. The generation business also sells electricity to wholesale customers through competitive markets.

The remaining 50% of total revenues in 2010 came from the regulated utilities business. It markets electricity to residential, business, and government customers through integrated transmission and distribution systems.

The company also reports results geographically by segment. Geographically, revenues come from Latin American operations (69% of 2010 revenues), North American operations (19%), European and African operations (8%), Middle Eastern and Asian operations (4%), and corporate activities (<0.1%). The company’s largest exposures geographically are to Brazil (39%), the U.S. (16%), Chile (8%), Argentina (5%) and El Salvador (4%).

CORPORATE STRATEGY. AES pursues both a global and a local growth strategy to increase its business. The company’s global strategy focuses on large-scale projects and pursues strategic initiatives. It concentrates on mergers and acquisitions, exploring opportunities in the climate change business such as the production of greenhouse gas reduction activities and related industries that involve environmental issues. The company also aims to mitigate exposure to price swings. In 2010, 64% of the revenues from its generation business was from plants that operate under PPAs of three years or longer for at least 75% of their output capacity. Additionally, a large portion of its capacity under construction will be subject to PPAs.

Company Financials Fiscal Year Ended Dec. 31

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Office: 4300 Wilson Blvd Ste 1100, Arlington, VA 22203-4167.

Telephone: [phone].

Email: [e-mail]

Website: http://www.aes.com

Chrmn: P. A. Odeen

Pres & CEO: A. R. Gluski

EVP & CFO: V. D. Harker

EVP, Secy & General Counsel: B. A. Miller

SVP & CIO: E. Hackenson

Investor Contact: A. Pasha (703-682-6552)

Board Members: S. W. Bodman, III, A. R. Gluski, K. M. Johnson, T. Khanna, J. A. Koskinen, P. Lader, S. O. Moose, J. B. Morse, Jr., P. A. Odeen, C. O. Rossotti, S. Sandstrom

Founded: 1981

Domicile: Delaware

Employees: 29,000

Aetna Inc.

S&P Recommendation

Price $37.89 (as of Nov 25, 2011)

12-Mo. Target Price $49.00

Investment Style Large-Cap Blend

GICS Sector Health Care

Sub-Industry Managed Health Care

Summary This company offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services.

Key Stock Statistics (Source S&P, Vickers, company reports)

Price Performance

Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst Phillip Seligman on Nov 02, 2011, when the stock traded at $39.33.

Highlights

We look for Health Care segment operating revenue to decline almost 1% in 2011, and grow by over 7.5% in 2012. We assume 40,000 fewer Medicare Advantage (MA; health plan) and 175,000 fewer stand-alone Medicare Part D (drug plan) members, on Medicare’s imposition of a marketing and selling sanction on AET, and a net loss of 260,000 fully insured and 5,000 self-funded commercial members in 2011. For 2012, we forecast modest increases in commercial risk and self-funded enrollment, a recovery of MA and Part D enrollment, on the lifting of the sanctions, and the full-year benefit of the 2011 acquisitions.

We forecast that total medical costs will decline 200 basis points (bps) in 2011 as a percentage of premiums (medical loss ratio, MLR), on moderated medical cost trends and favorable prior-year reserve development (PPRD). In 2012, we expect the MLR to rise by 290 bps, on the absence of favorable PPRD, our assumption of more-normal medical cost trends, and the impact of the health care reform law.

We estimate 2011 operating EPS of $5.00, versus $3.68 in 2010. We look for $4.85 in 2012, aided by additional share buybacks.

Investment Rationale/Risk

We think AET has the scale, diversity, technology and financial flexibility to perform better than most insurers amid health care reform. We view positively its pricing discipline, cost control initiatives, and increasing diversification, including penetration of the growing Medicaid market and international expansion. We also view AET’s cash flow as healthy, providing financial flexibility. In this regard, we see the June 2011 Prodigy acquisition building AET’s position in the third-party accounts market, while the October 2011 PayFlex Holdings acquisition provides it with a large foothold in flexible spending account administration. In addition, we see the October 2011 acquisition of the Medicare Supplement business of Genworth Financial (GNW 6, Buy) strengthening its competitive position in the Medicare market.

Risks to our recommendation and target price include intensified competition, a weaker economy, and adverse medical cost trends.

We apply a below-peers multiple of 10.1X, on intensified competition we foresee, to our 2012 EPS estimate to derive our 12-month target price of $49.

Qualitative Risk Assessment

Our risk assessment reflects AET’s leadership in the highly fragmented managed care market. Competition has been intensifying, as consolidation has led the largest companies, including AET, to bump up against one another in more markets and geographies. Still, we believe AET’s expanding product, market and geographic diversity will permit stable operating performance over the long term.

Revenue/Earnings Data

Revenue (Million $)

Earnings Per Share ($)

Fiscal year ended Dec. 31. Next earnings report expected: NA. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data (Dates: mm/dd Payment Date: mm/dd/yy)

Dividends have been paid since 2001. Source: Company reports.

Business Summary November 02, 2011

CORPORATE OVERVIEW. In December 2000, Aetna sold its financial services and international operations for $5 billion ($35.33 a share, not adjusted) and the assumption of $2.7 billion of debt. AET shareholders received $35.33 a share in cash, plus one share of a new health care company named Aetna. Revenue contributions (excluding net investment and other income) from the company’s business operations in 2010 were: Health Care 92.3%; Group Insurance 6.6%; and Large Case Pensions 1.1%.

The Health Care segment offers health maintenance organization (HMO), point-of-service (POS), preferred provider organization (PPO) and indemnity benefit products. The company had total health plan enrollment of 18,230,000 lives as of September 30, 2011, down from 18,468,000 as of December 31, 2010. Commercial risk enrollment was 4,757,000 lives, versus 5,015,000, while commercial administrative services (ASC; fee-based, self-funded accounts) was 11,810,000 lives, versus 11,804,000. Medicare enrollment was 408,000 lives, versus 445,000, while Medicaid enrollment was 1,261,000 lives, versus 1,199,000. The company also provided dental benefits to 13,647,000 members, versus 13,747,000, and pharmacy benefits to 8,806,000 members, versus 9,417,000.

Group Insurance provides group life, disability and long-term care products. Group life contracts and group conversion policies totaled 41,050,000 at December 31, 2009 (latest available).

Large Case Pensions manages various retirement products, including pension and annuity products, for defined benefit and defined contribution plans. Aetna has not marketed its Large Case Pensions products since 1993, but continues to manage the run-off of existing business. Assets under management totaled $11.2 billion at December 31, 2009 (latest available).

Company Financials Fiscal Year Ended Dec. 31

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Office: 151 Farmington Avenue, Hartford, CT 06156.

Telephone: [phone].

Email: [e-mail]

Website: http://www.aetna.com

Chrmn, Pres & CEO: M. T. Bertolini

COO: M. M. McCarthy

SVP & General Counsel: W. J. Casazza

CFO: J. Zubretsky

CTO: R. J. Leonard

Investor Contact: J. Chaffkin (860-273-7830)

Board Members: L. Abramson, F. Aguirre, M. T. Bertolini, F. M. Clark, Jr., B. Z. Cohen, M. J. Coye, R. N. Farah, B. H. Franklin, J. E. Garten, E. G. Graves, G. Greenwald, E. M. Hancock, R. J. Harrington, E. J. Ludwig, J. P. Newhouse

Founded: 1982

Domicile: Pennsylvania

Employees: 34,000

AFLAC Inc

S&P Recommendation

Price $40.74 (as of Nov 28, 2011)

12-Mo. Target Price $48.00

Investment Style Large-Cap Growth

GICS Sector Financials

Sub-Industry Life & Health Insurance

Summary AFL provides supplemental health and life insurance in the U.S. and Japan. Products are marketed at work sites and help fill gaps in primary insurance coverage. Approximately 80% of earnings comes from Japan and 20% from the U.S.

Key Stock Statistics (Source S&P, Vickers, company reports)

Price Performance

Options: ASE, CBOE, Ph

Analysis prepared by Equity Analyst Cathy Seifert on Nov 28, 2011, when the stock traded at $40.98.

Highlights

We expect revenues to rise 8% to 10% in 2011, on contributions from new distribution outlets, the launch of new products in Japan, and foreign currency shifts. While we anticipate solid sales at AFL Japan, fueled by strong demand for the company’s child endowment policy and new whole life insurance product, we expect sales growth to slow on difficult comps, and due to disruptions caused by the recent earthquake. We forecast that AFL Japan’s pretax margins will expand slightly to around 22%, on a decrease in the benefit ratio. While a business mix shift toward less profitable products should adversely affect margin expansion, we think this will be more than offset by an improvement in the overall benefit ratio and stronger premium growth.

We are encouraged that U.S. sales growth turned positive in the first quarter. We expect improved economic conditions, easy comps and a higher agent head count to lead to high single digit sales growth in 2011.

We forecast operating EPS of $6.34 in 2011 and $6.60 in 2012, excluding any realized investment gains or losses.

Investment Rationale/Risk

Our buy recommendation is based on the steep discount AFL currently trades at versus its historical valuation. While we expect the de-risking of its investment portfolio to slow earnings growth over the next few years, we believe the shedding of its holdings of European bank bonds and European sovereign debt will lead to a higher valuation. We view the fundamentals of AFL’s Japan operations as strong, and we expect the business to benefit from improved margins and strong premium growth. We believe AFL maintains a strong capital position and generates consistent earnings, which should allow the company to increase its dividend and repurchase its shares.

Risks to our recommendation and target price include investment losses, unfavorable movements in the yen/dollar exchange rate, less organic premium growth than we forecast, and agent recruiting difficulties.

Our 12-month target price is $48, or about 7.3X our 2012 operating EPS estimate, below historical multiples due to our lower earnings growth rate forecast versus AFL’s historical average.

Qualitative Risk Assessment

Our risk assessment reflects the potential for investment losses given AFL’s large exposure to hybrid bonds of financial services companies. Our assessment also takes into account the recent earthquake in Japan, although we think losses will be manageable. This is offset by AFL’s strong market share position and solid risk-based capital ratio, and its consistent track record of share repurchases and dividend increases.

Revenue/Earnings Data

Revenue (Million $)

Earnings Per Share ($)

Fiscal year ended Dec. 31. Next earnings report expected: NA. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data (Dates: mm/dd Payment Date: mm/dd/yy)

Dividends have been paid since 1973. Source: Company reports.

Business Summary November 28, 2011

CORPORATE OVERVIEW. Aflac provides supplemental health and life insurance in the U.S. and Japan. Most of Aflac’s policies are individually under-written and marketed at work sites through independent agents, with premiums paid by the employee. At of the end of 2010, Aflac believed it was the world’s leading underwriter of individually issued policies marketed at work sites.

In 2010, Aflac Japan accounted for 75% of total revenues, compared to 73% in 2009. At December 31, 2010, Aflac Japan accounted for 86% of total company assets, up from 85% at year-end 2009. As of year-end 2010, Aflac Japan ranked first in terms of individual insurance policies in force, surpassing Nippon Life in March 2003. At the end of 2010, AFL exceeded 20 million individual polices in force in Japan. AFL also maintained its position in 2010 as the number one seller of medical insurance policies in Japan.

Aflac Japan’s insurance products are designed to help pay for costs that are not reimbursed under Japan’s national health insurance system. Products include cancer life plans (22% of total Japanese sales in 2010; 28% in 2009), medical plans (34%: 39%), which include Rider MAX, rider for cancer life policies that provides accident and medical/sickness benefits; and EVER, a stand-alone whole life medical plan. Aflac Japan also offers ordinary life products (44%; 29%), which include Child Endowment (19%; 9%), a hybrid product called WAYS (9%; 6%), and other ordinary life (12%; 14%). Other products (4%; 4%) include benefit life plans and care products.

During 2010, the number of licensed sales associates at AFL Japan rose to approximately 115,400, from 110,500 at December 31, 2009, primarily reflecting individual agency recruitment. Also, AFL Japan was represented by more than 19,600 sales agencies.

Aflac U.S. sells cancer plans (17% of total U.S. sales in 2010; 18% in 2009) and various types of health insurance, including accident and disability (48%; 48%), fixed-benefit dental (5%; 5%), and hospital indemnity (18%; 18%). Other products include long-term care, short-term disability and ordinary life policies (12%; 11%).

Company Financials Fiscal Year Ended Dec. 31

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Office: 1932 Wynnton Road, Columbus, GA 31999.

Telephone: [phone].

Email: [e-mail]

Website: http://www.aflac.com

Chrmn & CEO: D. P. Amos

Pres, EVP, CFO & Treas: K. Cloninger, III

EVP & Chief Admin Officer: R. C. Davis

EVP, Secy & General Counsel: J. M. Loudermilk

Investor Contact: K. S. Janke, Jr. (706-596-3264)

Board Members: D. P. Amos, J. S. Amos, II, P. S. Amos, II, M. H. Armacost, K. Cloninger, III, E. J. Hudson, D. W. Johnson, R. B. Johnson, C. B. Knapp, E. S. Purdom, B. K. Rimer, M. R. Schuster, D. G. Thompson, R. L. Wright, T. Yoshida

Founded: 1973

Domicile: Georgia

Employees: 7,919

Agilent Technologies Inc

S&P Recommendation

Price $33.83 (as of Nov 25, 2011)

12-Mo. Target Price $48.00

Investment Style Large-Cap Blend

GICS Sector Health Care

Sub-Industry Life Sciences Tools & Services

Summary This Hewlett-Packard (HPQ) spin-off is a diversified global manufacturer of test and measurement instruments, and life sciences and chemical analysis instruments.

Key Stock Statistics (Source S&P, Vickers, company reports)

Price Performance

Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst Angelo Zino on Aug 17, 2011, when the stock traded at $36.63.

Highlights

We expect sales to rise 6% in FY 12 (Oct.) following our expectation for a 22% rise in FY 11. We see revenues paced by growth in A’s more cyclical electronic measurement end markets, with segment sales being driven by opportunities within the communications market. We see the chemical analysis business benefiting from growth in the food safety, petrochemical, and environment and forensic markets. In life sciences, we see sales driven by growth in pharmaceutical and biotech but remain cautious of the uncertain academic and government arena.

We project an annual gross margin of 53% in FY 12, matching our FY 11 margin forecast. Margins should benefit from higher volume and cost-cutting efforts. We view positively