Unauthorized redistribution of this report is prohibited. This report is intended for [email protected] Top 10 US Ideas Quarterly Q1 Top 10 Ideas Strategy Top 10 US Ideas — 1Q17 The backdrop for risk assets has changed dramatically over the past year. As Michael Hartnett pointed out, 2016 saw global interest rates fall to 5,000-year lows and the likely end of what has been the greatest bull market in bonds ever. We experienced a historic US Presidential election and Republican sweep of Congress on November 9th. Later that same month, OPEC reached a historic deal to reduce crude production by 1.2mn b/d with non-OPEC producers delivering an additional 600k b/d of cuts — the first such joint curb since 1998. Risk assets responded with 30-year Treasury reaching a yield of 2.088% in July, US equity markets reaching all-time highs, and oil prices rallying more than 40% since the start of the year. Given the Republican sweep - and the resulting likelihood that the logjam of Washington gridlock will be broken - our Top 10 stock selections are more heavily geared toward companies that may benefit from increased fiscal stimulus, a more pro-business agenda, and/or tax-policy reform. Our current strategy stands in stark contrast to our stance last year of looking for defensive growth ideas. Eight Buys and two Underperforms Our 1Q17 list includes eight Buys and two Underperforms across six sectors. Our Buys are Aetna Inc, Dover Corp, General Dynamics, Hess, MGM Resorts, Norfolk Southern, SVB Financial, and Texas Instruments. Our Underperforms are Consolidated Edison, and TripAdvisor. How the list will be maintained and updated We will publish this list at the beginning of each quarter. Ideas will generally remain on the list through the quarter unless coverage is dropped or the recommendation changes. Any security which is removed will not be replaced. If there are any changes to the list during the quarter we will publish the change in a research report. Securities are intended to stay on the list for one quarter, though some may be chosen for the next quarter’s list. We will publish performance quarterly Table 1: Top 10 US Ideas List - 1Q17 Company Ticker Analyst Rating Recommendation Price PO Mkt Cap (bn) Aetna Inc AET _ Fischbeck,Kevin B-1-7 BUY $124.45 $149.00 44 657.00 Dover Corp DOV = Obin,Andrew B-1-7 BUY 75.19 85.00 1,921.00 General Dynamics GD Epstein,Ronald J. B-1-7 BUY $173.21 $200.00 57,215.00 Hess HES — Leggate,Doug B-1-7 BUY 62.90 80.00 9,090.00 MGM Resorts MGM | Kelley,Shaun C-1-9 BUY 28.50 33.00 1,993.00 Norfolk Southern NSC — Hoexter,Ken B-1-7 BUY $108.82 $122.00 33,393.00 SVB Financial SIVB_— Poonawala,Ebrahim B-1-9 BUY $170.38 $190.00 8,584.00 Texas Instr. TXN — Arya,Vivek B-1-7 BUY 74.15 82.00 73,899.00 Consolidated Edison ED Chin,Brian A3-7 UNDERPERFORM 74.07 59.00 20,526.00 TripAdvisor TRIP — Schindler,Nat C-3-9 UNDERPERFORM 46.95 41.00 9,071.00 Source: BofA Merrill Lynch Global Research BofA Merrill Lynch does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 27 to 30. Analyst Certification on page 17. Price Objective Basis/Risk on page 15. 11698831 Timestamp: 03 January 2017 12:05AM EST Bankof America Merrill Lynch Equity | 03 January 2017 Corrected United States Alpha Generation Research MLPF&S Anthony Cassamassino Strategist MLPF&S +1 212 449 6874 [email protected] Derek Harris Strategist MLPF&S +1 646 743 0218 derek. [email protected] HOUSE_OVERSIGHT_014622

Top 10 US Ideas Quarterly Our Top 10 US Ideas are based on our view that these companies could have the most significant market and business related catalysts over the next three months. The list reflects primarily a bottoms-up approach, with calendar-specific events noted for most stocks. We constructed our list by canvassing BofAML Fundamental Equity Research analysts in order to find 10 BofAML-covered stocks which we think will significantly outperform or underperform peers during the quarter. We considered only Buy-rated names for outperform ideas and Underperform-rated names for underperform ideas. We then narrowed the list after consulting our Equity Research colleagues. To be eligible for the list, the stock must be covered by BofA Merrill Lynch AMRS fundamental equity analysts with a rating of Buy or Underperform, for long and short stock recommendations, respectively. Stocks will be chosen on a discretionary basis by the Alpha Generation team, which currently includes strategists with experience choosing stocks for BofAML’s US 1 list. Stocks will be chosen for the list using a bottoms-up approach after taking into account the views of the relevant BofA Merrill Lynch Fundamental Equity analyst and upcoming catalysts. Diversity of the list and BofAML macro views will also be factors in choosing stocks for the list. Stocks on the list will generally remain on the list during the quarter. However, a stock will be removed interim quarter if considered ineligible due to a change in the stock’s fundamental rating, or if the stock is no long covered by BofA Merrill Lynch fundamental Equity Research. When stocks are removed during the quarter, they will not be replaced. Stocks will generally be removed from the list at the end of the quarter in conjunction with the publication of the next quarter’s list, but may on select occasions remain on the list if the identified catalyst remains relevant or a new catalyst is expected to drive the requisite over/under performance. Any intra-quarter actions to the list will be announced in a research report. The Top 10 list will be published on or close to the first day of each quarter. In addition, we may also publish research reports updating the catalysts’ status or other news on particular stocks during the quarter. How the list will be maintained and updated We will publish this list at the beginning of each quarter. Ideas will generally remain on the list through the quarter unless coverage is dropped or the recommendation changes. Any security which is removed will not be replaced. If there are any changes to the list during the quarter we will promptly publish a note explaining the change. Securities are intended to stay on the list for one quarter, though some may be chosen again for the next quarter’s list. Bankof America 2 Top 10 US Ideas Quarterly | 03 January 2017 Merrill Lynch HOUSE_OVERSIGHT_014623

Aetna (AET) Kevin Fischbeck +1 646 855 5948 Research Analyst, MLPF&S Buy, PO $149 1Q investment thesis Based on past precedence, our view is that the AET/HUM deal is more likely than not to be approved by the courts (ruling likely to come in January 2017). PF 2018 earnings should be close to $11.50 (vs $9.70 consensus), even before taking into account the upside from tax reform (+15% to EPS} and rising interest rates (+5%). In the event that the deal breaks, we see little downside and potential upside in 1Q17 in the form of capital deployment (AET remains underlevered and in the absence of a deal could look to aggressively repurchase stock}. Current estimates do not include share repurchase and based on its history of repurchasing shares using free cash flow and its balance sheet capacity, we expect AET to repurchase a significant amount (~10%) of its shares in 2017 post deal break, providing initial downside support and ultimately driving upside to Street estimates. Table 1: Aetna key stock data Industry Managed Care Market Cap (mn) $44,657 Price $124.45 P/E (2017) 14.4x % of sell-side rated Buy 70.0% Short interest % of float 2.25% Source: Bloomberg and BofA Merrill Lynch Global Research estimates Deregulation/Gov't Legislation: Repeal and Replace of the ACA creates some uncertainty, but neither AET nor HUM derive a significant amount of EPS from the ACA. Meanwhile, Republicans have historically supported Medicare Advantage (80% of HUM’s revenue}, and we expect a stronger rate environment under this Administration than over the past 8 years. Tax Policy: As a domestic only company with a relatively high tax rate (est. 35% in 2017), AET would benefit from tax reform. We believe that some benefit would be lost to minimum MLR rebates or competition, but if taxes are lowered 15%, then we assume that they keep about 2/3 of the benefit (19% to EPS). Catalysts: Deal resolution, capital allocation update, tax reform, rising interest rates. Latest report: MCO rally has just begun; beneficiaries of the non-Health Care upside from Trump 1Q risks: Risks to the downside are courts not approving the HUM acquisition, lower- than-expected membership growth and higher than expected cost trend. CMS will issue the rate update for 2018 for Medicare Advantage in late February, a reg which we expect to be benign, but which could be worse than expected. Company Description: Aetna is one of the nation's largest managed care organizations, covering roughly 23 million members. The company focuses on three main business segments: Health Care (health insurance, dental, behavioral health and pharmacy benefit Bankof America <> Merrill Lynch Top 10 US Ideas Quarterly | 03 January 2017 3 HOUSE_OVERSIGHT_014624

products), Group Insurance (including life, disability and long term care insurance products) and Large Case Pension (a legacy business which is largely in runoff}. Dover (DOV) Andrew Obin +1 646 855 1817 Research Analyst, MLPF&S Buy, PO $85 1Q investment thesis We think the Street is underestimating ’17 EPS upside potential from Energy recovery given the segment’s close correlation to N.A. rig count and short-cycle nature of the business, as well as incremental accretion from Wayne acquisition. DOV is expected to host an analyst dinner on January 12" which will provide a 4Q update and preview 2017 results. We think the meeting will be a positive catalyst for the stock, providing more visibility on Energy orders post-OPEC meeting, highlighting sustainability of the EMV cycle in Wayne into ’19. Investors will also likely get an update on execution turnaround in the Refrigeration business, removing one of the biggest overhangs on the stock. Table 1: Dover key stock data Industry Industrial Machinery Market Cap (mn) $11,921 Price $75.19 P/E (2017) 19.6x % of sell-side rated Buy 25.0% Short interest % of float 1.54% Source: Bloomberg and BofA Merrill Lynch Global Research estimates Deregulation/Gov't Legislation: We expect Trump’s administration to prioritize US energy independence, with deregulation benefiting domestic shale produces, which should be an attractive tailwind to DOV’s Energy segment. Tax Policy: Our estimates are based on 29% tax rate in ‘17/18. We calculate that under Ryan’s proposed plan, we can see about 19% upside to EPS. We estimate that under Trump’s proposed plan, we can see about 24% upside to EPS. Catalysts: January 12" — investor dinner with management January 26" — 4Q results Rig count release Latest report: Dover Corp: Adjusting for Wayne, EMV cycle extension; Rig count going up, LIl read-across 1Q risks: With so much of DOV’s EPS upside tied to Energy segment recovery, we view oil price volatility (from stronger USS or other unexpected macro headlines) as the biggest risk to our thesis. Weaker-than-expected execution in Refrigeration or Fluid business would be another risk, offsetting Energy upside. Bankof America 4 Top 10 US Ideas Quarterly | 03 January 2017 Merrill Lynch HOUSE_OVERSIGHT_014625

Company Description: Dover is a diversified, global manufacturer of industrial products. It comprises more than 30 independent companies that operate in four segments: Refrigeration & Food Equipment, Fluids, Energy, and Engineered Systems. General Dynamics (GD) Ronald Epstein +1 646 855 5695 Research Analyst, MLPF&S Buy, PO $200 1Q investment thesis General Dynamics is a defensive large cap value stock with potential cyclical growth. The company has a history of annual dividend increases with a dividend yield of 1.7%. Concerns about weakening demand for Gulfstream business jets in General Dynamic’s Aerospace segment have weighed down sentiment. However, using a sum-of-the-parts analysis that values GD’s defense businesses in line with the pure play defense average, this would imply that GD’s Aerospace segment is trading at a significant discount to the market at 12x P/E multiple on 2018E earnings. Considering the strength in Gulfstream’s product portfolio and margin performance, we would expect Aerospace to trade at least at 18x P/E multiple on 2018E earnings. Table 1: General Dynamics key stock data Industry Aerospace & Defense Market Cap (mn) $57,215 Price $173.21 P/E (2017)* 17.9x % of sell-side rated Buy 76.2% Short interest % of float 1.02% Source: Bloomberg and BofA Merrill Lynch Global Research estimates Gov't Legislation: 56% of sales are from the US government General Dynamics’ primary customer is the US Department of Defense, which accounted for 47% of total sales in 2015. The remaining 9% are to other non-DoD US government agencies like the intelligence community. For the military, which is a defensive sector, GD is engaged in engineering, manufacturing, and support of land and expeditionary combat vehicles and systems, armaments, munitions, and shipbuilding and marine systems. Major products include Virginia-class nuclear-powered submarine and Ohio class ballistic nuclear submarine replacement, Arleigh Burke-class Aegis destroyer, Abrams M1A2 tank, Stryker 8-wheeled assault vehicle, medium-caliber munitions and gun systems, tactical and strategic mission systems. The company also provides information systems and technologies. Disruptor: Gulfstream G650 has unrivaled performance in the most profitable business jet market segment There is no direct competitor aircraft currently in service in the market to match the performance of the Gulfstream G650/650ER. The G650ER has a range of 7,500 nautical miles at Mach 0.85, but can fly faster at Mach 0.90 with a range of 6,400 nautical miles. The Dassault Falcon 8X has a range of only 6,450 nautical miles. Meanwhile, Bombardier’s response to the G650 has been delayed another year with the entry into service of the Global 7000 (range of 7,300 nautical miles) in 2H18. Gulfstream book-to- bill in 3Q16 was 1:1 ona dollar value basis and 1.2:1 on an aircraft unit basis. In our view, market share gains in a soft demand environment could provide Gulfstream a solid foundation to bridge the Gulfstream G450/550 to the G500/600. Bankof America Merrill Lynch Top 10 US Ideas Quarterly | 03 January 2017 5 HOUSE_OVERSIGHT_014626

Catalysts: Stable Aerospace earnings & US defense spending Operating weakness for Bombardier’s Global family, which competes with the Gulfstream family, has weighed down investor sentiment for large cabin business jets and General Dynamics. However, Gulfstrear’s more conservative production rates, attractive product positioning, higher quality backlog, and better operating performance compared to Bombardier lower Gulfstream’s near- and medium-term earnings risks, in our view. The key catalyst for General Dynamics is the upcoming earnings result that demonstrates how EBIT in the Aerospace segment remains stable despite a more tepid market outlook from Bombardier. We continue to view GD as a beneficiary of positive inflection in US defense spending. We expect the recent Republican victory in the White House and the Senate to be seen as incrementally positive for defense. Political control is a key driver of defense spending, and defense stock valuations are tied to changes in defense spending related to the modernization accounts. Our Political Control Model (PCM) analysis highlights a Republican President and Republican Senate is the best case for Budget Authority in defense modernization accounts. Our PCM analysis suggests that the Republican sweep could increase the Budget Authority for defense investment accounts by a CAGR of 12- 13% (FY17E-21E). This compares to the BofAML forecast of a 5% CAGR and the FY17 Green Book forecast of a 1% CAGR. Additionally, GD’s Marine Systems segment is a direct beneficiary of the US pivot to the Pacific. The Pacific is a hotbed of maritime activity particularly as China expands its territorial waters. As the US focus on naval superiority strengthens, we might see upside to shipbuilding spending. Latest report: General Dynamics: Gulfstream still undervalued; raise PO to $200 and reiterate Buy 30 November 2016 1Q risks: large cabin business jets market deterioration and US defense spending There is risk of market deterioration in large cabin business jets that could increase earnings risks for Gulfstream. Additionally, delays in government contracting or lower than expected increase in US defense spending could provide downside risks to our estimates. Company Description General Dynamics is a major US government contractor engaged in combat vehicles and systems, armaments, munitions, ordnance, shipbuilding and information systems and technologies. It is also the parent company of Gulfstream in its Aerospace segment, which is the most profitable airplane manufacturing company in the world. Consolidated Edison (ED) Brian Chin +1 646 855 5855 Research Analyst, MLPF&S Underperform, PO $59 1Q17 investment thesis Since the November elections, utility valuations have not adequately adjusted to the rapid shift towards a rising-rate environment and have decoupled from historically predicative valuation patterns. Looking at studies of 10yr Yields v. Utility PEs, BBB Yields v. Utility PEs, and Utility Div. Yields v. Rates are the best examples of this BankofAmerica <2” 6 Top 10 US Ideas Quarterly | 03 January 2017 Merrill Lynch HOUSE_OVERSIGHT_014627

dislocation (more metrics can be found in our Alternating Currents Weekly). We rate ED Underweight to take advantage of this sector dislocation. ED on its own is fundamentally overvalued. ED trades at a 0.5x premium to its peers despite having slower than average growth prospects, increasing regulatory complexity, and the overhanging risk of fines for the Harlem explosion. Table 1: ConEd key stock data Industry US Electric Utilities Market Cap (mn) $22,400 Price $74.07 Total Debt / 2019 EBITDA 3.88 % of sell-side rated Sell 26.3% Short interest % of float 3.94% Source: Bloomberg and BofA Merrill Lynch Global Research estimates Not your grandmothers ConEd - increasing complexity changes investment story ConEd is facing very slow growth electric demand growth in its utilities with 0.2% y/y growth in its CECONY subsidiary through 20201 and -0.1% growth in its O&R subsidiary. To offset this slow growth, ConEd has been increasing the complexity of its business by purchasing gas and electric transmission assets which have higher growth potential but face more market risk (most notably the JV with Crestwood in the Stagecoach midstream pipeline system). Furthermore, the regulatory regime in New York is undergoing a fundamental shift as the Reforming Energy Vision (REV) program is implemented. REV seeks to fundamentally change how utilities are compensated by creating more of a ‘platform’ for energy delivery. Slow growth, changing business mix, and new regulatory constructs add considerable risk to what used to be a “go to” vanilla regulated utility. An overvalued Sector and Potential Catalysts For a long time, ConEd was viewed as the quintessential utility and, during the run-up in Utility valuations in 2016 its shares outperformed despite its weakening fundamentals. As the story becomes more complex and the utility sector adjusts to lower valuation we would expect ED to underperform with a similar symmetry to other utility stocks. Latest reports: Recent BofA Merrill Lynch Global Research Reports Title: Subtitle Primary Author Date Published Utilities: Fed promises more hikes: utes face more downside Brian Chin 15 December 2016 risk in early 2017 Utilities: Alternating Currents Weekly Brian Chin 18 December 2016 1Q17 risks: Risks to our thesis are primarily macro related. If utility sector valuations remain disconnected from historical fundamentals for the quarter or if rising interest rates significantly reverse course our Underweight rating on ConEd could not materialize. Company Description: Consolidated Edison (ED) is the owner of Consolidated Edison Company of New York (CECONY) and Orange & Rockland Utilities (O&R) providing electric, gas and steam service to 3.5 million customers in New York City and the northern suburbs. ConEd also has a transmission segment with gas pipeline, storage, and electric transmission. Finally, ConEd has three competitive energy businesses: ConEd Development (energy infrastructure), Energy (wholesale services), and Solutions (retail services). Bankof America <> Merrill Lynch Top 10 US Ideas Quarterly | 03 January 2017 7 HOUSE_OVERSIGHT_014628

Hess Corporation (HES) Doug Leggate +1 713 247 6013 Research Analyst, MLPF&S Buy, PO $80 1Q17 investment thesis Broad expectations of a pro-energy agenda from the incoming administration set a theoretically constructive backdrop for the US oils. Along with the tailwind from renewed OPEC support for oil prices, we view the broader energy sector as a momentum play in the early part of 2017 where stock specific catalysts can re-emerge to differentiate relative performance within the large cap US oils. We view Hess as the most catalyst rich large cap US E&P for 2017 with a return to growth and disproportionate exploration risk from a company with the highest cash margins in the sector, second best balance sheet and significant oil leverage to our base case that is an oil recovery in 2017. Hess remains amongst our top ideas in the US large cap oil sector for 2017, and we retain our Buy rating, and $80 PO. Table 1: Hess key stock data Industry US oil and gas exploration and production Market Cap (mn) $19,090 Price $62.90 EV/Debt adjusted cash flow (2017)* 9.4x % of sell-side rated Buy 46.4% Short interest % of float 8.52% Source: Bloomberg and BofA Merrill Lynch Global Research estimates Deregulation / Gov't Legislation While the potential for a less onerous regulatory backdrop, and greater access to Federal lands for exploration and development, the majority of current activity remains dominated by private lands thereby limiting any material changes arising froma Republican administration. The exception is the potential for more receptive backdrop for infrastructure development that can improve regional pricing through improved access to takeaway capacity. Tax Policy: For the majority of the US E&P’s, changes in corporate tax rates have negligible impact given that substantial net operating losses and deferred tax credits means that cash taxes remain de minimis for the foreseeable future. Catalysts: News flow starts with an expected capex budget unchanged from 2016 at ~$2bn, the company has stated it expects a return to drilling in the Bakken with a stated ramp up to 6 rigs from 2 currently returning the play to growth in 2017.. The first Guyana development (Liza) expected to achieve FID by 2Q17 and which we expect to confirm industry leading economics. Start-up of the first of two major developments — the North Malay basin gas play in 3Q17, putting Hess back on a growth track and turning attention to the Stampede start up in the US GoM in early 2Q18. In the background is an exploration test every 45-60 days any one of which could materially change the scale of the Hess business model of the next decade. Bankof America 8 Top 10 US Ideas Quarterly | 03 January 2017 Merrill Lynch HOUSE_OVERSIGHT_014629

Latest reports: Tales from the road (Dec 1, 2016); Speculation builds over Payara (Dec 19, 2016) 1Q17 risks: We expect a supportive commodity backdrop, spending clarity and confirmed return to growth all punctuated by a steady stream of large scale exploration news flow to support relative performance for Hess in 1Q17. Greatest risk to the broader energy sector comes from adherence of the OPEC agreement to support oil prices through coordinated production cuts; With this backdrop note that Hess retains one of the most resilient balance sheets in the sector, with adjusted net debt / cap of just 14% and $2.9bn of net cash on the balance sheet at end 3Q16. Company Description: Hess Corp (HES) is a mid-sized oil & gas company with 1.0bn boe of proved reserves at end 2015. E&P operations are focused in the US onshore, deep water GOM, North Sea, Guyana, West Africa, and Asia. MGM Resorts International (MGM) Shaun Kelley +1 646 855 1005 Research Analyst, MLPF&S Buy, PO $33 1Q investment thesis MGM is a levered play to improving/accelerating US economic growth. The US makes up 80% of EBITDA (70% Vegas, 20% Macau, 10% US regional) and the company has 4-5x net debt/EBITDA which is high, but coming down to under 4x by end of 2017 which could allow for a possible upgrade to investment grade by the end of 2017 or early 2018. MGM has high operating leverage (50%+ flow through of revenues) and should benefit from any macroeconomic improvement as well as already healthy/strong Las Vegas fundamentals (visitation +3% YTD, RevPAR +6% which is one of best hotel markets in the US). MGM benefits from both consumer (80%) and business (20%) travel. There is zero supply growth in Las Vegas the next 2-3 years and virtually no Airbnb/disruption risk as staying at integrated casino resorts on the Strip is key to the experience. MGM should see accelerating growth in 2017 to a very high +24% Y/Y on an organic basis. We think this is some of the highest growth we will see in the Gaming, Lodging & Leisure industries. MGM should also see a meaningful free cash flow inflection in 2017 as capex falls off dramatically after its 2 new property openings in Washington DC and Cotai/Macau. Table 1: MGM key stock data Industry Gaming Market Cap (mn) $11,993 Price $28.50 P/E (2017) 21.6x % of sell-side rated Buy 95.7% Short interest % of float 2.94% Source: Bloomberg and BofA Merrill Lynch Global Research estimates Bankof America <> Merrill Lynch Top 10 US Ideas Quarterly | 03 January 2017 9 HOUSE_OVERSIGHT_014630

Deregulation/Gov’t Legislation: There aren’t any clear/obvious changes here that would impact MGM. As a labor intensive business, changes to overtime rules or the Affordable Care Act as it relates to company level costs could be modestly beneficial. Tax Policy: MGM will be a cash tax payer in 2017. Tax policy should be mixed. While they get some meaningful interest shield from their decent amount of debt, they also have relatively high capex that could benefit them if expensed as incurred. Import tariffs should be limited in impact as it’s mostly a domestic, services based business with limited COGS. Catalysts: ConAgg should generate RevPAR tailwinds. RevPAR should accelerate in Q1 and could be up double digits in the quarter driven by a strong convention calendar, headlined by the ConAgg convention which comes only once every 3 years. MGM also opened its $1.4B National Harbor casino outside of Washington on December 8". The first data points here on revenues will come in early January. MGM’s Cotai casino in Macau opens in 2Q17 and is a new $3B property. We believe expectations are reasonably low and revenues are still strong in Macau (+ double digits in 4Q). Despite recent softness, Macau peers still trade at premiums to core MGM Latest report: MGM Resorts International: Notes from the road: MGM National Harbor - the new standard for regionals 1Q risks: Macau sentiment has been fading recently as the RMB continues to depreciate and investors seek new growth opportunities domestically given the large cyclical rotations occurring in other sectors. Company Description: MGM, is a global hotel and casino gaming company, owns and operates 19 properties located in NV, MD, MS, MI, IL and Macau. It owns a 50% stake in its CityCenter joint venture on the Las Vegas Strip and a 77% interest in MGM Growth Properties, a publicly traded gaming focused real estate investment trust (REIT). Norfolk Southern (NSC) Ken Hoexter +1 646 855 1498 Research Analyst, MLPF&S Buy, PO $122 1Q investment thesis Norfolk Southern is benefiting from a volume inflection, with 9 consecutive weeks of carload growth year-over-year, after nearly 2 years of sustained negative carload declines. Aside from the ongoing inflection in data, the company should benefit in 2017 from its own structural efficiency program and many potential macro shifts currently under President-elect Trump’s Administration. The new management team (Jim Squires was named CEO in 2015) is working to change the culture and business processes, and has delivered for a few quarters. It set operating targets for the first time in company history, targeting $650 million in efficiency gains (+25% to 2015 EPS) and a 65% operating ratio by 2020. It also set $250 million in efficiency gains and a sub-70% operating ratio in 2016, allowing it to immediate progress. In January, management has noted it will further detail its efficiency gain targets, which could be a near-term catalyst for the shares. Under Trump’s proposal’s, NS could benefit from a lower tax BankofAmerica <2” 10 Top 10 US Ideas Quarterly | 03 January 2017 Merrill Lynch HOUSE_OVERSIGHT_014631

rate, given its 37% current effective tax rate (at 30% adds $10 to valuation and at 20% adds $25 to valuation), as well as additional infrastructure spend (more aggregates, cement, rebar, etc...), focus on domestic manufacturing, and repatriation of capital, which could aid GDP growth. We target NSC to post sustained double-digit EPS growth and significantly improve free cash flow. Table 1: Norfolk Southern key stock data Industry Railroad Market Cap (mn) $33,393 Price $108.82 P/E (2017) 17.3x % of sell-side rated Buy 44.8% Short interest % of float 1.19% Source: Bloomberg and BofA Merrill Lynch Global Research estimates Deregulation/Gov’t Legislation: The Surface Transportation Board, an independent governing body, formerly under the Department of Transportation, is set for a significant turnover, with a Republican taking control of the chairmanship, and 2 new members being added to the 5-person Board (up to this year the STB was a 3 member Board). The potential for negative impacts from mandatory open access and rate of return calculation adjustments may be reduced given the change of administration, which would be a positive for the railroad group. Tax Policy: Given their domestic focus, Transportation companies are the highest effective tax payers in the Industrial and Basic Materials group, with the U.S.-based railroads averaging a 37% effective tax rate. At a 20% tax-rate, EPS would jump nearly 30% (though full capex expensing could reduce EBIT to offset a sizeable portion of the gain). Additionally, cross-border tax increasing cost of goods sold for manufacturing goods could slow GDP, impacting carload growth over time. Catalysts: Near term catalysts include accelerating carload growth, coal turning positive for the rail industry this week, after 90 consecutive down weeks, and NS’s upcoming January promise for additional details on its targeted efficiency gains. The company is set to post a sub-70% operating ratio for only the 2"¢ time in the past 20 years, a target we would expect to improve further in 2017 and beyond. Latest report: Raise estimates and PO to $122; Volumes trending above target October Upgrade report: Time to look at things differently; Raise to Buy 1Q risks: Norfolk Southern has posted 9 consecutive weeks of carload growth, indicating underlying economic growth, with relatively easy comps into 1H17. Thus, risk includes carload growth slowing or turning back negative, as well as increased concern on macro GDP growth rates given fear about new fiscal policies (cross-border tax, full capex expensing) which could compress EPS. Additionally, if the expected discussion on efficiency gain details in January is not provided as expected, investors could lose confidence that management will stick with and/or meet its 2020 target. Additionally, if corporate tax reform is not passed, multiples that have expanded on some reduced tax rate could re-compress. Company Description: Norfolk Southern Railway operates a 21,300 route mile railroad network in 22 eastern states, District of Columbia, and Ontario, Canada. We target it to generate $10 billion in 2016 revenues and a sub-70% operating ratio (hitting that target Bankof America <> Merrill Lynch Top 10 US Ideas Quarterly | 03 January 2017 —-11 HOUSE_OVERSIGHT_014632

for only the 2™ time in the past 20 years}. We target it to move 7.22 million carloads in 2016, with an average revenue per car of $1,371. Coal represents 14% of total revenues, down from 36% 2 years prior. Intermodal represents 22% of revenues, and Ag/Consumer/Gov’t represents 16% of revenues. SVB Financial Group (SIVB) Ebrahim H. Poonawala +1 646 743 0490 Research Analyst, MLPF&S Buy, PO $190 1Q investment thesis We view SIVB as the best positioned bank in our coverage universe by a wide margin to benefit from the combination of 1) rising interest rates — with SIVB ranking among the most rate sensitive banks in the mid-cap banks group 2) stronger economic growth - with SIVB's 2017 guidance (issued before the US elections) already calling for double digit revenue growth 3) de-regulation 4) tax reform. Our '17e EPS of $9 and '18e EPS of $12 imply YoY EPS growth of 24% and 33% respectively. SIVB trades at 18x our '17e EPS and 2x YE17e TBV. Our PO of $190 implies P/'17e EPS of 20x (and 16x ‘18e EPS) and P/YE17e TBV of 2.4x. This compares to an average P/E of 22.7x and P/TBV of 2.6x that the stock traded at heading into and during the initial stages of the 2004-2006 interest rate cycle. Table 1: SIVB key stock data Industry Commercial Banks Market Cap (mn) $8,584 Price $170.38 P/E (2017) 19.1x % of sell-side rated Buy 77.8% Short interest % of float 4.68% Source: Bloomberg and BofA Merrill Lynch Global Research estimates Deregulation/Gov’t Legislation: Among the one legislative action on the regulatory front that appears likely to be passed under the new administration is the increase in the $50bn SIFI asset threshold which brings with a heightened level of regulatory scrutiny (such as undergoing the CCAR stress test). While we were not concerned about SIVB's ability to transition into a CCAR bank, the removal of this should no doubt serve as a positive. At $43bn in assets, becoming a CCAR bank had been weighing on investor sentiment. With expectations for this threshold to be pushed higher, this should no longer be a significant concern when thinking about SIVB's growth trajectory. Another issue that has not been discussed much but could occur is any changes in the Volcker rule that would allow the bank to once again participate in investing capital in PE/VC funds. We view this restriction as an unintended consequence on SIVB stemming from the Volcker rule and the ability once again participate in these funds would be a significant positive given the potential for getting equity exposure in the early stages of the life cycle of start-up companies. Tax Policy: With SIVB paying an effective tax rate of 40.6% in 2016 YTD, the bank will undoubtedly be a beneficiary from a lower corporate tax rate. While we believe it is too soon to adjust estimates for this, we note that a 500bp reduction in the tax rate would equate to 8.4% upside to SIVB's 2018 EPS estimate. Moreover, the potential for hundreds of billion dollars in tax repatriation by the US tech giants also augurs well for greasing the wheels for the start-up sector. While some of this repatriated capital will no doubt go to buy backs and higher dividends, we expect some of this to flow into the Start-up space as tech giants pursue M&A. At the very least it mitigates the risk of any Bankof America 12 Top 10 US Ideas Quarterly | 03 January 2017 Merrill Lynch HOUSE_OVERSIGHT_014633

significant credit issues for the banks as weaker firms (who are clients) will be better positioned to sell themselves to the tech behemoths looking for innovative ideas. Catalysts: 1) Improving expectations around rising rates (on back of better macro- economic data) will continue to serve as a tailwind for the stock 2) A strong tech IPO market — as SIVB stands to benefit from equity exposure to 1000+ start-up companies 3) Clarity around a tax reform bill once the new administration takes office in January should lead to the markets pricing-in a lift to forward EPS and 4) updated 2017 guidance could reflect a stronger outlook vs. management’s preliminary guidance provided in Oct 2016. Latest report: On its way to regaining its premium multiple 1Q risks: Downside risks are 1) reversal in the outlook for higher rates 2) a sharp sell- off in the equity markets that could derail IPO activity and 3) disappointment on the pace of policy actions under the new administration. Company Description: SVB Financial Group is a financial holding company that serves companies in the technology, life science, venture capital, private equity and premium wine industries. The bank offers diversified financial services such as commercial, investment, international and private banking. Headquartered in Santa Clara, California, SVB Financial Group (Nasdaq: SIVB) operates through offices in the U.S. and international operations in China, India, Israel and the United Kingdom. Texas Instruments (TXN) Vivek Arya +1 646 855 1755 Research Analyst, MLPF&S Buy, PO $82 1Q investment thesis In the aftermath of the US election in November, we think Texas Instruments stands to benefit the most with its 30% effective tax rate and high exposure to industrial, automotive, automation, and communications capex. The company has been one of the largest share gainers in industrial/auto semis entering a seasonally strong period for spending. Unlike peers, Texas instruments has no distraction from M&A while maintaining a grossly under-levered balance sheet (<0.1x net debt/EBITDA vs comps at 2x-4x). We expect TXN to continue to generate industry leading FCF while growing its dividend at 20%+ CAGR. We look toward the strategy update call in early February as the next catalyst for the stock. Table 1: Texas Instruments key stock data Industry Semiconductors Market Cap (mn) $73,899 Price $74.15 P/E (2017) 20.1x % of sell-side rated Buy 35.3% Short interest % of float 1.75% Source: Bloomberg and BofA Merrill Lynch Global Research estimates Deregulation/Gov't Legislation: 60% of TXN’s sales are exposed to the industrial, automotive, and communications equipment end markets. We think these markets could Bankof America <> Merrill Lynch Top 10 US Ideas Quarterly | 03 January 2017) 13 HOUSE_OVERSIGHT_014634

see the most uplift in spending from any potentially large fiscal stimulus and infrastructure spending under the new US administration. Tax Policy: Unlike most semis, TXN reports its financials on a pure GAAP basis and its tax rate at 30% is one of the highest in the industry. We think TXN stands to disproportionately benefit from the looser tax policies foreshadowed by the upcoming administration. Specifically, a 10% drop in the corporate tax rate would lead to 15% higher EPS for TXN in 2017, all else equal. Catalysts: (1) Seasonally stronger period for industrial/automotive spending — 46% of TXN’s revenue come from these end markets; (2) Annual strategy and capital allocation policy update call with shareholders which is likely to occur at the beginning of February. Latest report: The new "industrials": growth recovery plus pricing power, Buy TXN, ADI, MCHP, ON 1Q risks: (1} Still somewhat large (>10%) exposure to consumer electronics could create near-term volatility in topline results; (2) Historically lumpy communications equipment spending trends; (3) Larger than expected slowdown in North America automotive unit production Company Description: Texas Instruments is a broad-based supplier of semiconductor components, ranging from digital signal processors, to high-performance analog components, to digital light-processing technology and calculators. 65% of TXN sales are exposed to the well diversified, business-to-business Industrial, Automotive, Communications Infrastructure, and Enterprise markets. TripAdvisor (TRIP) Nat Schindler +1 415 676 3574 Research Analyst, MLPF&S Underperform, PO $41 1Q investment thesis Despite easier y/y comps in 2017, we see risk that Click-based & Transaction Hotel revenue continues to decline as 1) higher monetizing desktop traffic structurally declines, 2) mobile monetization remains at 30% of desktop traffic and is unlikely to meaningfully close the gap, and 3) Instant Book is unlikely to help reverse the revenue and earnings trend. At the same time, TRIP has been accelerating marketing spend, implying increasing acquisition costs, with further ad spend ramp in ‘17. TRIP noted 2017 EBITDA margin will decline further from 2016 levels as ad spend ticks up to re- accelerate growth. Table 1: TripAdvisor key stock data Industry Online Travel Market Cap (mn) $9,071 Price $46.95 P/E (2017) 32.5x % of sell-side rated Buy 14.3% Short interest % of float 10.30% Source: Bloomberg and BofA Merrill Lynch Global Research estimates BankofAmerica <2” 14 Top 10 US Ideas Quarterly | 03 January 2017 Merrill Lynch HOUSE_OVERSIGHT_014635

Tax Policy: TRIP has a ~25% tax rate. Trump’s tax plan calls for a reduction in the business tax rate from 35% to 15%, with elimination of most corporate tax deductions/credits (except for the R&D credit). While it’s unclear what elements of the tax plan will eventually be executed, Trump’s intent is clear and we believe companies with the highest tax rate have the most to gain. We see less incremental benefit to many of the global companies who already enjoy optimized tax rates (22% average tax rate across our coverage), but many companies will have more incentive to bring back Intl profits for buybacks with lower US tax rates. Catalysts: 4Q’16 Earnings (early February) will feature initial 2017 guidance. TripAdvisor noted on the 3Q’16 earnings call that 2017 EBITDA margin will decline further from 2016 levels as ad spend ticks up to re-accelerate growth, however it is unclear how much margin deterioration TripAdvisor will guide to. We think the deterioration in the guide will be higher than the Street’s expectations, driving further downside estimate revisions. Latest report: TripAdvisor: 2017 PM Level Outlook 1Q risks: There is downside risk to Street estimates if hotel shopper growth comes in below expectations, mobile monetization gap widens, and if initial 2017 guidance disappoints. We remain cautious on IB as an attempt to solve a very large problem: the continued transition of users consuming TripAdvisor’s content on their mobile phones instead of their desktops. On mobile phones, users are much less likely to transact or click on an ad than on desktops. A risk to the short thesis: There has been frequent speculation in the press that TripAdvisor may be a takeout candidate in the rapidly consolidating online travel market, with Priceline frequently named as the likely suitor. Company Description: TripAdvisor is the largest global online travel media company with over millions of members and hundreds of millions of user reviews. The company's portfolio of web properties attracts over 300 million unique visitors per month worldwide. Price objective basis & risk Aetna Inc (AET) Our Price Objective of $149 is based on a 50/50 blend of our standalone AET valuation ($138, 13.1x 2018E EPS of $10.50 when including share repurchase) and AET pro forma HUM valuation ($160, 14x 2018E EPS of $11.40). Our AET standalone valuation multiple reflects AET's historical average discount to the S&P 500. Our AET pro forma HUM valuation multiple of 14x reflects upside levers to HUM synergy guidance and to reflect the improved long-term growth profile of the company. Risks to the upside are regulatory approval of the HUM acquisition, better-than-expected membership growth and lower than expected cost trend. Risks to the downside are regulators not approving the HUM acquisition, lower-than-expected membership growth and higher than expected cost trend. Consolidated Edison (ED) Our price objective of $59 is predicated on shares of ED achieving 13.0x our 2019 EPS estimate. We apply the current group average multiple of 13.5x and apply a 0.5x discount to reflect a well below average ROE, a slightly below average growth profile, and a relatively challenging regulatory environment. This is offset slightly by a lower risk Bankof America <> Merrill Lynch Top 10 US Ideas Quarterly | 03 January 2017.15 HOUSE_OVERSIGHT_014636

profile investment outlook. Upside risks to our thesis could stem from more favorable changes to the investment and/or regulatory environment in New York. Downside/upside risks: ED, like all utility stocks, is also sensitive to changes in the market level of interest rates. Utilities historically underperform if bond yields rise, and outperform when they fall. Furthermore, ED is a bellwether utility and has historically outperformed during market uncertainty as a large liquid “flight to safety" stock. Dover Corp (DOV) Our PO of $85 is based on 11.5x EV/EBITDA on our 2017 estimate, which would put DOV in line with the multi-industrial peer group average. We view the target multiple as conservative, as we expect the Street to focus on EPS growth upside in ‘17, driven by Energy coming off depressed profitability. Risks to our PO are: 1) Highly dependent on acquisition strategy, 2) A reduction in capital spending in the oil & gas market, and 3) Weak global industrial production growth. General Dynamics (GD) We derive our PO of $200 using a sum-of-the-parts valuation model. Our model factors in 19.5x P/E multiple on 2018E earnings for GD's defense business, which is in line with pure play defense peers, and 18x P/E multiple on Gulfstream's 2018E earnings. In our view, GD's competitive business jet product portfolio and growth outlook in defense could provide near-term and medium-term organic growth. Additionally, the company's strong balance sheet and solid cash generation could sustain dividend growth and share repurchases. Downside risks to our PO are: 1) A downturn in business jets, due to an exogenous factor. 2) Given that business jets are priced in dollars, an unexpected devaluation in the dollar could significantly impact order activity, 3) We are forecasting a declining defense budget, which would then place a cap on the top-line growth for the defense primes. We view the Administration change as a potential ceiling to defense stocks as political control, in our view, is a key driver of defense spending. Decline in defense spending authorization (a leading indicator), which in turn could impact treasury outlays. Potential budget cuts to the Navy's fleet could encumber GD as well as a slowdown in procurement for the Army (armored vehicles). 4) Poor execution on defense programs could adversely impact margins. Hess Corp. (HES) Our price objective of $80 / share is based on a 5-year outlook which assumes a 5.5x DACF multiple and a commodity deck of $67.50 WTI and $70 Brent to which we add $10/ sh for Liza in offshore Guyana. The multiple is based on a finite timeline to delivery which is supported by core NAV. The risks to our price objective are: 1} the oil and gas price environment, (2) slowdowns in development drilling that leave production below expectations, and (3) news flow around HES' exploratory and appraisal drilling activities that could impact the stock. MGM Resorts International (MGM) Our $33 PO is based on 11.5x our 2017 EBITDA estimate {implied 10x 2018E EBITDA). This is in line with its historical trading range and supported by our detailed sum of the parts analysis. Upside risks are: a stronger than anticipated recovery in Las Vegas, improving consumer sentiment and its 56% ownership stake in MGM China. Downside risks are: balance sheet and liquidity risks proving worse than expected, continued Strip competition, and continuing near-term softness in the Macau market. Bankof America 16 Top 10 US Ideas Quarterly | 03 January 2017 Merrill Lynch HOUSE_OVERSIGHT_014637

Norfolk Southern (NSC) Our $122 price objective is based on a 19.5x multiple on our 2017 EPS estimate of $6.25. We move above the top of its one-standard deviation historical trading range of 12x-16x given the new management team's move to improve margins, cut costs, and raise its ROIC, and as EPS inflects off a volume deflated 19% decline in 2015. Risks to our price objective and estimates are the company's ability to derive continued operational benefits, a return to significant pricing competition among the rails, slower than expected economic growth, a deterioration to improving service metrics, a heavily unionized employee base, inability to exercise pricing power due to regulatory changes or legal challenges from customers, external factors (such as weather) impacting operations, and the STB installing mandatory reciprocal switching (or open access) to the rail network without proper pricing. SVB Financial Group (SIVB) We use a three-factor valuation framework (P/TBV, P/E, DCF) to arrive at our $190 price objective and assign a 2.3x multiple to our 2017e TBV and apply a 21x P/E to 17E EPS. Our valuation multiples are both in line with high growth peers due to SIVB's high profitability and EPS growth profile. Our DCF assumes a two-stage cost of capital of 9.5% and a terminal growth rate of 6%. Downside risks are a longer than expected low rate environment and a slowdown in the technology sector and related IPO activity. Upside risks are sooner than expected rate hike, or better than expected pickup in the tech sector. Texas Instruments Inc. (TXN) Our $82 PO on TXN is based on14x FY17E EV/EBITDA, in line with high quality diversified and analog peers trading at 14x-15x, given TXN's high quality business model and strong FCF generation. Risks to our price objective: 1} Lumpy telco capex, especially in wireless deployments, 2) Volatile market share as design cycle times are very long, 3} Increased R&D spending pressure to maintain an edge versus the competition, 4) Inventory cycles and potential double ordering by customers that can often create mismatches between real supply and demand, 5) Exposure to several mature markets such as PC and other consumer electronics could limit its growth rate. TripAdvisor (TRIP) Our price objective of $41 is based on 21x our 2018 non-GAAP EPS estimate. This multiple represents a premium to online travel/vertical media comps and in our view adequately compensates TripAdvisor for improving margins and growth off a trough point in FY16 into FY17 when the negative impacts of its IB transition peak. Downside risks to our price objective are: 1) increasing competition (e.g. Yelp), 2} macro- economic factors (e.g. recession in Europe) impacting the travel industry, 3} challenges to the credibility of online reviews, 4) Instant Book transition puts pressure on revenue growth, and 5) mobile monetization headwinds. Upside risks to our price objective are: 1) improved mobile monetization 2} major OTA sign on for instant booking 3) high non-hotel shopper dollar capture and 4) improved global macro environment. Analyst Certification We, Derek Harris, Andrew Obin, Brian Chin, Doug Leggate, Ebrahim H. Poonawala, Ken Hoexter, Kevin Fischbeck, CFA, Nat Schindler, Ronald J. Epstein, Shaun C. Kelley and Vivek Arya, hereby certify that the views each of us has expressed in this research report Bankof America <> Merrill Lynch Top 10 US Ideas Quarterly | 03 January 2017. 17 HOUSE_OVERSIGHT_014638

accurately reflect each of our respective personal views about the subject securities and issuers. We also certify that no part of our respective compensation was, is, or will be, directly or indirectly, related to the specific recommendations or view expressed in this research report. Bankof America 18 Top 10 US Ideas Quarterly | 03 January 2017 Merrill Lynch HOUSE_OVERSIGHT_014639

US - Aerospace and Defense Coverage Cluster BofA Merrill Lynch Investment rating Company ticker Bloomberg symbol Analyst BUY AerCap Holdings NV. AER AER US Kristine T. Liwag Air Lease Corporation AL ALUS Kristine T. Liwag Bombardier Inc. YBBD B BBD/B CN Ronald J. Epstein Booz Allen Hamilton BAH BAH US Ronald J. Epstein CAE Inc. YCAE CAE CN Ronald J. Epstein Embraer ERJ ERJ US Ronald J. Epstein General Dynamics GD GD US Ronald J. Epstein Lockheed Martin LMT LMT US Ronald J. Epstein Northrop Grumman NOC NOC US Ronald J. Epstein Raytheon Co. RTN RIN US Ronald J. Epstein RBC Bearings Inc ROLL ROLL US Kristine T. Liwag Textron TXT TXT US Ronald J. Epstein TransDigm Group Inc. TDG TDG US Ronald J. Epstein Triumph Group TGl TGI US Ronald J. Epstein United Tech UTX UTX US Ronald J. Epstein NEUTRAL BWX Technologies, Inc. BWXT BWXT US Ronald J. Epstein Crane Co CR CRUS Kristine T. Liwag Curtiss-Wright Corporation cw CW US Kristine T. Liwag FLY Leasing Ltd FLY FLY US Kristine T. Liwag HEICO Corporation HEI HEI US Ronald J. Epstein Hexcel Corporation HXL HXL US Ronald J. Epstein Huntington Ingalls Industries HII HII US Ronald J. Epstein L-3 Comm LLL LLL US Ronald J. Epstein Mercury Systems MRCY MRCY US Ronald J. Epstein Rockwell Collins COL COL US Ronald J. Epstein Spirit AeroSys-A SPR SPR US Ronald J. Epstein UNDERPERFORM Atrcastle LTD AYR AYRUS Kristine T. Liwag Boeing BA BAUS Ronald J. Epstein Esterline Technologies Corporation ESL ESL US Ronald J. Epstein Garmin GRMN GRMN US Ronald J. Epstein Moog Inc. MOGA MOG/A US Kristine T. Liwag Wesco Aircraft Holdings, Inc WAIR WAIR US Ronald J. Epstein me peorlgalinll Top 10 US Ideas Quarterly | 03 January 2017-19 HOUSE_OVERSIGHT_014640

US - Electric Utilities Coverage Cluster BofA Merrill Lynch Investment rating Company ticker Bloomberg symbol Analyst BUY American Electric Power AEP AEP US Brian Chin American Water Works AWK AWK US Brian Chin Black Hills Corporation BKH BKH US Brian Chin Dominion Resources D DUS Brian Chin DTE Energy DTE DTE US Brian Chin Edison International EIX EIX US Brian Chin FirstEnergy FE FE US Brian Chin Great Plains Energy GXP GXP US Brian Chin NextEra Energy NEE NEE US Brian Chin NextEra Energy Partners NEP NEP US Brian Chin PG&E Corporation PCG PCG US Brian Chin NEUTRAL Calpine CPN CPN US Brian Chin Exelon EXC EXC US Brian Chin InfraREIT, Inc. HIFR HIFR US Brian Chin NRG Energy NRG NRG US Brian Chin Pinnacle West Corp PNW PNW US Brian Chin PPL Corporation PPL PPL US Brian Chin UNDERPERFORM AES Corporation AES AES US Brian Chin Consolidated Edison ED ED US Brian Chin Duke Energy DUK DUK US Brian Chin Entergy ETR ETRUS Brian Chin NorthWestern Corporation NWE NWE US Brian Chin Portland General Electric Company POR POR US Brian Chin Public Service Enterprise Group Inc. PEG PEG US Brian Chin Southern Company SO SOUS Brian Chin 20 Top 10 US Ideas Quarterly | 03 January 2017 Bankof America “> Merrill Lynch HOUSE_OVERSIGHT_014641

US - Internet Coverage Cluster BofA Merrill Lynch Investment rating Company ticker Bloomberg symbol Analyst BUY Alphabet GOOGL GOOGL US Justin Post Alphabet GOOG GOOG US Justin Post Amazon.com AMZN AMZN US Justin Post Bankrate RATE RATE US Nat Schindler eBay EBAY EBAY US Justin Post Expedia EXPE EXPE US Justin Post Facebook FB FB US Justin Post GrubHub GRUB GRUB US Nat Schindler IAC InterActive IAC IAC US Nat Schindler LendingTree TREE TREE US Nat Schindler Match Group MTCH MTCH US Nat Schindler Netflix, Inc. NFLX NFLX US Nat Schindler OnDeck Capital ONDK ONDK US Nat Schindler priceline.com PCLN PCLN US Justin Post Take-Two Interactive TTWO TTWO US Justin Post Wix.com WIX WIX US Nat Schindler Yahoo! YHOO YHOO US Justin Post Zillow ZG ZGUS Nat Schindler Zillow Z ZUS Nat Schindler NEUTRAL Activision ATVI ATVIUS Justin Post Electronic Arts EA EAUS Justin Post Quotient Technology Inc QUOT QUOT US Nat Schindler Wayfair Ww WUS Justin Post Yelp YELP YELP US Justin Post UNDERPERFORM Care.com CRCM CRCM US Justin Post Fitbit FIT FITUS Nat Schindler GoPro GPRO GPRO US Jason Mitchell Pandora Media, Inc. P PUS Nat Schindler TripAdvisor TRIP TRIP US Nat Schindler Twitter TWIR TWIRUS Justin Post ZYNGA ZNGA ZNGA US Justin Post RVW Chegg CHGG CHGG US Nat Schindler me peorlgalinll Top 10 US Ideas Quarterly | 03 January 201721 HOUSE_OVERSIGHT_014642

US - Multi-Industrials/Engineering and Construction Coverage Cluster BofA Merrill Lynch Investment rating Company ticker Bloomberg symbol Analyst BUY 3M Company MMM MMM US Andrew Obin AECOM ACM ACM US Anna Kaminskaya, CFA Allegion ALLE ALLE US Andrew Obin AMETEK Inc AME AME US Andrew Obin Colfax Corporation CFX CFX US Andrew Obin Dover Corp DOV DOV US Andrew Obin Fortive Corporation FIV FTV US Andrew Obin General Electric Company GE GEUS Andrew Obin HD Supply Holdings Inc HDS HDS US Andrew Obin Honeywell International Inc. HON HON US Andrew Obin Ingersoll-Rand IR IRUS Andrew Obin KBR KBR KBR US Anna Kaminskaya, CFA Milacron MCRN MCRN US Andrew Obin Mistras Group MG MG US Andrew Obin Rush RUSHA RUSHA US Andrew Obin NEUTRAL Eaton Corp PLC ETN ETN US Andrew Obin Flowserve FLS FLS US Andrew Obin ITT Inc. IT ITTUS Andrew Obin Jacobs Eng. JEC JEC US Anna Kaminskaya, CFA Parker Hannifin Corporation PH PH US Andrew Obin UNDERPERFORM Chicago Bridge & Iron Company CBI CBI US Anna Kaminskaya, CFA Donaldson Co DC| DCI US Andrew Obin Emerson Electric Co EMR EMR US Andrew Obin Fluor Corp FLR FLR US Anna Kaminskaya, CFA Pentair plc PNR PNR US Andrew Obin Rexnord Corporation RXN RXN US Andrew Obin Rockwell ROK ROK US Andrew Obin SPX Flow Inc. FLOW FLOW US Andrew Obin US - Semiconductors Coverage Cluster BofA Merrill Lynch Investment rating Company ticker Bloomberg symbol Analyst BUY Advanced Micro Devices, Inc AMD AMD US Vivek Arya Analog Devices Inc. ADI ADI US Vivek Arya Broadcom Limited AVGO AVGO US Vivek Arya Cypress CY CY US Vivek Arya Inphi Corporation IPHI IPHI US Vivek Arya Integrated Device Technology, Inc. IDTI IDTI US Vivek Arya Intel INTC INTC US Vivek Arya Microchip MCHP MCHP US Vivek Arya NVIDIA Corporation NVDA NVDA US Vivek Arya ON Semiconductor ON ON US Vivek Arya Skyworks Solutions, Inc. SWKS SWKS US Vivek Arya Texas Instruments Inc. TXN TXN US Vivek Arya NEUTRAL Cavium CAVM CAVM US Vivek Arya M/A-Com MTSI MTSI US Vivek Arya Maxim Integrated Products Inc. MXIM MXIM US Vivek Arya UNDERPERFORM Marvell Technology Group Ltd. MRVL MRVL US Vivek Arya Qorvo Inc. QRVO QRVO US Vivek Arya Xilinx Inc. XLNX XLNX US Vivek Arya 22 Top 10 US Ideas Quarterly | 03 January 2017 Bankof America <> Merrill Lynch HOUSE_OVERSIGHT_014643

US - Transportation Coverage Cluster BofA Merrill Lynch Investment rating Company ticker Bloomberg symbol Analyst BUY Canadian Pacific Railway cP CPUS Ken Hoexter CSX Corporation CSX CSX US Ken Hoexter FedEx Corp. FDX FDX US Ken Hoexter Fortress Transportation & Infrastructure FTAI FTAI US Ariel Rosa Golar LNG Limited GLNG GLNG US Ken Hoexter Golar LNG Partners LP GMLP GMLP US Ken Hoexter Hoegh LNG Partners LP HMLP HMLP US Ken Hoexter J.B. Hunt Transport Services JBHT JBHT US Ken Hoexter Norfolk Southern NSC NSC US Ken Hoexter Scorpio Tankers Inc. STNG STNG US Ken Hoexter Swift Transportation SWFT SWFT US Ken Hoexter Triton International, Ltd TRIN TRIN US Ken Hoexter Union Pacific UNP UNP US Ken Hoexter UPS UPS UPS US Ken Hoexter NEUTRAL ArcBest Corporation ARCB ARCB US Ken Hoexter Genesee & Wyoming GWR GWR US Ken Hoexter Kansas City Southern KSU KSU US Ken Hoexter Knight Transport KNX KNX US Ken Hoexter Navios Maritime Midstream Partners L.P. NAP NAP US Ken Hoexter The Greenbrier Companies GBX GBX US Ken Hoexter World Fuel Services INT INT US Ken Hoexter UNDERPERFORM C.H. Robinson CHRW CHRW US Ken Hoexter Canadian National CNI CNIUS Ken Hoexter Kirby Corp KEX KEX US Ken Hoexter Old Dominion Freight Line ODFL ODFL US Ariel Rosa Seaspan Corp SSW SSW US Ken Hoexter Teekay Tankers Limited TNK TNK US Ken Hoexter Werner Enterprises WERN WERN US Ken Hoexter me peorlgalinll Top 10 US Ideas Quarterly | 03 January 2017-23 HOUSE_OVERSIGHT_014644

US - Large Cap Oils Coverage Cluster BofA Merrill Lynch Investment rating Company ticker Bloomberg symbol Analyst BUY Anadarko Petroleum Corp. APC APC US Doug Leggate Cabot Oil & Gas Corp. COG COG US Doug Leggate ConocoPhillips COP COP US Doug Leggate Continental Resources Inc. CLR CLR US Doug Leggate Devon Energy Corp. DVN DVN US Doug Leggate Hess Corp. HES HES US Doug Leggate Marathon Oil Corp. MRO MRO US Doug Leggate Marathon Petroleum Company MPC MPC US Doug Leggate Occidental Petroleum Corp. OXY OXY US Doug Leggate Pioneer Natural Resources PXD PXD US Doug Leggate Range Resources Corp RRC RRC US Doug Leggate Tesoro Corp. TSO TSO US Doug Leggate NEUTRAL Chesapeake Energy Corp. CHK CHK US Doug Leggate Chevron Corp. CVX CVX US Doug Leggate EOG Resources EOG EOG US Doug Leggate ExxonMobil Corp. XOM XOM US Doug Leggate HollyFrontier Corp HFC HFC US Doug Leggate Noble Energy NBL NBL US Doug Leggate Phillips 66 PSX PSX US Doug Leggate Southwestern Energy Corp. SWN SWN US Doug Leggate Valero Energy Corp. VLO VLO US Doug Leggate UNDERPERFORM Apache Corp APA APA US Doug Leggate Calumet Specialty Products Partners CLMT CLMT US Jason Smith Delek US Holdings, Inc. DK DK US Doug Leggate PBF Energy PBF PBF US Doug Leggate 24 Top 10 US Ideas Quarterly | 03 January 2017 (pertain HOUSE_OVERSIGHT_014645

US - Facilities, Hospitals and Managed Healthcare Coverage Cluster BofA Merrill Lynch Investment rating Company ticker Bloomberg symbol Analyst BUY Acadia Healthcare ACHC ACHC US Kevin Fischbeck, CFA Aetna Inc AET AET US Kevin Fischbeck, CFA American Renal ARA ARA US Kevin Fischbeck, CFA Anthem ANTM ANTM US Kevin Fischbeck, CFA Capital Senior Living CSU CSU US Joanna Gajuk Centene Corporation CNC CNC US Kevin Fischbeck, CFA Civitas Solutions CIV CIVIUS Kevin Fischbeck, CFA Envision Healthcare Corp EVHC EVHC US Kevin Fischbeck, CFA HCA HCA HCA US Kevin Fischbeck, CFA Mednax MD MD US Kevin Fischbeck, CFA Service Corp. International scl SCI US Joanna Gajuk Surgery Partners, Inc SGRY SGRY US Kevin Fischbeck, CFA Surgical Care Affiliates, Inc. SCAI SCAI US Kevin Fischbeck, CFA UnitedHealth Group UNH UNH US Kevin Fischbeck, CFA NEUTRAL DaVita Inc DVA DVAUS Kevin Fischbeck, CFA Tenet Healthcare THC THC US Kevin Fischbeck, CFA Universal Health Services UHS UHS US Kevin Fischbeck, CFA WellCare Health Plans, Inc. WCG WCG US Kevin Fischbeck, CFA UNDERPERFORM Adeptus ADPT ADPT US Kevin Fischbeck, CFA Brookdale Senior Living BKD BKD US Joanna Gajuk Community Health Systems CYH CYH US Kevin Fischbeck, CFA Genesis Healthcare Inc GEN GEN US Joanna Gajuk HealthSouth HLS HLS US Kevin Fischbeck, CFA Kindred Healthcare KND KND US Kevin Fischbeck, CFA LifePoint Health LPNT LPNT US Kevin Fischbeck, CFA Molina Healthcare, Inc. MOH MOH US Kevin Fischbeck, CFA Select Medical Corp. SEM SEM US Kevin Fischbeck, CFA RSTR Team Health TMH TMH US Kevin Fischbeck, CFA Universal American UAM UAM US Kevin Fischbeck, CFA me peorlgalinll Top 10 US Ideas Quarterly | 03 January 2017-25 HOUSE_OVERSIGHT_014646

US - Gaming, Lodging and Leisure Coverage Cluster BofA Merrill Lynch Investment rating Company ticker Bloomberg symbol Analyst BUY Choice Hotels International CHH CHH US Shaun C. Kelley ClubCorp MYCC MYCC US Shaun C. Kelley Extended Stay America STAY STAY US Shaun C. Kelley Hilton Worldwide HLT HLT US Shaun C. Kelley Hyatt Hotels H HUS Shaun C. Kelley International Game Technology IGT IGT US Barry J. Jonas Intrawest Resorts SNOW SNOW US Shaun C. Kelley Las Vegas Sands LVS LVS US Shaun C. Kelley Marriott International Inc. MAR MAR US Shaun C. Kelley MGM Growth Properties LLC MGP MGP US Shaun C. Kelley MGM Resorts International MGM MGM US Shaun C. Kelley Pinnacle Entertainment PNK PNK US Shaun C. Kelley Red Rock Resorts, Inc. RRR RRR US Shaun C. Kelley Sunstone Hotel Investors SHO SHO US Shaun C. Kelley Vail Resorts, Inc MTN MTN US Shaun C. Kelley NEUTRAL Boyd Gaming Corp BYD BYD US Shaun C. Kelley Hersha Hospitality HT HTUS Shaun C. Kelley La Quinta Holdings LQ LQUS Shaun C. Kelley LaSalle Hotel Properties LHO LHO US Shaun C. Kelley Pebblebrook Hotel Trust PEB PEB US Shaun C. Kelley Penn National Gaming PENN PENN US Shaun C. Kelley Ryman Hospitality Properties RHP RHP US Shaun C. Kelley Wynn Resorts Ltd WYNN WYNN US Shaun C. Kelley UNDERPERFORM Ashford Hospitality Trust AHT AHT US Shaun C. Kelley DiamondRock Hospitality DRH DRH US Shaun C. Kelley FelCor Lodging Trust FCH FCH US Shaun C. Kelley Gaming & Leisure Properties, Inc. GLPI GLPI US Shaun C. Kelley Host Hotels & Resorts Inc. HST HST US Shaun C. Kelley RLJ Lodging Trust RLJ RLJ US Shaun C. Kelley Scientific Games Corporation SGMS SGMS US Barry J. Jonas Summit Hotel Properties INN INN US Shaun C. Kelley 26 Top 10 US Ideas Quarterly | 03 January 2017 Bankof America “> Merrill Lynch HOUSE_OVERSIGHT_014647

US - Banks Coverage Cluster BofA Merrill Lynch Investment rating Company ticker Bloomberg symbol Analyst BUY BankUnited, Inc. BKU BKU US Ebrahim H. Poonawala BB&T Corporation BBT BBT US Erika Najarian Capital Bank Financial Corp. CBF CBF US Erika Najarian Citigroup Inc. C CUS Erika Najarian Citizens Financial Group CFG CFG US Erika Najarian East West Bancorp, Incorporated EWBC EWBC US Ebrahim H. Poonawala FCB Financial Holdings, Inc FCB FCB US Ebrahim H. Poonawala First Republic Bank FRC FRC US Erika Najarian Great Western Bancorp Inc GWB GWB US Ebrahim H. Poonawala Huntington Bancshares Inc. HBAN HBAN US Erika Najarian IBERIABANK Corp IBKC IBKC US Ebrahim H. Poonawala JPMorgan Chase & Co. JPM JPM US Erika Najarian Key Corp KEY KEY US Erika Najarian Signature Bank SBNY SBNY US Ebrahim H. Poonawala SunTrust Banks, Inc. STl STIUS Erika Najarian SVB Financial Group SIVB SIVB US Ebrahim H. Poonawala Texas Capital Bancshares Inc. TCBI TCBI US Ebrahim H. Poonawala The PNC Financial Services Group, Inc. PNC PNC US Erika Najarian UMB Financial Corporation UMBF UMBF US Ebrahim H. Poonawala Wells Fargo & Company WEC WEC US Erika Najarian NEUTRAL Associated Banc-Corp ASB ASB US Ebrahim H. Poonawala Banc of California BANC BANC US Ebrahim H. Poonawala Comerica Incorporated CMA CMA US Erika Najarian Commerce Bancshares Inc. CBSH CBSH US Ebrahim H. Poonawala Fifth Third Bank FITB FITB US Erika Najarian First Bancorp Puerto Rico FBP FBP US Ebrahim H. Poonawala First Hawaiian Inc. FHB FHB US Ebrahim H. Poonawala First Horizon National Corp. FHN FHN US Ebrahim H. Poonawala Franklin Financial Network, Inc. FSB FSB US Ebrahim H. Poonawala Hancock Holding HBHC HBHC US Ebrahim H. Poonawala New York Community Bancorp NYCB NYCB US Ebrahim H. Poonawala Regions Financial RF RF US Erika Najarian Synovus Financial Corp. SNV SNV US Ebrahim H. Poonawala U.S. Bancorp USB USB US Erika Najarian Zions Bancorp ZION ZION US Erika Najarian UNDERPERFORM Bank of Hawaii Corp. BOH BOH US Ebrahim H. Poonawala Cullen/Frost Bankers Inc CFR CFRUS Ebrahim H. Poonawala M&T Bank MTB MTB US Erika Najarian Prosperity Bancshares Inc PB PBUS Ebrahim H. Poonawala TCF Financial Corp. TCB TCB US Ebrahim H. Poonawala Disclosures Important Disclosures Equity Investment Rating Distribution: Aerospace/Defense Electronics Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 23 50.00% Buy 19 82.61% Hold 13 28.26% Hold 8 61.54% Sell 10 21.74% Sell 9 90.00% Equity Investment Rating Distribution: Banks Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 81 43.55% Buy T4 91.36% Hold 45 24.19% Hold 4 91.11% Sell 60 32.26% Sell 56 93.33% me peorlgalinll Top 10 US Ideas Quarterly | 03 January 2017-27 HOUSE_OVERSIGHT_014648

Equity Investment Rating Distribution : Energy Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 105 46.67% Buy 88 83.81% Hold 54 24.00% Hold 48 88.89% Sell 66 29.33% Sell 49 14.24% Equity Investment Rating Distribution: Financial Services Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 113 46.89% Buy 89 18.76% Hold 66 27.39% Hold 55 83.33% Sell 62 25.13% Sell 40 64.52% Equity Investment Rating Distribution: Gaming Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 24 54.55% Buy 16 66.67% Hold 14 31.82% Hold 6 42.86% Sell 6 13.64% Sell 1 16.67% Equity Investment Rating Distribution: Health Care Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 134 54.92% Buy 100 14.63% Hold 59 24.18% Hold 38 64.41% Sell 51 20.90% Sell 23 45.10% Equity Investment Rating Distribution: Industrials/Multi-Industry Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 38 55.07% Buy at 71.05% Hold i 10.14% Hold 4 57.14% Sell 24 34.78% Sell 15 62.50% Equity Investment Rating Distribution: Technology Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 113 56.50% Buy 82 12.57% Hold 40 20.00% Hold 32 80.00% Sell 47 23.50% Sell 28 59.57% Equity Investment Rating Distribution: Transport/Infrastructure Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 3 49.66% Buy 53 12.60% Hold 35 23.81% Hold 21 60.00% Sell 39 26.53% Sell 19 48.72% Equity Investment Rating Distribution: Utilities Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 58 46.03% Buy 45 17.59% Hold 34 26.98% Hold 29 85.29% Sell 34 26.98% Sell 20 58.82% Equity Investment Rating Distribution: Global Group (as of 30 Sep 2016) Coverage Universe Count Percent Inv. Banking Relationships* Count Percent Buy 1553 49.44% Buy 1130 12.16% Hold 730 23.24% Hold 538 13.10% Sell 858 27.32% Sell 514 59.91% * Issuers that were investment banking clients of BofA Merrill Lynch or one of its affiliates within the past 12 months. For purposes of this Investment Rating Distribution, the coverage universe includes only stocks. A stock rated Neutral is included as a Hold, and a stock rated Underperform is included as a Sell. FUNDAMENTAL EQUITY OPINION KEY: Opinions include a Volatility Risk Rating, an Investment Rating and an Income Rating. VOLATILITY RISK RATINGS, indicators of potential price fluctuation, are: A - Low, B - Medium and C - High. 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Investment rating Total return expectation (within 12-month period of date of initial rating) Ratings dispersion guidelines for coverage cluster* Buy = 10% < 10% Neutral = 0% = 30% Underperform NIA = 20% *Ratings dispersions may vary from time to time where BofA Merrill Lynch Research believes it better reflects the investment prospects of stocks in a Coverage Cluster. INCOME RATINGS, indicators of potential cash dividends, are: 7 - same/higher (dividend considered to be secure), 8 - same/lower (dividend not considered to be secure) and 9 - pays no cash dividend. Coverage Cluster is comprised of stocks covered by a single analyst or two or more analysts sharing a common industry, sector, region or other classification(s). A stock’s coverage cluster is included in the most recent BofA Merrill Lynch report referencing the stock. Price charts for the securities referenced in this research report are available at http://pricecharts.baml.com, or call 1-800-MERRILL to have them mailed. 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