EFTA02566454.pdf

From: Jeffrey Epstein <[email protected]> Sent: Wednesday, February 13, 2013 5:48 PM To: Barrett, Paul S Subject: Re: An idea ok On Wed, Feb 13, 2013 at 12:41 PM, Bar=ett, Paul S <I <mailto > wrote:<=r> Jeffrey I do not think we have enough equity ri=k in the portfolio right now. While we feel very good about our mortgages =nd credit exposure, the upside in credit feels limited. Therefore I would like to selectively add some equity exposure with names =hat have underperformed the broader market yet maintain some buffers to pr=tect us on the downside. We recently added Merck to our focus li=t. I think we should consider a Market Plus Note on MRK (Overweight with a=$52 price target) 18 month Greater of the upside or a 3% coup=n so long as we don't finish below 80% at expiry.</=> Would consider $1MM<=span> Background: Merck is the 2nd largest pha=maceutical company globally with a broad portfolio of market-leading medic=nes and vaccines. International revenues represent 62% of total, while the U.S. represents - 38%. Highest selling products include= Singulair (asthma/allergies) and Januvia (diabetes)<=p> • Pullback presents opportunity i= a favored sector (the cheapest defensive sector)<=> - MRK is down -14% over last 4 month= vs. PFE at up 7% and S&P at up 4% EFTA_R1_01731660 EFTA02566454  — Delay in filing of odanacatib, MRK=92s phase III osteoporosis drug and investor concern about upcoming trial =ata have hurt sentiment. We believe this pullback is overdone and at current levels potential downside from upcoming trial info=mation appears limited. • Upcoming pipeline data points e=pected in 2H13 and 2014 provide catalysts and higher EPS growth potential =han peers — MRK has a solid pipeline beyond od=nacatib (suvorexant - insomnia, anacetrapib - cholesterol, PD-1- oncology,=BACE - Alzheimers) as well as healthy core product portfolio (Januvia -diabetes and vaccines). - JPMS LLC expects strong EPS gro=th of - 8% through 2020 • Valuation attractive both versus peers and historical averages; high dividend should support the stock - MRK trades at 11.2x F13EPS vs. 12.=x five-yr avg, PFE at 12.0x and at a 20% discount to larger cap pharma pee=s, despite higher growth potential — 4.2% div yield, which we view as s=stainable given 7.8% FCF yld White line = buffer =span style="font-size:8.0pt;font-family:"Verdana","sans- s=rif";color:#5fSfSf"> =span style="font-size:8.0pt;font-family:"Verdana","sans-s=rir;color:#515f5f">Paul Barrett= I Managing Director I Global Investment Opportunities Group I J.P. Morgan Private =ank I 320 Park Avenue, 14th Floor, New York, NY=10022 I T: (212) 622-2770 <tel:%28212%29%20622-2770> I F: (212) 310-0108 <tel:%28212%29%20310-0108> I [email protected] <mailto:[email protected]> I NMLS ID# 853441 This email is confidential and subject to important disclaimers and conditi=ns including on offers for the purchase or sale of securities, accuracy an= completeness of information, viruses, confidentiality, legal privilege, a=d legal entity disclaimers, available at http://www.jpmorgan.com/pages/=isclosures/email <http://www.jpmorgan.cogpages/disclosures/email> . 2 EFTA_R1_01731661 EFTA02566455 The information containe= in this communication is confidential, may be attorney-client privileg=d, may constitute inside information, and is intended only for the use of the a=dressee. It is the property of Jeffrey Epstein Unauthorized use, di=closure or copying of this communication or any part thereof is strictl= prohibited and may be unlawful. If you have received this communication in error, p=ease notify us immediately by return e-mail or by e-mail to [email protected], =nd destroy this communication and all copies thereof, including all attachm=nts. copyright -all rights reserved 3 EFTA_R1_01731662 EFTA02566456