EFTA01177187.pdf

Global Equity Research A-ric-cas UBS Investment Research UBS Business Jet Survey Sector Comment Index Declines Along with Weaker Macro 30 May 2012 • Index at 43, down 13% weercubscominvestmentresearch Our latest Business Jet Market Index came in at 43. down 13% and reversing most of the improvement seen in ow prior survey from March. All three of our market segment indices moved lower with large cabin down the most. Our straight up measure of absolute business conditions came in at 4.2, 6% below recent peak at David E. Strauss 4.5 in March. Anatyst [email protected] • Customer interest improvement slows +1212.7136185 Four out of five component scores moved lower with declines in our customer Darryl Genovesi interest and outlook scores driving the majority of the drop in our index, partially Analyst offset by continued inventory improvement. While lower from our prior survey. [email protected] +1212.7134016 interest and outlook scores remain above 50. indicating incremental improvement. Matthew Akers • North America remains relatively strong Associate Analyst Our overall customer interest score moved 19% lower to 56 with lower scores [email protected] across all regions. Customer interest continues to improve the most in North +1212.7134881 America (64) followed by Latin America (60) and Asia (59) while deteriorating in the Middle East (48) and Europe (30). • See positive risk-rewards for stocks Despite weakness in our survey, we continue to believe North American bizjet market is improving, driven by replacement demand postponed during the downturn. We still see positive risk-rewards as we don't think stocks incorporate much for bizjets at current levels including Buy rated TXT/COLJGD. Chart 1: UBS Business Jet Market Index Chart 2: Overall Business Conditions Score 100 250 10 200 150 45- . t 0 50 444444444VV" tie I SSSfl S! !. UBS Business Jet market Index — • Rai Port IRKS) M411 114 • Srnple average BSDIG0ITXT sloth price pedonnance ilex ratite to SAP 500 Source: UBS Business Jet Survey Source: UBS Business Jet Survey This report has been prepared by UBS Securities LLC ANALYST CERTIRCAllON AND REQUIRED DISCLOSURES BEGIN ON PAGE 18. UBS does and seeks to do business with companies covered in its research reports. Asa 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. EFTA01177187 UBS ButesJet Survey 30 May 2012 Business Jet Market Survey Ow UBS Business Jet Market Survey is designed to provide timely market data supplied directly by industry professionals. We regularly survey a group of US domestic and international broker/dealers, manufacturers, fractional providers, financiers and others, from whom we recently received 162 responses. Investment Conclusion Our latest Business Jet Market Index came in at 43, 13% lower than ow prior survey in March on slowing incremental improvement in customer interest/outlook along with still weak pricing. The decline in our Index reverses the improvement seen in March with all three of our market segment indices lower with large cabin down the most. Ow straight up measure of absolute business conditions came in at 4.2, 6% below recent peak at 4.5 in March. Four out of five component scores moved lower with large declines in our customer interest and outlook scores driving the majority of the drop in ow index, partially offset by continued inventory improvement. While lower from ow prior survey, ow interest and outlook scores remain above 50, indicating incremental improvement. Our customer interest score moved 19% lower to 56, slightly above 50 still indicating improving customer interest. Our young inventory score, not a component of our index, moved 2% higher this time to 43, still indicative of oversupply of high•quality young used aircraft. Our financing score, also not a component of our index, moved 9% lower, but remains above 50 reflecting improved financing availability. Table 1: UBS Business Jet Survey Results and Comparison to Prior Survey Component Better Same Worse Score Last Time Change Customer Interest 27% 58% 15% 56 70 -19% Pricing 7% 60% 33% 37 42 -12% 12 Month Outlook 43% 46% 11% 66 75 -12% Inventory Lewis 3% 34% 63% 20 18 13% Wilingness 19% 49% 32% 44 51 14% Composite Index 17% 51% 32% 43 49 •13% Young kweraory 21% 44% 35% 43 42 2% Financng 19% 72% 9% 55 61 -9% Business Conditions nta Ma tea 0.2 4.5 4% Source: UBS Business Jel Survey UBS 2 EFTA01177188 UBS Business Jet Survey 30 May 2012 UBS Business Jet Market Index Our UBS Business Jet Market Index is a proprietary index designed to measure the total "value" of the responses to our survey questions. We have weighted each factor in our index based on our perception of its overall importance to the condition of the new business jet market. Our index is scored on a scale of zero to 100, with 51.100 representing incrementally strengthening market conditions, 50 incrementally stable, and 0-49 incrementally weakening market conditions. Our May Business Jet Market Index came in at 43, 13% lower than our prior survey in March. Chart 3: UBS Business Jet Market Index 100 3 ! M .7,—„W IF;;:—, - 8C -- I 'cl3 ? 0 1 11011 1 1111 31 1 1 t 1- . . 4 11/ III "15 11111111ffill 444$404W4WW46714467c443.4c4c4c0VihrogWe 2e 22.” at li m8g 2 2 -0)=---0)=--0)=-- 2-0)=-.- -(O=O--2-(O=---c satmassatassats*zsepa-sssn's*stflt§aii.m m z'- -mk - =-O Smuts: UBS Business Jel Survey Market Segment Indices All three of our market segment indices declined with our small cabin index decreasing 12% to 43 (from 49), midsize decreasing 13% to 44 (from 51) and large cabin decreasing 17% to 40 (from 48). Chart 4: Market Segment indices, by Cabin Class 60 50 40 30 20 10 0 0 0 0 0 <V CM 0 z A 2 2 4 2 2 2 2 -Survey Wes —0— Small -A- Midsize —0— I-010 Source: UBS Business Jel Survey UBS 3 EFTA01177189 UBS Business Jar Survey 30 May 2012 Survey Participant Profile Of the 162 market professionals who responded to our survey, a majority (62%) are broker/dealers. Brokers/dealers are involved in the purchase and sale of both new (direct from manufacturer) and used aircraft, often purchasing on spec. Chart 5: Business Jet Market Survey- Participant Role Other 10% Manufacturer 9% Financier Dealearolter 19% 62% Note: Other inctides appraisers. Tractional providers. management. charter. FBO and MRO service providers. Sauce: UBS Business Jet Survey The majority of our participants are located in North America (72%) with an additional 19% in Europe. Chart 6: Business Jet Market Survey - Participant Location Asia & Pacifc 2% Lath America 0 4% Middle Eas1 & Mica Nan Amiga % 72% Europe 19% Source: UBS Business Jet Survey MIS 4 EFTA01177190 UBS Butes Jet Survey 30 May 2012 While the majority of our survey participants are located in the U.S.. most transact a significant proportion of their business with foreign customers. Chart 7: Proportion of Business Transacted Outside the US None 9% Less tan 25% 31% Z5-50% 16% Source: UBS Business Jel Survey Respondents varied fairly uniformly in average transaction size with the majority in the S5-20 million range. Chart 8: Business Jet Market Survey • Average Transaction Size 630M+ 5% $2031:14 603M S10•2061 32% 5510M 21% Source: UBS Business Jel Survey UBSs EFTA01177191 UBS Business Jet Survey 30 May 2012 Survey Results Overall Business Conditions In the first question, we asked, "On a scale of zero to 10, how would you characterize overall business conditions after factoring typical seasonally (0 = the worst ever, 5 = normal, 10 = the best ever)?" Note that while our Business Jet Market Index (discussed earlier) indicates incremental change from the prior period, this question is meant to measure the absolute level of business conditions. We received 160 responses (two participants did not respond to this question) with scores ranging from zero to eight. Chart 9: Indication of Overall Business Conditions, Play 2012 35% - 29% 26% 16% 14% 6% 4% 5% - 2% 1% I I 1% 0% 0% 0% la m 0 1 2 3 4 5 6 7 8 9 10 Business ConOibons Rank Source: UBS Business Jel Survey Overall, our average business conditions score came in at 4.2, 6% lower from ow prior survey in March. Chart 10: Overall Business Conditions 10 Overall Business Conditions " co p ca - coNNioN ANA coca N ia - Mon No NI COCO o 0" tn e e" - ^ 1- 0.4 . " 4=I :3 = l1 ; ;II vv 0 1 1 11 I agg8888W4SS'Sgaggs,glos,SSSS e SSSO:SS a aricac c ------ """ nat a k1S 8 t a X 4 aN A X•548 A4E 4 a li30)0 2"ag 44 1gaaS R OSank "coz-.22 (nz-.22coz-.22-.corts. -“nz0-.22 coz-222 z-222 z-222 Scarce: UBS Business Jel Survey UBS 6 EFTA01177192 UBS Business Jet Survey 30 May 2012 Customer Interest In the next question, we asked, "Since our last survey in March, the level of customer interest improved, stayed the same or deteriorated?" Of the 162 responses (all participants responded to this question), 27% indicated that customer interest had improved, while 15% indicated that customer interest had deteriorated. The remaining 58% indicated that customer interest had stayed the same. This result is worse than our prior survey, in which 48% indicated that customer interest had improved, 8% indicated customer interest had deteriorated and 44% indicated that customer interest had stayed the same. Chart 11: Indication of Customer Interest, May 2012 Detenoraied 15% Improved 27% Stayed IP.e same 58% Scum: UBS Business Jon Survey Our customer interest score decreased 19% to 56, but remained above the 50 mark indicating incremental improvement. Chart 12: UBS Business Jet Survey Score - Customer Interest 100 e r m,mmg m $,0(0 mm Cm 22 2„, 50 O ca 0 .. 77cdc''"' .'5:*.8424) 22WS."4:t8C3roj ra ra ra co2; 2 2r4841$88$°"=1"'T'al . =itatiaCa,tateziAtAzdtaflattaS4.14.ASSA.tato zatte-aF'ia Source: UBS Business Jai Survey UBS 7 EFTA01177193 UBS Business Jel Survey 30 May 2012 Customer Interest by Region Our overall customer interest score moved 19% lower to 56 including declines across all regions. Customer interest continues to improve the most in North America (64) followed by Latin America (60) and Asia (59), while deteriorating in the Middle East (48) and Europe (30). Chart 13: Customer Interest Score by Region and Comparison to Prior Survey 66 59 53 North America Europe Latin America Middle East Asia ■ Nor Survey ■ Current Survey Source: UBS Business Jet Survey Customer Interest by Cabin Class In the next question, ow participants were asked to indicate the class of aircraft in which they were seeing the most interest from potential buyers. Respondents were asked to choose from large Cabin, Midsize Cabin or Small Cabin. Of the 123 responses (39 participants did not respond to this question), 69% indicated they were seeing the strongest interest in large cabin aircraft, with 17% indicating midsize and 14% indicating small cabin. Compared to our prior survey, this reflects slightly more interest in large cabin relative to small. Chart 14: Cabin Class with Most Buyer Interest, May 2012 Small Cabin 14% Midsize Cabin 17% • Large Cabe Source: UBS Business Jet Survey UBS 8 EFTA01177194 UBS Business Jet Survey 30 May 2012 Pricing In the next question, we asked, "Since our last survey in March, overall pricing levels increased, stayed the same, or decreased?' Of the 145 responses (17 participants did not respond to this question), 7% indicated that pricing levels had increased, while 33% indicated that pricing levels had decreased. The remaining 60% indicated that pricing levels had stayed the same. These results are weaker from our prior survey in March in which 9% indicated that pricing levels had increased, 25% indicated that pricing levels had decreased, and the remaining 66% indicated that pricing levels had stayed the same. Chart 15: indication of Pricing, May 2012 Increased I 7% Decreased 33% AI/Stayed1hp same 60% Source: UBS Business Jon Survey Our pricing score came in at 37, 12% lower from our prior survey in March. Chart 16: UBS Business Jet Survey Score- Pricing 100 E co co ffi u C l VG r An°44 A ;71A RZ; A th 0 ea a C4 CV 44g *48 $484484W 1WiriM444440$S!s Sa acc MPWA14200241A1A1.0-inAAWAIAgrajAWEijAn Source: UBS Business Jet Survey UBS 9 EFTA01177195 UBS BusinessJai Survey 30 May 2012 Pricing by Cabin Class In the next question, our participants were asked to indicate the cabin class of aircraft in which they were seeing the strongest pricing. Respondents were asked to choose from Large Cabin, Midsize Cabin or Small Cabin. Of the 125 responses (37 participants did not respond to this question), 82% indicated they were seeing the strongest pricing in large cabin aircraft, with 9% indicating midsize and 9% indicating small cabin. Compared to our prior survey, this reflects stronger pricing for small cabin relative to large and midsize. Chart 17: Cabin Class with Strongest Pricing, May 2012 Small Cabin 9% 1111 Midsize Cabei 9% Large Cabin 92% Source: UBS Business Jon Survey U13S10 EFTA01177196 UBS Business Jet Survey 30 May 2012 12-Month Outlook In the next question, we asked, "Over the next 12 months, do you expect overall business conditions to improve, stay the same or deteriorate'?" Of the 158 responses (4 participants did not respond to this question), 43% expect business conditions to improve, while 11% expect business conditions to deteriorate. The remaining 46% expect business conditions to stay the same over the next 12 months. These results are weaker than our prior survey in which 56% expected business conditions to improve, 6% expected business conditions to deteriorate and 38% expected business conditions to stay the same. Chart 18: 12-Month Forward Outlook for Business Conditions, May 2012 Detenorale 11% Improve 43% Sty he same 46% Source: UBS Business Jel Survey Our 12-month outlook score came in at 66 this time, 12% lower than in our prior survey, although still well above 50 indicating that on average our survey participants expect business conditions to improve over the next 12 months. p„..„,,,, Chart 19: UBS Business Jet Survey Score -12-Month Outlook 100 ... co ,,m Iav, , RRUM _I,,gann 0 7 ,, o,, 0 0 I I SSS wom 6. a t% m.,mm Iii Ilii) SSS a. r Illili:lil 111111' Jiiiiiii ''1:3 zi 1111111 .1 Soc •L c? ac cp S8Sc b.> all e2c08$88$'===== a. 2 , a ;..-a wz,mm ,8=,=.- al ----- — Et, a ir_,EA -s• `-""" me cfr z,mm Source: UBS Business Jel Survey UBS11 EFTA01177197 UBS Business Jet Survey 30 May 2012 Overall Inventory Levels In the next question, we asked, "How would you characterize current inventory levels?" In this question, we targeted broker/dealers, but in some cases, other participants also responded. The survey participants were asked to select "high", "average", or "low." Of the 122 responses (40 participants did not respond to this question), 3% believe inventory levels are low, while 63% believe inventory levels are high. The remaining 34% believe inventory to be at average levels. These results are slightly better than our prior survey in March in which 3% believed inventory levels were low, 67% believed inventory levels were high and the remaining 30% believed inventory to be at average levels. Chart 20: Indication of Inventory Levels, May 2012 Law 3% I Average - 34% Mgh 63% Sauce: UBS Business Jet Sway Our inventory score came in at 20 this time, 13% higher from our prior survey in March. but continues to reflect high overall inventory levels. Chart 21: UBS Business Jet Survey Score - Inventory Levels 0 `O 0 50 - 0 iiiIll 1101111111111J assosoosssss6- , a. s - 3 040M Wriaa a w-,040., Scarce: UBS Business Jet Survey s,-a a. a we NZ 676-6-6-6-sss8s a 6. w0040M0.2 - .2MCOZ 6 6. . 000°M - )MM - 3NZ3LL j likrmemewn'mmm - /WZO a .1 = a - M-300a.aM-3 - )Ma oCa NZ -3 .Wa gala s88"=m`="- ------""- s--a .ata. m a M-300M,M mm ,-.,-,,,,_ mg a•-a 'a 3a a 4• UBS 12 EFTA01177198 UBS Business Jet Survey 30 May 2012 Young Inventory Levels In the next question, we asked, "How would you characterize current inventory levels of relatively young used aircraft?" In this question, we targeted broker/dealers, but in some cases, other participants also responded. The survey participants were asked to select "high", "average", or "low." Of the 124 responses (38 participants did not respond to this question), 21% believe young inventory levels are low, 35% believe young inventory levels are high, and the remaining 44% believe young inventories to be at average levels. These results are slightly better than our prior survey in which 20% believed young inventory levels were low, 36% believed young inventory levels were high and 44% believed young inventories to be at average levels. Chart 22: Indication of Young Inventory Levels, May2012 Average 44% Scarce: UBS Business Jel Survey Our young inventory score at 43 continues to reflect oversupply of high•quality, young used aircraft. Chart 23: UBS Business Jet Survey Score - Young Used Inventory Levels 100 -191 88 90 87 91 90 P8 77 Young Inventory Score 64 47 43 4O-42At 50 - 32 32 35 K 25 27 22 23 23 25 12 14 2° 2° 8 6 4 4 4 0 coo 8N-88r- 8 8 8 " 4 • • ir: • • • 4/"1 " 255- z fl t 5'ArR4gl Ag4 4 4 A g44; 8 z"mm" a z 5 mm Source: UBS Business Jel Survey UBS 13 EFTA01177199 UBS BusinessJet Survey 30 May 2012 Willingness to Increase Inventories In the next question, we asked, "Over the next month, will you be more or less willing to increase your inventory?" In this question, we again targeted broker/dealers, but in some cases, other participants also responded. The survey participants were asked to select "more willing", "same", or "less willing." Of the 88 responses (74 participants did not respond to this question), 19% indicated they would be more willing to take on inventory, while 32% indicated they would be less willing to take on inventory. The remaining 49% indicated no change in their willingness to take on inventory. These results are weaker than ow prior survey, in which 25% indicated they would be more willing to take on inventory, 22% indicated they would be less willing and 53% indicated no change in their willingness to take on inventory. Chart 24: Willingness to Increase Inventory Levels, May 2012 More warp Less wiling 19% 32% Same 49% Scurce: UBS Business Jel Survey Our willingness score decreased 14% to 44 this time, below the 50 mark indicating that participants are less willing to take on additional inventory compared to our prior survey in March. Chart 25: UBS Business Jet Survey Score - Willingness to Increase Inventory Levels 100 2 5° IIIIIIIIIIIIIIIIIIIIC64111►i11 88a:328228ss s , s-88688882222rnssa:ssa:°°°°°`:° 4104k41010040W1010),WIMAPIAgpging Scurce: UBS Business Jel Survey UBS 14 EFTA01177200 UBS ButesJet Survey 30 May 2012 Customer Financing In the next question, we asked, "Since our last survey in March. has the availability of customer financing improved, stayed the same, or deteriorated?" Of the 149 responses (13 participants did not respond to this question), 19% indicated that customer financing conditions had improved, while 9% indicated that financing conditions had deteriorated. The remaining 72% indicated that financing conditions had stayed the same. These results are weaker than our prior survey, in which 25% indicated financing conditions had improved, 4% indicated financing conditions had deteriorated and 71% indicated no change in financing conditions. Chart 26: Financing Conditions, May 2012 Deteriorated Improved 9% 19% Stayed Ire same 72% Source: UBS Business Jet Survey Our financing score came in at 55 this time, 9% below our previous survey but above the 50 mark indicating incremental improvement. Chart 27: UBS Business Jet Survey Score - Financing 100 57 58 60 60 60 60 58 61 53 55 M 55 63 63 58 53 50 53 53 55 se 41 0 41 77 . E$$ "a77a7 a a a =. 6 a g; mu's t 8 t• Scums: UBS Business Jet Survey UBS 15 EFTA01177201 UBS ButesJet Survey 3D May 2012 Commentary The following are selected comments from business jet professionals. Overall Business Conditions ■ Mixed signals in the market. Recovery is even slower than forecast. ■ The Hawker Beechcraft bankruptcy is not good for our industry. ■ Markets stable to slightly improving. ■ Although inventory is high by historical standards, more than half is older equipment that may in fact be already "retired". ■ Really no change — we're just bumping along the bottom. ■ It seems like the turboprop market is gaining some momentum. Maybe it will eventually give the low end jet market some momentum. ■ Expect the resale market to remain soft into 2013. Aircraft Values / Pricing ■ Older jets have seen their values plummet, but on the flip side that represents amazing value to buyers in that segment. Good airplanes, priced right are selling. ■ Older aircraft continue to decrease in value. Near new aircraft are in strong demand and have the highest prices. ■ Pricing remains flat in most markets as interest has increased but demand is still very price sensitive. ■ Buyers are very focused on operating cost and future investments. ■ Extremely low prices are very attractive. We expect 8-10 year old large cabin aircraft on average will cost 50% more in 5 years time. Customer Interest ■ Slight improvement in buyer interest and willingness to complete a transaction. ■ Difficult trading conditions despite interest levels. ■ No buyers. ■ Things are a little quieter in the last two months. ■ Buyer interest is up and people seem more willing to jump into the market. ■ I have noticed pull back in willingness to buy. Buyer activity was much stronger in February and March versus now. Regional Trends ■ The dire economic situation in Europe has caused sales on that continent to suffer, while continued uncertainty in the US and the upcoming election all add to an attitude of extreme caution by would-be buyers. U13S16 EFTA01177202 UBS Business Jet Survey 30 May 2012 ■ Europe continues to be very unstable. ■ Markets seem to be flattening on a global level with good support, but no real growth currently. ■ With the financial situation in France and Southern Europe, Europe seems to be waiting to see what will (eventually) happen. Sub continent Asia still seeing strong customer interest from serious buyers. ■ US market continues to strengthen. Europe is very weak. ■ Fear of impact of Euro zone crisis. ■ Uncertainty in Europe and election year has kept optimism tepid. Financing ■ We are being visited by more banks seeking aircraft finance business; many regional banks seem to have an appetite for it. However, when we delve into what kind of business they are hoping to garner, it's really the A•paper or top quality notes they want to write. ■ Lenders don't want anything to do with older airplanes and it's not worth their time to get involved with deals less than about three million dollars. They are ignoring a huge portion of the market which only serves to depress values of those airplanes. ■ Even though there are more financial institutions in the mix, the overall availability of financing has not improved. ■ I find financing to still be a big problem. ■ Statement of Risk The business jet market is cyclical in nature, largely driven by the general economic environment. Business jet manufacturers' earnings and cash flow are dependent on end•user demand, availability of customer financing, program execution and inventory management. Our estimates, ratings and price targets for General Dynamics, Textron and Rockwell Collins are subject to additional risks including poor program execution and government funding related to their defense and security businesses. Additionally, Textron faces liquidity risks related to it its asset based lending businesses. UB.517 EFTA01177203 UBS Business Jet Survey 30 May 2012 ■ Analyst Certification Each research analyst primarily responsible for the content of this research report. in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner, including with respect to UBS, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. U13318 EFTA01177204 UBS Business Jet Survey 30 May 2012 Required Disclosures This report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS. For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request. UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China Securities Regulatory Commission. UBS Investment Research: Global Equity Rating Allocations UBS 12-Month Rating Rating Category Coverage' IB Servicesa Buy Buy 51% 34% Neutral Hold/Neutral 40% 35% Sell Sell 9% 15% UBS Short-Term Rating Rating Category Coverages IB Services] Buy Buy less than 1% 25% Sell Sell less than 1% 17% 1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. 3:Percentage of companies under coverage globally within the Short•Term rating category. 4:Percentage of companies within the Short•Term rating category for which investment banking (IB) services were provided within the past 12 months. Source: UBS. Rating allocations are as of 31 March 2012. UBS Investment Research: Global Equity Rating Definitions UBS 12-Month Rating Definition Buy FSR is > 6% above the MRA. Neutral FSR is between •6% and 6% of the MRA. Sell FSR is > 6% below the MFtA. UBS Short-Term Rating Definition Buy: Stock price expected to rise within three months from the time the rating was assigned Buy because of a specific catalyst or event. Sell: Stock price expected to fall within three months from the time the rating was assigned Sell because of a specific catalyst or event. UBS 19 EFTA01177205 UBS Business Jet Survey 30 May2012 KEY DEFINITIONS Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of. the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst. indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the ex