U.S. Equity Strategy Navigator

U.S. Equity Strategy Navigator April 2021

Strategy | Economics and Strategy

Recent Economic Data Reflects Stimulus and Reopening

The initial policy response to COVID resulted in the shortest recessionary decline

and largest bounce on record. 2021 GDP is forecasted to expand at the fastest

pace in nearly 4 decades and yields have jumped, the result of continued fiscal

actions ($900Bn and $1.9Tn). Government proposals indicate more to come.

Recent ISM readings hit a cycle high 64.7, 916k jobs were created last month

(660k estimate), and consumer confidence has rebounded.

2021 Earnings to Surge

Consensus forecasts are for 23% EPS growth in 2021. We expect a 30%

increase on stronger GDP growth and higher Financials profitability (rising rates,

falling delinquencies). Pricing power should be quite robust on strong demand and

higher commodity prices.

Small Caps and Value Dominated in 1Q

The S&P 500 returned 6.2% in 1Q21 vs. Small Caps at 12.7%. Value topped

Growth (11.3% vs. 0.9%). At the sector level, Financials and Cyclicals bested

Non-Cyclicals and TECH+ (16.0% and 11.3% vs. 3.2% and 2.3%).

10-Year Treasury Yields vs. ISM Manufacturing

Note: Latest ISM represents March reading

Source: Federal Reserve, ISM, Haver Analytics®, Credit Suisse

40

45

50

55

60

65

0.5

1.5

2.5

3.5

12 13 14 15 16 17 18 19 20 21

ISM (Mfg.) ut 10-Year Yield

%

ISM points to

rate upside

5 April 2021

Equity Research

Americas | United States

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS,

LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies 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.

Research Analysts

Jonathan Golub, CFA

212 325 6239

[email protected]

Patrick Palfrey

212 325 7970

[email protected]

Manish Bangard, CFA

212 325 6632 [email protected]

Chandni Chellappa

212 325 2759

[email protected]

Katherine Zhou

212 325 2722 [email protected]

5 April 2021

U.S. Equity Strategy Navigator 2

Inside this Navigator

Market Returns ........................................................................... 3-11

Reopening Recommendations .................................................... 12-15

Rates & Credit Spreads .............................................................. 16-19

Current Market Conditions ............................................................... 20

Market Composition ................................................................... 21-22

Economic Backdrop .................................................................. 23-34

Earnings ................................................................................... 35-46

Valuations ................................................................................ 47-52

The Long-Term Case for TECH+ ............................................... 53-54

Long-Term Trends .................................................................... 55-62

Sources & Uses of Cash ............................................................ 63-65

Leverage .................................................................................. 66-67

Market Returns ......................................................................... 68-70

Credit Suisse Targets & Recommendations ................................. 71-72

Throughout this report: Non-Cyclicals are Health Care, Staples, Utilities,

REITs, and Telecom. Cyclicals are Energy, Materials, Industrials, and Discretionary ex-Internet Retail. TECH+ is the Technology Sector; Internet

Retail within Discretionary; and Interactive Media & Services, Interactive

Home Entertainment, and NFLX from Movies & Entertainment within

Communication Services.

All data and prices as of March 31, 2021 unless otherwise noted.

5 April 2021


Market Returns

Total Return – 1Q21

Source: Standard and Poor’s, Russell, MSCI, FactSet, Credit Suisse

Total Return – 1 Year

Source: Standard and Poor’s, Russell, MSCI, FactSet, Credit Suisse

12.7

11.3

6.2

3.6

2.3

0.9

Russell

2000

Russell

1000

Value

S&P

500

EAFE

(USD)

EM

(USD)

Russell

1000

Growth

%

94.8

62.758.9

56.4 56.1

45.2

Russell

2000

Russell

1000

Growth

EM

(USD)

S&P

500

Russell

1000

Value

EAFE

(USD)

%

Market leadership has been

pro-cyclical in 1Q21, with Small

Caps and Value leading

The gap between Growth and

Value performance has narrowed

substantially

5 April 2021


Market Returns

Total Return – 1Q21

Source: Standard and Poor’s, FactSet, Credit Suisse

Total Return – 1 Year

Source: Standard and Poor’s, FactSet, Credit Suisse

16.0

11.3

3.22.3

Financials Cyclicals Non-Cyclicals TECH+

%

69.3 67.563.3

30.9

Cyclicals Financials TECH+ Non-Cyclicals

%

Market leadership has been

pro-cyclical in 1Q21, with

Financials and Cyclicals leading

Performance for Cyclicals and

Financials is now leading TECH+

on a 12-month basis

5 April 2021


Market Returns

Factor Returns – 1Q21

Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse

Factor Returns – 1 Year


11.5

6.3

4.3

1.0

-2.2-3.4 -3.8

-5.4

Low

P/E

52 Wk

Drawdown

Div

Yield

EPS

Growth

Low

Vol

Sales

Growth

High

ROA

Low

Leverage

%

11.3

4.9 4.23.0

1.5

-1.3

-3.6

-12.7

52 Wk

Drawdown

EPS

Growth

Div

Yield

Sales

Growth

Low

P/E

High

ROA

Low

Leverage

Low

Vol

%

Value and low quality led in 1Q,

while Growth and stability lagged

Over the past year, Growth and

cheapness have outperformed

modestly while stability has

underperformed

5 April 2021


Market Returns

Return Decomposition: Top 5 Stocks vs. Remaining 495 – 1Q21

Note: Largest 5 stocks: AAPL, AMZN, MSFT, GOOGL, FB

Source: Standard & Poor’s, Refinitiv, FactSet and Credit Suisse

Return Decomposition: Top 5 Stocks vs. Remaining 495 Stocks – 1-Year

Note: Largest 5 stocks: AAPL, AMZN, MSFT, GOOGL, FB


13.2

9.4

-11.6

-1.9

0.1

7.3

Top 5 S&P 500

ex-Top 5

Top 5 S&P 500

ex-Top 5

Top 5 S&P 500

ex-Top 5

% EPS P/E Price Return

31.6

3.8

28.2

44.9

68.7

50.3

Top 5 S&P 500

ex-Top 5

Top 5 S&P 500

ex-Top 5

Top 5 S&P 500

ex-Top 5

% EPS P/E Price Return

The top-5 stocks underperformed

the rest of the market during 1Q,

on a decline in multiples

Over the past year, the top-5

stocks outperformed on stronger

EPS

5 April 2021


Market Returns

Peak to Trough Market Declines around Recessions

Note: Price return

Source: Standard & Poor’s, Haver Analytics®, Credit Suisse

Market Rebound 373 Days post Recessionary Trough

Note: Price return


'66

'68-70

'73-74

'80-82

'90

'00-02

'07-09

'20

-60

-50

-40

-30

-20

-10

0

0 200 400 600 800 1,000

% F

all

# of Days

'20: 78%

'09: 72%

'74: 46%

'70: 42%'90: 34%'02: 33%

'66: 30%

'82: 60%

Rebound %

# of Days0 373

%

The market’s -34% decline from

peak to trough was both

short-lived and modest relative to

other downturns

The market’s post-trough rebound

outpaced all similar recovery

periods since the 1960s

5 April 2021


Market Returns

Daily Market Moves


# of Trading Days

Year >1% >2% All-Time Highs

2007 65 17 9

2008 134 72 0

2009 117 55 0

2010 76 22 0

2011 96 35 0

2012 50 6 0

2013 38 4 45

2014 38 6 53

2015 72 10 10

2016 48 9 18

2017 8 0 62

2018 64 20 19

2019 37 7 35

2020 109 44 33

2021 18 3 15

Avg: 2007 - 2020 68 22 20

The S&P 500 continues to hit new

highs

5 April 2021


Market Returns

S&P 500 vs. High Yield Spreads

Source: Standard & Poor’s, the BLOOMBERG PROFESSIONAL™ service , Credit Suisse

S&P 500 vs. Inflation Expectations (10-Year Breakeven)

Source: Federal Reserve, Standard & Poor’s, Haver Analytics®, Credit Suisse

2.0

4.0

6.0

8.0

10.0

12.0

2,200

2,600

3,000

3,400

3,800

4,200

Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21

t S&P 500

CS HY Spread (Inverted) u

0.5

1.0

1.5

2.0

2.5

2,200

2,700

3,200

3,700

4,200

Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21

t 10-Yr Breakeven

S&P 500 u

Stocks tend to move inversely

with credit spreads.

The relationship between stock

prices and credit is much tighter

than with the general level of

interest rates

There is a very strong relationship

between inflation expectations

and stock prices

5 April 2021


Market Returns

S&P 500 vs. Oil

Source: Standard & Poor’s, the BLOOMBERG PROFESSIONAL™ service , Credit Suisse

S&P 500 vs. Copper

Source: Federal Reserve, Standard & Poor’s, Haver Analytics®, Credit Suisse

0

15

30

45

60

75

2,200

2,600

3,000

3,400

3,800

4,200


t S&P 500WTI u

$/Barrel

2.0

2.4

2.8

3.2

3.6

4.0

2,200

2,600

3,000

3,400

3,800

4,200

Dec-19 Mar-20 Jun-20 Sep-20 Dec-20

t S&P 500

Copper u

$/Lb

Stocks respond positively to

higher commodity prices

5 April 2021


Market Returns

Average Daily S&P 500 Return on Up/Down Rate Days – Past Year

Source: Standard and Poor’s, Federal Reserve, Haver Analytics®, FactSet, Credit Suisse

Cyclical Sectors and CAI Index – 3 Month Rolling Returns

Source: Standard and Poor’s, Russell, Federal Reserve, Haver Analytics®, FactSet, Credit Suisse

0.45

-0.27

0.49

-0.35

0.39

-0.12

-0.35

0.53 0.54

-0.42

Up Down Up Down Up Down Up Down Up Down

10-Year Copper Oil HY Spread Cyclical

Acceleration Index

-60

-30

0

30

60

-36

-24

-12

0

12

24

05 10 15 20

Cyclical Sectorsu

t CAI Index

%60

-60

Stocks move in the same

direction as rates and

commodities, and the opposite

direction of spreads

The Cyclical Acceleration Index

(CAI) provides a real time

indication of economic

expectations and is based on

rising Treasury yields and

commodity prices (copper and oil),

and falling credit spreads

5 April 2021


Reopening Recommendations

Stocks by Exposure to Cyclical Acceleration Index (CAI) – ENERGY Sector

Source: Standard and Poor’s, Russell, Federal Reserve, EIA, CME, WSJ, Haver Analytics®, Credit Suisse

Stocks by Exposure to Cyclical Acceleration Index (CAI) - MATERIALS Sector


Ticker Company Name Ticker Company Name Ticker Company Name

CLR Continental Resources BKR Baker Hughes AM Antero Midstream

DVN Devon Energy COP ConocoPhillips COG Cabot Oil & Gas

FANG Diamondback Energy EOG EOG Resources CVX Chevron

HAL Halliburton HFC HollyFrontier EQT EQT (US)

HES Hess OKE ONEOK ETRN Equitrans Midstream

HP Helmerich & Payne PXD Pioneer Natural Resources KMI Kinder Morgan

MRO Marathon Oil SLB Schlumberger LNG Cheniere Energy

MUR Murphy Oil TRGP Targa Resources PSX Phillips 66

OXY Occidental Petroleum VLO Valero Energy WMB Williams Cos

XEC Cimarex Energy XOM Exxon Mobil

Super-Cyclical Cyclical Less-Cyclical


ALB Albemarle AMCR Amcor ARD Ardagh Group

CBT Cabot APD Air Products & Chemicals ATR AptarGroup

CC Chemours ASH Ashland Global Holdings BLL Ball Corp

CE Celanese AVY Avery Dennison ECL Ecolab

CF CF Industries AXTA Axalta Coating Systems GPK Graphic Packaging Holding

DOW Dow BERY Berry Global Group GRA W R Grace

EMN Eastman Chemical CCK Crown MLM Martin Marietta Materials

ESI Element Solutions CTVA Corteva NEM Newmont Corp

FCX Freeport-McMoRan DD DuPont de Nemours NEU NewMarket

HUN Huntsman EXP Eagle Materials RGLD Royal Gold

LYB LyondellBasell Inds NV FMC FMC RPM RPM

MOS Mosaic IP Intl Paper SEE Sealed Air

NUE Nucor LIN Linde SHW Sherwin-Williams

OLN Olin PKG Packaging of America SLGN Silgan

SCCO Southern Copper PPG PPG Industries SMG Scotts Miracle-Gro

STLD Steel Dynamics RS Reliance Steel & Aluminum SON Sonoco Products

WLK Westlake Chemical VVV Valvoline VMC Vulcan Materials

WRK WestRock


5 April 2021



Stocks by Exposure to Cyclical Acceleration Index (CAI) - INDUSTRIALS Sector



AAL American Airlines Group ACM AECOM ALLE Allegion

ADT ADT ALSN Allison Transmiss Hldgs AWI Armstrong World Inds

AGCO AGCO AME AMETEK BAH Booz Allen Hamilton Hldg

AL Air Lease AOS A. O. Smith BWXT BWX Technologies

ALK Alaska Air Group AXON Axon Enterprise CACI CACI

AYI Acuity Brands CLH Clean Harbors CHRW C.H. Robinson Worldwide

BA Boeing CMI Cummins CLGX CoreLogic

CAT Caterpillar CSX CSX CPRT Copart

CFX Colfax CTAS Cintas CSGP CoStar Group

CPA Copa DCI Donaldson CSL Carlisle Cos

CR Crane DE Deere & Co EFX Equifax

CW Curtiss-Wright DOV Dover Corp /IL EXPD Expeditors

DAL Delta Air Lines FBHS Fortune Brands Home & Sec FAST Fastenal

EAF GrafTech Intl FDX FedEx FCN FTI Consulting

EMR Emerson Electric FTV Fortive GD General Dynamics

ETN Eaton GNRC Generac GGG Graco

FLS Flowserve HON Honeywell International GWW WW Grainger

GE General Electric HUBB Hubbell HEI HEICO

GTES Gates Industrial HXL Hexcel HII Huntington Ingalls

HWM Howmet Aerospace IAA IAA IEX IDEX

IR Ingersoll Rand ITW Illinois Tool Works JBHT JB Hunt Transport Svcs

ITT ITT J Jacobs Engineering JCI Johnson Ctr Int

KEX Kirby JBLU JetBlue KNX Knight-Swift Transportation Holdings

LYFT Lyft KSU Kansas City Southern /US LDOS Leidos

MAN ManpowerGroup LECO Lincoln Electric LHX L3Harris Technologies

NVT nVent Electric LUV Southwest Airlines LII Lennox

OSK Oshkosh MIC Macquarie Infrastructure LMT Lockheed Martin

PH Parker-Hannifin MIDD Middleby LSTR Landstar System

R Ryder System MMM 3M MAS Masco

RHI Robert Half MSA MSA Safety MRCY Mercury Systems

ROK Rockwell Automation NDSN Nordson MSM MSC Industrial Direct

RTX Raytheon Technologies NSC Norfolk Southern NLSN Nielsen Hld

SPR Spirit AeroSystems Hldgs OC Owens Corning NOC Northrop Grumman

ST Sensata Technologies Hldg ODFL Old Dominion Freight Line ROL Rollins

SWK Stanley Black & Decker PCAR PACCAR ROP Roper Technologies

TDG TransDigm Group PNR Pentair RSG Republic Services

TKR Timken Co PWR Quanta Services SAIC Science Applications Intl

TRN Trinity Industries SNA Snap-On SNDR Schneider National

TXT Textron SRCL Stericycle TT Trane Technologies

UAL United Airlines Holdings TDY Teledyne Technologies TTC Toro Co

UNVR Univar Solutions TREX Trex UHAL AMERCO

URI United Rentals TRU TransUnion UPS United Parcel Service

VMI Valmont Industries UBER Uber Tech VRSK Verisk Analytics

WWD Woodward UNP Union Pacific WM Waste Management

XPO XPO Logistics WAB Wabtec WSO Watsco

XYL Xylem


5 April 2021



Stocks by Exposure to Cyclical Acceleration Index (CAI) – TECH+ Sector (1 of 2)



ADS Alliance Data Systems AAPL Apple ACN Accenture

ADSK Autodesk ADBE Adobe ADP ADP

AMAT Applied Materials ADI Analog Devices AKAM Akamai Technologies

ARW Arrow Electronics ANET Arista Networks AMZN Amazon com

CDAY Ceridian ANSS ANSYS ATVI Activision Blizzard

CGNX Cognex APH Amphenol AZPN Aspen Technology

COHR Coherent AVGO Broadcom BKI Black Knight

COMM CommScope Holding AVLR Avalara BR Broadridge Financial Sol

DXC DXC Technology AVT Avnet CDK CDK Global

EEFT Euronet Worldwide AYX Alteryx CIEN Ciena

ENPH Enphase Energy CDNS Cadence Design Systems CTSH Cognizant Tech

ENTG Entegris CDW CDW CTXS Citrix Systems

FLT FLEETCOR Technologies COUP Coupa Software DBX Dropbox

GLW Corning CRM salesforce com DOX Amdocs Ltd

GRUB GrubHub CRUS Cirrus Logic EA Electronic Arts

HPE Hewlett Packard Enterp CSCO Cisco Systems EBAY eBay

HUBS HubSpot DELL Dell Technolges EVBG Everbridge

IPGP IPG Photonics DLB Dolby Laboratories FB Facebook

KLAC KLA DOCU DocuSign FFIV F5 Networks

LFUS Littelfuse EPAM EPAM Systems FIS Fidelity Natl Info Svcs

LITE Lumentum Holdings ESTC Elastic FISV Fiserv

LRCX Lam Research ETSY Etsy FIVN Five9

MA Mastercard FEYE FireEye G Genpact

MCHP Microchip Technology FICO Fair Isaac GDDY GoDaddy

MKSI MKS Instruments FLIR FLIR Systems GWRE Guidewire Software

MPWR Monolithic Power Systems FSLR First Solar Inc IBM IBM

MRVL Marvell Tech Group FTNT Fortinet Inc IT Gartner

MU Micron Technology GOOGL Alphabet JKHY Jack Henry & Associates

NCR NCR GPN Global Payments JNPR Juniper Networks

NTAP NetApp HPQ HP MDB MongoDB

NTNX Nutanix INTC Intel MSI Motorola Soltn

NVDA NVIDIA INTU Intuit NFLX Netflix

OLED Universal Display IPHI Inphi NLOK NortonLifeLock

ON ON Semiconductor KEYS Keysight Tech NUAN Nuance Communications

PCTY Paylocity Holding MANH Manhattan Associates OKTA Okta

PS Pluralsight MSFT Microsoft ORCL Oracle

PSTG Pure Storage MXIM Maxim Integrated Products PANW Palo Alto Networks

PTC PTC NATI National Instruments PAYX Paychex

QRVO Qorvo NEWR New Relic PD PagerDuty


5 April 2021



Stocks by Exposure to Cyclical Acceleration Index (CAI) – TECH+ Sector (2 of 2)



SABR Sabre NOW ServiceNow PFPT Proofpoint

SEDG SolarEdge Technologies PAYC Paycom Software RNG RingCentral

SNX SYNNEX PEGA Pegasystems RP RealPage

SQ Square PLAN Anaplan SMAR Smartsheet

SWKS Skyworks Solutions PYPL PayPal Hldgs SNPS Synopsys

TER Teradyne QRTEA Qurate Retail SWCH Switch Inc

TRIP TripAdvisor SATS EchoStar SWI SolarWinds

TTD Trade Desk SPLK Splunk TDC Teradata

TWOU 2U SSNC SS&C Technologies Holdings TEAM Atlassian

TWTR Twitter TRMB Trimble TTWO Take-Two Interactive

W Wayfair TWLO Twilio TYL Tyler Technologies

WDC Western Digital TXN Texas Instruments UI Ubiquiti

WEX WEX V Visa VRSN VeriSign

XRX Xerox Holdings VMW VMware WDAY Workday

VSAT ViaSat WU Western Union

ZEN Zendesk Z Zillow Group

ZNGA Zynga

ZS Zscaler


5 April 2021


Rates & Credit Spreads

Federal Funds Target Rate with Futures

Source: FRB, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse

10-Year Treasury Yields with Futures

Source: FRB, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse

0.00

0.50

1.00

1.50

2.00

2.50

15 16 17 18 19 20 21 22 23 24

%

0.50

1.00

1.50

2.00

2.50

3.00

15 16 17 18 19 20 21 22 23 24

%%

Fed funds are expected to remain

near zero until 2022

10-Year Treasury yields are

expected to hit 2.5% in 2024

5 April 2021



10-Year Treasury-Yield

Source: Federal Reserve, Haver Analytics®, Credit Suisse

10-Year Yields vs. High Yield Spreads

Source: CBOE, Federal Reserve, Bank of America Merrill Lynch, Haver Analytics®, Credit Suisse

0.5

0.8

1.1

1.4

1.7

2.0


1.56% Tr Yld on 2/19/20 (pre-pandemic high)

%

Current: 1.74%

1.7

3.8

0.7

9.8

10-Year Yield% HY Spread

Mar-2021 Mar-2020 Mar-2021 Mar-2020

10-Year Treasury yields are now

above pre-pandemic levels

Rates have risen and spreads

have fallen sharply over the past

year, a favorable backdrop for risk

assets

5 April 2021



Real Yield for 10-Year Treasury

Note: 7-Day Moving Average. Most recent reading represents actual month-end value


10-Year Treasury/Sovereign Yields of Developed Economies

Note: Pfizer announcement was on 11/06/20

Source: Federal Reserve, Cabinet Office of Japan, HM Treasury, Deutsche Finanzagentur, Haver Analytics®,

Credit Suisse

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

-2.0

-1.0

0.0

1.0

2.0

15 16 17 18 19 20 21

t Real Yield

10-Y Treasury u

1.74

0.84

-0.29

0.09

US UK Germ. Jpn.

% Treasury/Sovereign

Yields

92

57

33

7

US UK Germ. Jpn.

BpsChange since

Pfizer Ann.

Real yields are likely to remain

under pressure as inflation rises

Yield spreads between US and

ROW have widened substantially

5 April 2021



VIX vs. High Yield Spread

Source: CBOE, Federal Reserve, Bank of America Merrill Lynch, Haver Analytics®, Credit Suisse

High Yield Spread vs. Bankruptcies (3 Months Lagged)

Note: Bankruptcies are 3-months lagged

Source: Barclays, The BLOOMBERG PROFESSIONAL™ service, Credit Suisse

0

5

10

15

20

0

15

30

45

60

75

03 06 09 12 15 18 21

t HY Spread

t VIX

%

Bear

Stearns

Financial Crisis

EuropeanDebt

Crisis

U.S. Debt Downgrade

Spanish/Italian

Debt Concerns

Greek Debt Concerns

Inflation & Trade

Concerns

COVID-19

0

150

300

450

600

750

900

4

8

12

16

20

24

03 06 09 12 15 18 21

Bankruptcies u

t High Yield

%

Volatility and spreads tend to

move together

High yields spreads tend to lead

bankruptcies and loan defaults

5 April 2021


Current Market Conditions

Market Backdrop — Today vs. Prior Periods

Source: Standard & Poor’s, FactSet, The BLOOMBERG PROFESSIONAL™ service, Haver Analytics®, ISM,

Federal Reserve, BLS, CBOE, Credit Suisse

Mar 31, 2021 Dec 31, 2020 Dec 31, 2019

S&P 500 Level 3,973 3,756 3,231

Consensus EPS ($)

Next 12 Mos. (NTM) EPS 181.95 167.24 177.26

P/E (x)

NTM P/E 21.8 22.5 18.2

EPS Growth (%)

NTM EPS Growth 27.1 27.6 6.9

Yields (%)

10-Year Treasury 1.7 0.9 1.9

CS Inv Grade Bond Yield 2.7 1.9 2.9

(Investment Grade Spread) 1.0 1.0 1.0

CS High Yield Bond Yield 5.6 5.1 5.9

(High Yield Spread) 3.8 4.1 4.0

Economics

VIX Level 19.4 22.8 13.8

ISM Level 64.7 60.5 47.7

Unemployment Rate 6.0 6.7 3.6

While stock prices are above year-

end 2020 levels, valuations have

actually declined

5 April 2021


Market Composition

Market Weight (% of S&P 500)

Source: Standard & Poor’s, FactSet, Credit Suisse

NTM P/E

Source: Standard & Poor’s, FactSet, Refinitiv, Credit Suisse

Mar-92 Mar-02 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17 Mar-19 Mar-20 Mar-21

Cyclicals

42.8

Non-

Cyclicals

35.4

Non-

Cyclicals

39.6

Cyclicals

34.5

Non-

Cyclicals

35.7

Non-

Cyclicals

36.1

Non-

Cyclicals

35.0

Non-

Cyclicals

32.6

TECH+

36.1

TECH+

39.0

Non-

Cyclicals

42.0

Cyclicals

29.1

Cyclicals

32.0

Non-

Cyclicals

32.4

Cyclicals

31.4

Cyclicals

29.3

Cyclicals

26.0

TECH+

30.6

Non-

Cyclicals

34.1

Non-

Cyclicals

28.1

Financials

9.6

Financials

18.3

TECH+

18.3

TECH+

19.0

TECH+

19.1

TECH+

21.0

TECH+

24.7

Cyclicals

24.0

Cyclicals

18.9

Cyclicals

21.6

TECH+

5.7

TECH+

17.4

Financials

10.0

Financials

14.2

Financials

13.8

Financials

13.6

Financials

14.4

Financials

12.7

Financials

10.9

Financials

11.2


Cyclicals

15.0

TECH+

36.3

TECH+

14.9

TECH+

13.7

Non-

Cyclicals

15.7

Non-

Cyclicals

17.7

TECH+

19.5

TECH+

20.8

TECH+

20.2

TECH+

28.4

Non-

Cyclicals

14.7

Cyclicals

21.5

Non-

Cyclicals

10.8

Non-

Cyclicals

13.3

TECH+

13.3

Cyclicals

17.5

Non-

Cyclicals

17.1

Non-

Cyclicals

16.1

Non-

Cyclicals

14.4

Cyclicals

24.6

TECH+

13.0

Non-

Cyclicals

19.4

Financials

10.5

Financials

10.9

Financials

11.1

TECH+

16.5

Financials

13.8

Cyclicals

16.0

Cyclicals

13.6

Non-

Cyclicals

17.4

Financials

10.5

Financials

14.5

Cyclicals

5.2

Cyclicals

6.0

Cyclicals

9.3

Financials

12.4

Cyclicals

13.1

Financials

11.2

Financials

9.1

Financials

13.2

5 April 2021


Market Composition

Revenues (% of S&P 500)


Earnings (% of S&P 500)



Cyclicals

56.0

Cyclicals

44.7

Cyclicals

43.8

Non-

Cyclicals

38.0

Cyclicals

38.8

Cyclicals

38.8

Non-

Cyclicals

41.0

Non-

Cyclicals

37.8

Non-

Cyclicals

38.6

Non-

Cyclicals

41.1

Non-

Cyclicals

26.5

Non-

Cyclicals

29.8

Non-

Cyclicals

35.8

Cyclicals

37.0

Non-

Cyclicals

36.2

Non-

Cyclicals

37.1

Cyclicals

33.2

Cyclicals

34.1

Cyclicals

33.0

Cyclicals

28.6

Financials

12.5

Financials

15.9

Financials

11.1

Financials

14.5

Financials

13.4

Financials

12.8

Financials

13.5

TECH+

14.4

TECH+

14.8

TECH+

16.6

TECH+

5.1

TECH+

9.6

TECH+

9.3

TECH+

10.6

TECH+

11.6

TECH+

11.3

TECH+

12.4

Financials

13.6

Financials

13.7

Financials

13.7


Non-

Cyclicals

42.9

Non-

Cyclicals

35.6

Cyclicals

41.1

Non-

Cyclicals

37.4

Non-

Cyclicals

32.0

Non-

Cyclicals

32.5

Non-

Cyclicals

38.2

Non-

Cyclicals

32.9

Non-

Cyclicals

34.5

Non-

Cyclicals

43.1

Cyclicals

38.0

Cyclicals

31.5

Non-

Cyclicals

37.9

Cyclicals

31.7

Cyclicals

31.7

Cyclicals

30.5

TECH+

21.9

TECH+

24.7

TECH+

23.8

TECH+

25.6

Financials

13.4

Financials

24.0

TECH+

15.6

TECH+

21.0

TECH+

20.6

TECH+

19.9

Cyclicals

21.8

Cyclicals

23.9

Cyclicals

22.8

Financials

18.0

TECH+

5.7

TECH+

8.9

Financials

5.4

Financials

9.8

Financials

15.6

Financials

17.1

Financials

18.1

Financials

18.4

Financials

18.8

Cyclicals

13.3

5 April 2021


Economic Backdrop

Daily COVID-19 Cases

Note: 7-day moving average, last data point actual

Source: Johns Hopkins University, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse

Total COVID-19 Deaths



0

50

100

150

200

250

300

Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21

'000s

0

100

200

300

400

500

600

Mar-20 Jun-20 Sep-20 Dec-20 Mar-21

'000s

Covid cases and hospitalizations

have been declining

5 April 2021


Economic Backdrop

COVID-19 Hospitalizations



% of Population Fully Vaccinated

Source: Johns Hopkins University, Centers for Civic Impact, CDC, Our World in Data, Credit Suisse

0

45

90

135

Feb-20 May-20 Aug-20 Nov-20 Feb-21

'000s

16.6

7.4

5.04.4

1.9

US UK Germany France Canada

%

5 April 2021


Economic Backdrop

GDP Consensus Expectations - 2021

Source: BEA, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse

GDP Consensus Expectations - 2021



Real GDP

5.7%

Real GDP

6.6%

CPI

2.4%

CPI

2.7%

Nominal GDP

8.2%

Nominal GDP

9.4%

Overall Consensus Large Banks

1

2

3

4

5

6

7

8

9

Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21

%

5.7

8.2

Nominal GDP u

t Real GDP

Consensuses expectations point

to a substantial pickup in GDP,

with large banks indicating an

even greater gain

5 April 2021


Economic Backdrop

Revenues vs. Nominal U.S. GDP

Source: Standard & Poor’s, BEA, FactSet, Haver Analytics®, Credit Suisse

2021 Revenue Growth – Consensus vs. Implied from GDP Estimates


-24

-12

0

12

24

-12

-6

0

6

12

00 05 10 15 20

S&P 500 Revenues u

t GDP

S&P 500 Revenues = 2.7 * Nominal GDP - 7.2%% %

2021 Revenue Est u

Based on 8.2% GDP

9.6

18.4

Bottom-up Consensus Implied from Large Bank

GDP estimates

%

2.7 * Nominal

GDP ( 9.4%)

– 7.2% = 18.4%

GDP forecasts imply much higher

revenue growth than analyst

forecasts

5 April 2021


Economic Backdrop

Relationship Between GDP and S&P 500 EPS

Source: BEA, Standard & Poor’s, the BLOOMBERG PROFESSIONAL™ service, Haver Analytics®, Credit

Suisse

Investments

Imports

Exports

Consumer

Government

GDP

0

2

4

6

8

10

12

14

-50 -25 0 25 50 75

2021 C

onsensu

s G

DP

Ests

.

Correlation with S&P 500 EPS Growth

%Imports and Investments have the

highest correlation to S&P 500

profits of any GDP components

Strength of Imports and

Investments will make economic

growth feel substantially stronger

than GDP forecasts imply

5 April 2021


Economic Backdrop

Real GDP YoY with Consensus Estimates


Unemployment Rate with Consensus Estimates

Note: Data as of 4/2/21

Source: BLS, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse

2.3

0.3

-9.0

-2.8 -2.5

-0.1

11.7

5.7 6.0 5.54.6

4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22

%

3.5 3.8

13.0

8.8

6.8

6.0 5.95.4

5.0 4.8 4.5

4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22

%

Unemployment is expected to hit

5% by 4Q21

5 April 2021


Economic Backdrop

U.S. ISM New Orders – Manufacturing vs. Services

Note: 3-month moving average

Source: Institute for Supply Management, Haver Analytics®, Credit Suisse

U.S. PCE – Goods vs. Services

Note: Indexed at 100 on December 2018.


30

35

40

45

50

55

60

65

70

Dec-18 Jun-19 Dec-19 Jun-20 Dec-20

t ISM -Svcs

t ISM - Mfg

80

90

100

110

120

130

Jan-19 Jul-19 Jan-20 Jul-20 Jan-21

From Feb '20 Level:

-7.0%

From Feb '20 Level:

9.3%

PCE - Goods u

PCE - Services u

Marginal consumer spending has

favored goods over services

We expect this trend to reverse

5 April 2021


Economic Backdrop

Federal Reserve Balance Sheet at a % of GDP

Note: 3 month moving average with most recent data point being actual value. CS Economics team estimates

Source: Federal Reserve, BEA, The BLOOMBERG PROFESSIONAL™ service, Credit Suisse

US Federal Debt Held by the Public as a % of GDP

Note: 2020 and 2021 are consensus estimates

Source: OMB, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse

0

5

10

15

20

25

30

35

40

90 94 98 02 06 10 14 18

%

CS Estimates u

20

30

40

50

60

70

80

90

100

110

40 50 60 70 80 90 00 10 20

%

Consensus Estimates u

While deficit spending and Fed

purchases might be helpful near

term, they represent a future

burden

5 April 2021


Economic Backdrop

Federal Reserve Balance Sheet vs. Deficit as a % of GDP

Note: 12 month moving average

Source: Federal Reserve, The BLOOMBERG PROFESSIONAL™ service, Credit Suisse

-20

-10

0

10

20

30

40

00 05 10 15 20

%

Federal Balance Sheet as

a Percentage of GDP u

Federal Deficit as a

Percentage of GDP u

It appears that the Federal

Reserve is monetizing budget

deficits

5 April 2021


Economic Backdrop

Debt to GDP

Note: Debt to GDP held by the public for the U.S.

Source: Federal Reserve, Office for National Statistics, Banque de France, Deutsche Bundesbank, Istituto

Nazionale di Statistica, Bank of Japan, Ministerio de Economía y Producción, Haver Analytics®, Credit Suisse

Global Negative Yielding Debt

Note: 3-Month Rolling Average with last data point actual

Source: Barclays, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse

68.9

99.2 100.7112.7

151.2

220.0

256.3

Germany U.K. U.S. France Italy Japan Greece

%

5

10

15

20

16 17 18 19 20

$ Tn.

5 April 2021


Economic Backdrop

M2 Growth

Note: 3 month moving average with most recent data point being actual value

Source: Federal Reserve, the BLOOMBERG PROFESSIONAL™ service, and Credit Suisse

Money Velocity

Note: GDP divided by M2 Money Supply; Indexed to 100 in 2000

Source: Federal Reserve, BEA, Cabinet Office of Japan, Statistical Office of the European Communities, ECB,

Haver Analytics®, Credit Suisse

0

5

10

15

20

25

30

90 94 98 02 06 10 14 18

%

40

50

60

70

80

90

100

00 05 10 15 20

Europe u

t U.S.

Japan u

An increase in money supply is

only helpful to the extent that the

velocity of money is stable

In recent years, the velocity of

money has fallen in response to

uber-easy monetary policy

5 April 2021


Economic Backdrop

Savings Rate vs. 10-Year Yield

Note: 1975 to Present

Source: Federal Reserve, BEA, Haver Analytics®, Credit Suisse

0

4

8

12

16

20

0 5 10 15

Pe

rso

nal S

avin

gs R

ate

10-Year Treasury Yield

%

%

Most recent

Extremely low interest rates

suppress spending, limiting their

potential benefits

Currently high savings rates are

the result of shelter-at-home

policies

5 April 2021


Earnings

S&P 500 Consensus EPS Growth: 2020


S&P 500 Consensus EPS Growth: 2021


-13.5-15.4

-32.3

-8.2

1.4

2020 1Q20 2Q20 3Q20 4Q20

%

23.3

20.2

50.1

17.9

13.1

2021 1Q21 2Q21 3Q21 4Q21

%

4Q EPS is above prior year levels

Earnings are expected to expand

in each quarter of 2021

5 April 2021


Earnings

2020 EPS Growth: Value vs. Growth

Source: Russell, Refinitiv, FactSet and Credit Suisse

2021 EPS Growth: Value vs. Growth

Source: Russell, Refinitiv, FactSet and Credit Suisse

13.4

6.7 7.8

15.7

21.0

-17.1 -17.0

-37.5

-11.9

-1.9

Gr Val Gr Val Gr Val Gr Val Gr Val

2020%

1Q20 2Q20 3Q20 4Q20

17.7

28.2

23.7

13.8

9.4

26.4

22.2

59.5

19.2

14.8

Gr Val Gr Val Gr Val Gr Val Gr Val

2021%

1Q21 2Q21 3Q21 4Q21

Growth delivered positive EPS in

each quarter of 2020

Value is expected to deliver

stronger EPS growth in 2021

5 April 2021


Earnings

Historical EPS Surprise


4Q20 EPS Surprises by Super Sector


6.0 6.27.4

5.2 5.6 5.54.5

3.0

7.5

4.1

6.6

3.6

6.45.2

4.6 4.3

2.9

23.2

19.4

15.5

11.6

1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21

%

24.3

19.518.4

15.5

5.7

Financials TECH+ Cyclicals S&P 500 Non-Cyclicals

%

Companies have been delivering

outsized surprises, a trend we

believe will persist in 2021

Analysts are likely to continue to

underestimate the path of

earnings, the result of ongoing

monetary and fiscal stimulus

5 April 2021


Earnings

Historical Revision to Annual S&P 500 EPS Estimates

Note: EPS indexed at 100 on 9/30 of prior year


S&P 500 2021 EPS Revision Trend

Note: Historical trend based on estimates from 2011-19. 2021 EPS Indexed at 100 on September 30, 2020


50

60

70

80

90

100

110

96 00 04 08 12 16 20

t 2004

1998 p

2001 u

2009 u

2008 u

t 2010

2012 u2015 u

t 2018

2020 u

2021 u

96

98

100

102

104

106

108

Sep Oct Nov Dec Jan Feb Mar

t Historical Trend

t 2021

Estimates tend to rise coming out

of an economic downturn

2018 was an exception due to tax

changes

2021 estimates have been

steadily rising

5 April 2021


Earnings

2021 Consensus EPS Growth


2022 Consensus EPS Growth


23.3

88.2

25.0

18.414.1

4.4

S&P

500

Cyclicals Financials TECH+ Health

Care

Non Cyclicals

ex-Health

Care

%

15.1

31.3

14.1

10.9

6.8 6.6

S&P

500

Cyclicals TECH+ Financials Health

Care

Non Cyclicals

ex-Health

Care

%

Cyclicals are expected to deliver

the strongest growth in 2021-22

5 April 2021


Earnings

U.S. 2021 Consensus Growth Dashboard

Note: Blend of actuals where available and estimates


Weighted Growth YoY (%)

Revenue Margins Earnings Buybacks EPS

S&P 500 9.6 13.0 22.7 0.6 23.2

Energy 28.6 782.7 811.3 29.5 840.7

Materials 12.8 27.8 40.5 1.1 41.6

Industrials 10.5 60.5 71.0 5.8 76.8

Capital Goods 8.9 21.7 30.6 0.7 31.3

Business Services 3.6 4.2 7.8 0.5 8.3

Transportation 16.8 253.4 270.2 -26.5 243.7

Discretionary 15.0 33.6 48.6 2.1 50.8

Automobiles & Components 23.5 28.7 52.2 -1.1 51.1

Durables & Apparel 13.4 21.6 34.9 -0.1 34.8

Consumer Services 28.4 128.3 156.6 -3.6 153.1

Hardline Retail 4.2 3.8 8.0 1.7 9.7

Internet Retail 22.7 -5.6 17.1 -1.9 15.3

Softline Retail 17.1 90.6 107.7 0.1 107.8

Technology 11.1 7.3 18.4 -0.3 18.1

Software & Services 9.7 4.2 13.9 0.8 14.7

Technology Hardware 11.4 14.5 25.9 -3.5 22.4

Semiconductors 13.3 3.8 17.1 1.6 18.8

Comm Svcs 11.3 0.6 11.9 0.8 12.7

Telecommunication Services 2.9 -3.3 -0.4 1.0 0.6

Internet Svcs & Home Ent 23.1 -3.8 19.3 0.8 20.1

Media & Entertainment 8.9 6.4 15.2 0.5 15.7

Financials 0.0 22.8 22.8 1.5 24.3

Investment Banks -1.7 22.2 20.5 1.5 21.9

Regional Banks -0.5 43.8 43.2 1.9 45.1

Diversified Financials 0.7 21.4 22.1 -1.0 21.1

Insurance 1.9 8.0 9.9 2.0 11.9

Staples 3.2 3.1 6.2 0.5 6.7

Food & Staples Retailing 2.2 -1.5 0.7 2.3 3.0

Food Beverage & Tobacco 4.2 3.3 7.4 -0.2 7.3

Household & Personal Products 5.8 2.3 8.1 0.3 8.4

Health Care 8.6 5.3 13.9 0.2 14.1

HC Equipment & Services 7.0 6.8 13.8 0.1 13.9

Pharma, Biotech, & Life Sci 14.5 -0.6 13.9 0.3 14.2

Utilities 6.2 0.1 6.4 -1.8 4.6

REITs 6.2 -1.2 5.0 -2.1 2.9

TECH+ 15.0 3.5 18.5 -0.2 18.3

S&P 500 ex-TECH+ 8.5 19.1 27.6 0.9 28.5

Cyclicals 14.6 68.3 82.9 4.1 86.9

S&P 500 ex-Cyclicals 7.4 8.1 15.5 0.2 15.7

Non-Cyclicals 6.3 3.2 9.4 0.0 9.4

EPS growth is expected to grow

23% in 2021 led by Cyclicals

5 April 2021


Earnings

U.S. 1Q21 Consensus Growth Dashboard

Note: Blend of actuals where available and estimates


Weighted Growth YoY (%)

Revenue Margins Earnings Buybacks EPS

S&P 500 8.3 14.7 23.0 0.5 23.5

Cyclicals

Energy -9.4 8.8 -0.7 -4.3 -5.0

Materials 9.6 36.5 46.1 -0.1 46.1

Industrials -3.2 -15.1 -18.3 -0.1 -18.4

Discretionary 14.6 67.7 82.3 17.9 100.2

Financials 24.7 45.1 69.9 1.1 71.0

Technology 15.7 5.7 21.5 2.9 24.3

Comm Svcs 9.2 1.0 10.2 -0.9 9.3

Non-Cyclicals

Staples 1.0 -1.4 -0.4 0.8 0.4

Health Care 9.4 10.1 19.5 -1.5 18.1

Utilities 5.1 -0.2 4.9 -2.1 2.7

REITs -0.3 -0.1 -0.4 -2.0 -2.4

FAANG 32.5 20.4 52.9 3.9 56.8

TECH+ 20.8 5.6 26.4 2.6 29.0

Cyclicals 0.2 10.7 10.8 1.3 12.1

S&P 500 ex-TECH+ 5.9 15.7 21.6 -0.2 21.5

S&P 500 ex-Cyclicals 12.6 13.0 25.7 0.4 26.0

Discretionary and Financials are

expected to deliver robust growth

in 1Q21

5 April 2021


Earnings

Historical Revenue Growth

Note: Estimates based on consensus estimates


Historical EPS Growth

Note: Estimates based on consensus estimates


-1.7

-0.3

2.5

4.7

7.3

5.2 5.5

8.1 8.1

9.68.6

4.8

2.5 2.4 2.0

3.9

0.9

-8.8

-1.9

1.9

8.3

1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21E

%

-5.1-1.7

4.79.0

15.4

9.6 7.9

12.7

26.125.428.2

17.1

2.8 3.8 1.1 2.9

-13.6

-30.7

-6.4

4.1

23.5

1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21E

%

Revenue and EPS growth are

expected to rebound in 1Q21

5 April 2021


Earnings

ISM Manufacturing vs. % of Companies Beating Earnings

Note: ISM is 3-Month Moving Average with last data point actual. Latest ISM represents March reading

Source: Institute for Supply Management, Standard & Poor’s, Refinitiv, Haver Analytics®, FactSet, Credit Suisse

Price Response Spread: Double Beats Less Double Misses

Note: Double beats are companies surpassing both revenue and EPS estimates, double misses are companies

missing both revenue and EPS estimates.


30

35

40

45

50

55

60

65

45

50

55

60

65

70

75

80

85

98 01 04 07 10 13 16 19

ISM (Mfg.) u

t % of Companies Beating

%

0

1

2

3

4

5

6

7

8

9

10 11 12 13 14 15 16 17 18 19 20

%

Earnings surprises trend with the

ISM

Despite strong surprises, stocks

had little reaction in 3Q/4Q

5 April 2021


Earnings

Interest as a % of Sales

Note: S&P 500, trailing 4Q basis; 4Q moving average


Aggregate Tax Rate

Note: Blend of actuals where available and estimates;

Source: Standard & Poor’s, Refinitiv, FactSet, and Credit Suisse

1

2

3

4

5

6

7

91 96 01 06 11 16 21

Avg = 4.4%

Avg = 2.1%

%

30.6 30.430.9

31.5

30.2 30.3

31.7 31.7

29.629.3

27.627.1

26.3

20.1 20.2

18.5

20.020.3

05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

%

Lower interest and taxes have

contributed positively to earnings

growth

5 April 2021


Earnings

S&P 500 EBIT Margins vs. Industrial Commodity Prices

Note: S&P 500 ex-Financials & REITs; CRB Raw Industrials Index is lagged by 1 quarter

Source: Standard & Poor’s, Commodity Research Bureau, FactSet, Haver Analytics®, Credit Suisse

Oil

Note: 5-Day Moving Average with last data point actual; Pre-Pandemic denotes price as of 2/19/20

Source: EIA, Haver Analytics®, Credit Suisse

200

300

400

500

600

9.5

10.5

11.5

12.5

13.5

14.5

01 06 11 16 21

CRB Raw Industrials

(lagged by 1 qtr.) u

t EBIT Margins

%

0

20

40

60

80

18 19 20 21

$/Bbl

Current: $60.14

Pre-pandemic: $52.18

Pre-Pandemic $52.18

Current $60.14

Change 15.3%

Commodity prices tend to lead

margins by 1 quarter

5 April 2021


Earnings

Copper


Source: WSJ, Haver Analytics®, Credit Suisse

Lumber


Source: CME, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse

2.0

2.5

3.0

3.5

4.0

4.5

18 19 20 21

$/Lb

Current: $4.02

Pre-pandemic: $2.61

Pre-Pandemic $2.61

Current $4.02

Change 54.0%

200

400

600

800

1,000

1,200

17 18 19 20

$/1000 Board Feet

Current: $1009.10

Pre-pandemic: $460.30

Pre-Pandemic $460.30

Current $1009.10

Change 119.2%

The pickup in oil, copper and

lumber prices should have a

significant positive impact on

2021 EPS

5 April 2021


Valuations

S&P 500 NTM P/E


S&P 500 P/FCF


5

10

15

20

25

65 75 85 95 05 15

Avg. P/E: 14.5

Current P/E:

21.8

-1 SD: 10.4

+1 SD: 18.6

x

0

10

20

30

40

50

60

70

80

84 89 94 99 04 09 14 19

x

+1 SD: 38.9

-1 SD: 12.7

Avg. P/FCF: 25.8

Current P/FCF: 30.1

Multiples appear quite elevated

5 April 2021


Valuations

S&P 500 P/ROC (Dividends + Buybacks)

Note: Russell 1000 prior to 1990, S&P 500 after 1990.

Source: Standard & Poor’s, Russell, Refinitiv, FactSet, Credit Suisse

10

20

30

40

50

60

70

80

84 89 94 99 04 09 14 19

x

-1 SD: 21.4

+1 SD: 51.0

Avg. P/ROC: 36.2

Current P/ROC: 39.9The price to return of capital has

recently jumped as buybacks

have fallen. This should quickly

reverse

5 April 2021


Valuations

Free Cash Flow as a % of Sales

Note: Russell 1000 prior to 1990, S&P 500 after 1990; Trailing 4Q basis; 4Q Moving Average

Source: Standard & Poor’s, Russell, FactSet, Credit Suisse

Free Cash Flow vs. Return of Capital

Note: Shaded areas denote recession; Russell 1000 prior to 1990, S&P 500 after 1990; Ex-Financials & REITs;

Trailing 4Q basis; 4Q Moving Average

Source: Standard & Poor’s, Russell, NBER, FactSet, Credit Suisse

0

2

4

6

8

10

12

85 90 95 00 05 10 15 20

Avg = 4.7%

Avg = 10.1%%

0

200

400

600

800

1,000

85 90 95 00 05 10 15 20

Free Cash Flow u

t Dividends +

Buybacks

$ Bn

Following recessions,

companies often

redirect capital

toward balance

sheet repair

Companies have been more cash

flow generative in recent years

Cash flows have been strong

while dividends and buybacks

have recently declined

5 April 2021


Valuations

Bond Yields vs. S&P 500 Multiples

Note: Implied P/E based on the inverse of the Baa yield

Source: Standard and Poor’s, Moody’s, FactSet, Refinitiv, Credit Suisse

3.8%

26.5x

21.8x

3.8%

26.4x

21.8x6.3%

15.8x14.1x

1.7%0.7%

3.8%

2.0%3.1%

2.5%

Baa

Yield

Implied

P/E

Actual

P/E

Baa

Yield

Implied

P/E

Actual

P/E

Baa

Yield

Implied

P/E

Actual

P/E

March 2020

Spread

10-Yr

March 2010Current

5 April 2021


Valuations

Sector P/Es

Note: Energy removed from analysis due to negative forward earnings


Relative Sector P/Es (vs. the S&P 500)

Note: Energy removed from analysis due to negative forward earnings


5

10

15

20

25

30

35

40

S&P

500

Disc Tech Ind Comm Mat REITs Fin Stap Util H.C.

x Cur

Avg

10 Yr

Range

-10

-5

0

5

10

15

20

Disc Ind Tech Comm REITs Mat Fin Stap Util H.C.

x

Cur

Avg

10 Yr

Range

7 sectors trade at a larger discount to the

market than their 10-year average

All 11 sectors are trading above

their 10-year average

Discretionary, Industrials, and

Tech each trade at a premium to

their history

Financials, Staples, Utilities, and

Health Care appear the most

attractively priced

5 April 2021


Valuations

10 Year Annualized Stock Returns vs. Starting P/E Levels


1 Year Annualized Stock Returns vs. Starting P/E Levels

Source: Standard & Poor’s, FactSet, Refinitiv, Credit Suisse

-10

-5

0

5

10

15

20

5 10 15 20 25

An

nu

alize

d 1

0-Y

ear

Re

turn

Starting Forward P/E

%

x

Current: 21.8

-60

-40

-20

0

20

40

60

80

5 10 15 20 25

1-Y

ear

Retu

rn

Starting Forward P/E

%

x

Current: 21.8

Historically, future returns have

been lower when multiples are

elevated

5 April 2021


The Long-Term Case for TECH+

Revenue Growth (Indexed to 100)

Note: 4-Quarter Moving Average;


EBIT Margins

Note: S&P 500 ex-Financials; Trailing 12-Month EBIT Margin; 4-Quarter Moving Average;


100

200

300

400

500

600

95 00 05 10 15 20

t S&P 500 ex-TECH+

TECH+ u

0

5

10

15

20

25

95 00 05 10 15 20

p S&P 500 ex-TECH+

TECH+ u

%

Since 2009, TECH+ revenue

growth has meaningfully

exceeded the broad market

While margins have been stable

for the broad market, they have

been rising for TECH+

5 April 2021


The Long-Term Case for TECH+

FCF as a % of Sales – TECH+ vs. S&P 500 ex-TECH+

Note: Trailing 12-months;


0

5

10

15

20

25

95 00 05 10 15 20

%

t S&P 500 ex-TECH+

t TECH+

TECH+ companies generate twice

as much FCF as other companies

5 April 2021


Long-Term Trends

Dow Jones Industrial Average Super Cycle

Source: Dow Jones, FactSet, Credit Suisse

10-Year Treasury Yield

Note: 12-Month Moving Average. Most recent reading represents actual month-end value


40

400

4,000

40,000

35 45 55 65 75 85 95 05 15

Log Scale

0

3

6

9

12

15

63 73 83 93 03 13

% Decade Average

'60s 4.8

'70s 7.5

'80s 10.6

'90s 6.7

'00s 4.5

'10s 2.4

'20s 0.9

Investor behavior tends to be

regime-specific, with returns,

rates and valuations moving in a

specific pattern for extremely long

(often multi-decade) periods

5 April 2021


Long-Term Trends

U.S. Historical GDP Growth

Note: Real GDP; 5-Year Moving Average

Source: BEA, Haver Analytics®, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse

G7 ex-U.S. GDP Growth

Note: Real GDP; 5-Year Moving Average

Source: BEA, World Bank, Deutsche Bundesbank, Institut National de la Statistique/Economique, Haver

Analytics®, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse

0

2

4

6

60 70 80 90 00 10 20

Avg = 3.4%

Avg = 1.4%

%

Perceived

Output Gap

-1

0

1

2

3

4

5

6

60 70 80 90 00 10 20

Avg = 2.6%

Avg = 0.9%

%

Perceived

Output

Gap

Avg = 5.6%

Data Unavailable Prior to

1965

The U.S. and global economies

have decelerated over the past

decade

5 April 2021


Long-Term Trends

U.S. Potential GDP Growth

Source: Congressional Budget Office, Credit Suisse

U.S. Productivity

Note: 3-Year Moving Average of YoY change in real GDP divided by aggregate hours; +/- 1 standard deviation

Source: BLS, BEA, Haver Analytics®, Credit Suisse

1.4

0.5

Real Potential GDP

%

t Labor Force Growth

t Productivity

1.9

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

75 85 95 05 15

%

According to the CBO, 1.4% of

potential GDP will come from

productivity, 0.5% from labor

force growth

Productivity has improved over

the past couple of years

5 April 2021


Long-Term Trends

U.S. Retirees as a Percent of Total Population

Source: United Nations, Haver Analytics®, Credit Suisse

Working Age Population per Retiree


15

20

25

30

90 95 00 05 10 15 20 25 30 35 40

%

3.2

2.5

1.9

2.9

2.1

1.4

3.2

1.5

1.0

6.2

3.8

1.7

1990 20172040E 1990 20172040E 1990 20172040E 1990 20172040E

U.S. Europe Japan China

Aging population is a natural

headwind for economic growth

5 April 2021


Long-Term Trends

Population vs. Labor Force Growth

Note: Annualized growth rates

Source: BLS, Haver Analytics®, Credit Suisse

U.S. Labor Force Participation — Male vs. Female

Source: OECD, Haver Analytics®, Credit Suisse

1.0

0.7

1.7

0.3

1970-2008 2008-2020 1970-2008 2008-2020

% Population Growth Labor Force Growth

30

45

60

75

60 70 80 90 00 10 20

Femaleu

tMale

%

Labor force growth is substantially

lagging population growth, the

result of demographic forces

Male and female labor force

participation are both in decline

5 April 2021


Long-Term Trends

U.S. Labor Force Participation by Age Group

Source: BLS, Haver Analytics®, Credit Suisse

Fertility – U.S. vs. India


55.9

82.9 83.2 81.4

65.3

20.2

16-24 25-34 35-44 45-54 55-64 65+

%

1.5

3.0

4.5

6.0

60 65 70 75 80 85 90 95 00 05 10 15 20

t India

U.S. u

Labor force participation fades as

the population ages

5 April 2021


Long-Term Trends

Fertility Rate


Median Female Age


1.9

1.8

1.61.5

1.4 1.3

2.2

1.81.7

1.7

Fra U.S. U.K. Ger Can Jap Ita Ind Rus Bra Chi

G7 Average: 1.6 BRIC Average: 1.9

1.8

50.049.1

47.5

43.4 42.941.7

43.2

39.4

34.1

29.5

39.8

Jap Ger Ita Fra Can U.K. U.S. Rus Chi Bra Ind


40

5 April 2021


Long-Term Trends

U.S. Birth and Death Rates


Births Minus Deaths by Country


7

10

13

16

19

22

25

60 70 80 90 00 10 20

Per 1,000 People

Births u

Deaths q

2.7 2.2 2.0

-1.7

-2.8 -2.9

10.8

7.7

4.8

0.1

3.3

U.S. Can U.K. Fra Ger Ita Jap Ind Bra Chi Rus


5 April 2021


Sources & Uses of Cash

Dividend Payout Ratio

Note: S&P 500 index excluding Financials & REITs; Shaded area denotes recession


Buyback Payout Ratio

Note: S&P 500 index excluding Financials & REITs; Shaded area denotes recession


20

30

40

50

60

90 95 00 05 10 15 20

%

-20

0

20

40

60

80

90 95 00 05 10 15 20

%

Dividend payout ratios tend to rise

during recessions, with dividends

holding steady and earnings

declining

Buyback payout ratios tend to fall

during recessions as companies

attempt to preserve capital

5 April 2021



S&P 500 Dividend Yield

Note: GICS sectors except Communications, which is split between Telecom and Media/Entertainment

Source: Standard & Poor’s, Federal Reserve, FactSet, Refinitiv, Credit Suisse

4.5

4.2

3.2

2.7 2.6

2.01.7 1.7

1.5 1.5 1.5

1.0

0.6

0.2

Ene Tele Util Stap REITs Fin 10Y

Yield

Mat H.C. Ind S&P

500

Tech Disc Media

& Ent

%The market dividend yield has

fallen below the 10-year treasury

yield

5 April 2021



IPO Listings – Annual

Note: Includes all listings priced on U.S. exchanges. Special Purpose Acquisitions are excluded.

Source: FactSet, Credit Suisse

M&A Activity – Annual

Note: Includes all transactions over US$1 billion in North America.

Source: MergerStat, FactSet, Credit Suisse

99 91 90

252

224229

276

40

71

188

162175

260

311

182

122

190

230

196

249

118

01 03 05 07 09 11 13 15 17 19 21YTD

194

216

114

70 70

126

160

218

249

90

71

140127

175

148

237230231231

270

230235

144

99 01 03 05 07 09 11 13 15 17 19 21

YTD

IPO and M&A activity typically

decline around recessions;

however, recent activity has been

surprisingly robust

5 April 2021


Leverage

Net Debt-to-Equity – Large Cap vs. Small Cap

Note: 4-Quarter Moving Average; Excludes Financials and REITs


Net Debt-to-EBITDA – Large Cap vs. Small Cap



30

40

50

60

70

80

90

100

110

96 01 06 11 16 21

%

Russell 2000 u

t S&P 500

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

91 96 01 06 11 16 21

x

Russell 2000 u

t S&P 500

During economic recoveries,

companies with greater financial

leverage tend to outperform

Smaller-caps have much greater

leverage than their larger peers

5 April 2021


Leverage

Interest Coverage – Large Cap vs. Small Cap



Short-Term Debt to Cash – Large Cap vs. Small Cap



0

2

4

6

8

10

91 96 01 06 11 16 21

x

Russell 2000 q

q S&P 500

0.0

0.2

0.4

0.6

0.8

1.0

1.2

91 96 01 06 11 16 21

%

t Russell 2000

t S&P 500

5 April 2021


Market Returns

Note: All returns include dividends except the Dow and NASDQ; Five-, and ten-year returns are annualized returns. Peak is Feb 19, 2020 and Trough is March 23, 2020.

Source: Dow Jones, NASD, Standard & Poor’s, Russell, FactSet, Credit Suisse

U.S. Equity Returns Including Dividends (%)

Index Peak - Trough Since Trough Mar-21 YTD 1 Yr 3 Yr 5 Yr 10 Yr

Broad Indices

Dow -36.7 77.4 6.6 7.8 50.5 9.6 14.7 10.4

S&P 500 -33.8 80.7 4.4 6.2 56.4 15.8 17.6 13.9

S&P 500 Equal Weight -39.0 100.9 6.0 11.5 71.6 14.5 16.4 13.2

S&P 100 (OEX) -31.4 76.3 4.2 5.1 54.4 16.8 18.2 14.2

Nasdaq -30.1 93.1 0.4 2.8 72.0 22.1 23.6 16.9

Russell Large Cap

1000 -34.6 85.9 3.8 5.9 60.6 16.4 18.1 14.0

Growth -31.5 86.7 1.7 0.9 62.7 21.7 22.5 16.6

Value -38.2 82.7 5.9 11.3 56.1 10.3 13.1 11.0

Russell Mid Cap

Mid -40.3 104.2 2.7 8.1 73.6 14.8 16.4 12.6

Growth -35.7 96.0 -1.9 -0.6 68.6 19.3 19.9 14.3

Value -43.4 106.2 5.2 13.1 73.8 10.8 13.5 11.2

Russell Small Cap

2000 -40.7 124.3 1.0 12.7 94.8 15.3 18.1 12.0

Growth -38.5 118.3 -3.1 4.9 90.2 17.7 20.2 13.4

Value -43.1 127.7 5.2 21.2 97.1 12.0 15.4 10.2

Index Value 2020 2019 2018 2017 2016 2015 2014

Broad Indices

Dow 32,982 7.2 22.3 -5.6 25.1 13.4 -2.2 7.5

S&P 500 3,973 18.4 31.5 -4.4 21.8 12.0 1.4 13.7

S&P 500 Equal Weight 5,752 12.8 29.2 -7.6 18.9 14.8 -2.2 14.5

S&P 100 (OEX) 1,802 21.5 32.2 -3.9 22.0 11.4 2.6 12.7

Nasdaq 13,247 43.6 35.2 -3.9 28.2 7.5 5.7 13.4

Russell Large Cap

1000 21.0 31.4 -4.8 21.7 12.1 0.9 13.2

Growth 38.5 36.4 -1.5 30.2 7.1 5.7 13.0

Value 2.8 26.5 -8.3 13.7 17.3 -3.8 13.5

Russell Mid Cap

Mid 17.1 30.5 -9.1 18.5 13.8 -2.4 13.2

Growth 35.6 35.5 -4.8 25.3 7.3 -0.2 11.9

Value 5.0 27.1 -12.3 13.3 20.0 -4.8 14.7

Russell Small Cap

2000 20.0 25.5 -11.0 14.6 21.3 -4.4 4.9

Growth 34.6 28.5 -9.3 22.2 11.3 -1.4 5.6

Value 4.6 22.4 -12.9 7.8 31.7 -7.5 4.2

5 April 2021


Market Returns

Note: All returns include dividends; Five-, and ten-year returns are annualized returns; Financials excludes REITs. Peak is Feb 19, 2020 and Trough is March 23, 2020.


U.S. Equity Returns Including Dividends (%)

Sector Peak - Trough Since Trough Mar-21 YTD 1 Yr 3 Yr 5 Yr 10 Yr

S&P 500 -33.8 80.7 4.4 6.2 56.4 16.8 16.3 13.9

Cyclicals

Energy -55.9 116.2 2.8 30.9 75.2 -5.5 -0.7 -1.6

Materials -36.1 109.2 7.6 9.1 78.3 14.0 14.3 9.5

Industrials -41.7 105.5 8.9 11.4 69.6 12.1 13.7 12.2

Discretionary -31.7 89.2 3.7 3.1 70.3 19.8 17.9 17.5

Financials -42.9 97.5 5.8 16.0 67.5 9.8 15.7 12.1

Technology -31.1 90.1 1.7 2.0 66.6 28.5 27.6 20.5

Comm. Svcs -28.6 75.7 3.1 8.1 59.1 18.7 15.6 16.5

Non-Cyclicals

Staples -24.0 43.8 8.2 1.1 28.4 12.1 8.2 11.6

Health Care -27.9 59.0 3.9 3.2 34.0 15.1 13.6 15.6

Utilities -35.6 47.8 10.5 2.8 19.4 12.0 8.9 11.3

REITs -37.7 60.6 6.8 9.0 32.0 12.3 8.1 10.0

Sector Weight 2020 2019 2018 2017 2016 2015 2014

S&P 500 100.0 18.4 31.5 -4.4 21.8 12.0 1.4 13.7

Cyclicals

Energy 2.8 -33.7 11.8 -18.1 -1.0 27.4 -21.1 -7.8

Materials 2.7 20.7 24.6 -14.7 23.8 16.7 -8.4 6.9

Industrials 8.9 11.1 29.4 -13.3 21.0 18.9 -2.5 9.8

Discretionary 12.4 33.3 27.9 0.8 23.0 6.0 10.1 9.7

Financials 11.3 -1.7 32.1 -13.0 22.2 22.8 -1.5 15.2

Technology 26.6 43.9 50.3 -0.3 38.8 13.8 5.9 20.1

Comm. Services 10.9 23.5 31.7 -7.7 20.1 12.1 14.3 7.4

Non-Cyclicals

Staples 6.1 10.7 27.6 -8.4 13.5 5.4 6.6 16.0

Health Care 13.0 13.4 20.8 6.5 22.1 -2.7 6.9 25.3

Utilities 2.7 0.5 26.3 4.1 12.1 16.3 -4.8 29.0

REITs 2.5 -2.2 29.0 -2.2 10.8 3.4 4.7 30.2

5 April 2021


Market Returns

Note: All returns include dividends; Five-, and ten-year returns are annualized returns. Peak is Feb 19, 2020 and Trough is March 23, 2020.

Source: Standard & Poor’s, MSCI, FactSet, Credit Suisse

Global Equity Returns Including Dividends (%)

Country Currency Peak - Trough Since Trough Mar-21 YTD 1 Yr 3 Yr 5 Yr 10 Yr

TSX US$ -42.8 99.2 4.6 9.5 63.4 10.8 13.0 3.4

Local -37.1 72.2 3.9 8.1 44.2 10.1 11.3 6.0

EAFE US$ -32.6 67.8 2.4 3.6 45.2 5.9 10.8 5.8

Local -30.4 53.4 5.4 7.7 37.1 6.8 10.0 7.7

Euro ex-UK US$ -33.5 71.6 3.3 3.6 49.5 7.5 11.9 6.5

Local -33.0 57.4 6.8 8.4 40.0 8.6 10.4 8.1

UK US$ -39.9 63.6 2.8 6.2 33.6 0.9 5.5 3.1

Local -32.3 36.3 4.1 5.2 20.1 0.8 5.6 4.8

Pac ex-Japan US$ -37.4 77.4 1.0 4.6 54.1 5.7 12.1 5.4

Local -31.7 49.6 2.2 5.8 34.7 6.1 11.0 7.3

Japan US$ -23.6 59.4 1.2 1.7 40.2 6.0 11.9 6.5

Local -23.3 58.1 5.0 8.9 43.5 7.2 11.2 9.7

EME US$ -31.1 78.1 -1.5 2.3 58.9 6.2 15.3 4.6

Local -27.5 70.4 -0.8 4.0 53.5 9.0 15.1 7.8

S&P 500 -33.8 80.7 4.4 6.2 56.4 15.8 17.6 13.9

Country Currency 2020 2019 2018 2017 2016 2015 2014 2013

TSX US$ 7.5 29.4 -16.4 29.4 25.4 -23.6 1.4 5.9

Local 5.6 22.9 -8.9 22.9 21.1 -8.3 10.6 13.0

EAFE US$ 8.3 22.7 -13.4 22.7 1.5 -0.4 -4.5 23.3

Local 1.3 22.3 -10.5 22.3 5.9 5.8 6.4 27.5

Euro ex-UK US$ 11.6 25.9 -14.4 25.9 0.3 0.1 -5.8 28.7

Local 2.1 27.5 -10.6 27.5 3.2 9.1 7.4 24.2

UK US$ -10.4 21.1 -14.1 21.1 0.0 -7.5 -5.4 20.7

Local -13.2 16.5 -8.8 16.5 19.2 -2.2 0.5 18.5

Pac ex-Japan US$ 6.6 18.5 -10.2 18.5 8.0 -8.4 -0.3 5.6

Local 0.4 18.2 -4.4 18.2 8.5 -0.8 5.8 16.5

Japan US$ 14.9 20.1 -12.6 20.1 2.7 9.9 -3.7 27.3

Local 9.2 18.9 -14.9 18.9 -0.4 10.3 9.8 54.8

EME US$ 18.7 18.9 -14.2 18.9 11.6 -14.6 -1.8 -2.3

Local 19.5 18.5 -9.7 18.5 10.1 -5.4 5.6 3.8

S&P 500 18.4 31.5 -4.4 21.8 12.0 1.4 13.7 32.4

5 April 2021


Credit Suisse Targets & Recommendations

S&P 500 Price and Earnings Targets

Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse estimates

EPS Estimate Detail


S&P 500 Price Level Price % Change

Current (as of 03/31/2021) 3,973

2021 Year-End Target Price 4,300 8.2%

Operating Earnings EPS YoY Change

2019 Actual $164.58 1.0%

2020 Estimate $142.50 -13.4%

2021 Estimate $185.00 29.8%

2022 Estimate $210.00 13.5%

P/E Multiples on Credit Suisse Estimates P/E Change

Current on NTM EPS Estimate 20.8x

Year-end 2021 on 2022 EPS 20.5x -0.3x

P/E Multiples on Consensus Estimates P/E Change

Current on NTM EPS Estimate 21.8x

Year-end 2021 on 2022 EPS 21.3x -0.5x

2019 2020E 2021E 2022E

Dollars ($bn)

Sales 11,752 11,359 13,022 13,840

EBIT 1,868 1,585 2,050 2,303

Interest Expense 244 222 211 225

EBT 1,624 1,363 1,839 2,078

Taxes 257 177 290 348

Net Income 1,367 1,187 1,549 1,730

Per Share ($)

Sales/Share 1415.20 1365.00 1555.00 1680.00

EPS/Share 164.58 142.50 185.00 210.00

Contribution to Growth (%)

Sales 3.5 -3.3 14.6 6.3

Operating Margins -3.4 -11.8 14.7 6.1

Int & Tax -0.9 2.0 1.3 -0.7

Share Count 1.8 -0.2 -0.8 1.8

Chg in EPS 1.0 -13.4 29.8 13.5

Our target of 4,300 is consistent

with 8% upside

5 April 2021


Credit Suisse Targets & Recommendations

Quarterly EPS and Revenue Estimates ($)


Sector Recommendations

Source: Credit Suisse

Operating EPS Sales/share

2018 162.91 1,343.01

1Q 39.15 338.85

2Q 41.31 351.91

3Q 42.14 355.02

4Q 41.98 369.42

2019 164.58 1,415.20

1Q 33.13 332.59

2Q 27.98 315.61

3QE 38.69 346.71

4QE 42.70 370.09

2020E 142.50 1,365.00

1QE 42.00 350.00

2QE 44.00 380.00

3QE 49.00 400.00

4QE 50.00 425.00

2021E 185.00 1,555.00

2022E 210.00 1,680.00

Overweight Market Weight Underweight

Discretionary ex-Int. Retail Technology REITs

Industrials Communication Svcs Staples

Materials Internet Retail Utilities

Energy

Health Care

Financials

While we are positive on TECH+

longer term, near term, we expect

Financials, Health Care and

Cyclicals to outperform


5 April 2021

Companies Mentioned (Price as of 02-Apr-2021) 2U, Inc (TWOU.OQ, $40.49) 3M (MMM.N, $192.7) A O Smith (AOS.N, $67.87) ADT Inc (ADT.N, $8.46) AECOM (ACM.N, $64.38) AGCO Corp (AGCO.N, $144.42) Accenture Plc (ACN.N, $278.34) Activision Blizzard, Inc (ATVI.OQ, $95.54) Acuity Brands (AYI.N, $168.9) Adobe Systems Inc. (ADBE.OQ, $483.34) Air Lease (AL.N, $49.64) Air Products & Chemicals (APD.N, $284.9) Akamai Technologies, Inc. (AKAM.OQ, $102.83) Alaska Air Group, Inc. (ALK.N, $69.49) Albemarle Corporation (ALB.N, $150.74) Allegion (ALLE.N, $127.75) Alliance Data (ADS.N, $113.35) Allison Transmission (ALSN.N, $40.89) Alphabet (GOOGL.OQ, $2129.78) Alteryx (AYX.N, $84.64) Amazon com Inc. (AMZN.OQ, $3161.0) Amcr (AMCR.N, $11.66) Amdocs (DOX.OQ, $72.4) Amerco (UHAL.OQ, $614.25) American Airlines Group Inc. (AAL.OQ, $23.86) Ametek (AME.N, $128.66) Amphenol Corporation (APH.N, $67.05) Analog Devices Inc. (ADI.OQ, $160.38) Anaplan (PLAN.N, $54.92) Ansys, Inc. (ANSS.OQ, $351.85) Antero Midstream Corporation (AM.N, $9.12) Apple Inc (AAPL.OQ, $123.0) Applied Materials Inc. (AMAT.OQ, $141.52) AptarGroup, Inc. (ATR.N, $143.87) Ardagh Group S.A. (ARD.N, $25.5) Arista Networks (ANET.N, $308.04) Armstrong World (AWI.N, $92.48) Arrow Electronics, Inc. (ARW.N, $112.14) Ashland Global Holdings Inc. (ASH.N, $90.36) AspenTech (AZPN.OQ, $153.0) Atlassian Corp (TEAM.OQ, $223.06) Autodesk Inc. (ADSK.OQ, $283.9) Automatic Data Processing Inc. (ADP.OQ, $189.4) Avalara (AVLR.N, $139.71) Avery Dennison Corp (AVY.N, $188.07) Avnet Inc. (AVT.OQ, $42.02) Axalta Coating Systems (AXTA.N, $29.97) Axon Enterprise (AXON.OQ, $143.06) Babcock & Wilcox (BWXT.N, $66.87) Baker Hughes Inc. (BKR.N, $21.73) Ball Corporation (BLL.N, $86.27) Berry Global Group (BERY.N, $61.56) Black Kngt (BKI.N, $74.71) Boeing (BA.N, $252.96) Booz Allen Hamilton Holding (BAH.N, $81.71) Broadcom Ltd (AVGO.OQ, $475.95) Broadridge (BR.N, $154.92) CACI International, Inc. (CACI.N, $248.6) CDK Global (CDK.OQ, $54.16) CDW Corp (CDW.OQ, $169.44) CF Industries Holding Inc. (CF.N, $45.91) CH Robinson (CHRW.OQ, $97.15) CSX Corporation (CSX.OQ, $97.26) Cabot (CBT.N, $53.28) Cabot Oil & Gas Corporation (COG.N, $19.09) Cadence Design System (CDNS.OQ, $141.49) Carlisle Companies Incorporated (CSL.N, $167.05) Caterpillar Inc. (CAT.N, $232.74) Celanese Corporation (CE.N, $151.89) Ceridian HCM Holdings (CDAY.N, $84.58) Chemours (CC.N, $28.2) Cheniere Energy (LNG.A, $71.8) Chevron Corporation (CVX.N, $105.75) Ciena Corp (CIEN.N, $56.6) Cimarex Energy Co. (XEC.N, $64.42) Cintas Corp. (CTAS.OQ, $348.31) Cirrus Logic (CRUS.OQ, $87.61) Cisco Systems (CSCO.OQ, $51.98) Citrix Systems Inc. (CTXS.OQ, $140.32) Clean Harbors (CLH.N, $86.15) CoStar Group (CSGP.OQ, $861.38) Cognex (CGNX.OQ, $84.31) Cognizant Technology Solutions Corp. (CTSH.OQ, $78.88) Coherent (COHR.OQ, $258.53) Colfax (CFX.N, $44.36) CommScope Inc. (COMM.OQ, $15.57) Computer Sciences Corp. (DXC.N, $30.83)


5 April 2021

ConocoPhillips (COP.N, $54.02) Continental Resources, Inc. (CLR.N, $27.34) Copa Holdings (CPA.N, $80.92) Copart (CPRT.OQ, $112.61) Corelogic (CLGX.N, $79.45) Corning, Inc. (GLW.N, $43.99) Corteva, Inc. (CTVA.N, $46.74) Coupa (COUP.OQ, $262.28) Crane (CR.N, $95.02) Crown Holdings Inc. (CCK.N, $100.38) Cummins Inc. (CMI.N, $257.72) Curtiss-Wright (CW.N, $119.93) Deere & Co. (DE.N, $372.12) Dell Technologies (DELL.N, $89.08) Delta Air Lines, Inc. (DAL.N, $48.83) Devon Energy Corporation (DVN.N, $23.5) Diamondback Energy, Inc. (FANG.OQ, $81.22) DocuSign (DOCU.OQ, $206.29) Dolby Labs (DLB.N, $102.0) Donaldson Company, Inc. (DCI.N, $58.93) Dover Corporation (DOV.N, $137.93) Dow, Inc. (DOW.N, $64.6) Dropbox (DBX.OQ, $27.39) DuPont de Nemours, Inc. (DD.N, $78.13) EOG Resources, Inc. (EOG.N, $75.34) EPAM Systems, Inc. (EPAM.N, $399.99) EQT Corporation (EQT.N, $18.96) ETSY (ETSY.OQ, $208.2) Eagle Matls (EXP.N, $135.28) Eastman Chemical (EMN.N, $111.29) Eaton Corporation (ETN.N, $139.49) EchoStar (SATS.OQ, $23.99) Ecolab (ECL.N, $216.85) Elastic (ESTC.N, $114.53) Electronic Arts, Inc (EA.OQ, $137.96) Element Solution (ESI.N, $18.81) Emerson Electric (EMR.N, $90.41) Enphase Energy (ENPH.OQ, $162.69) Entegris (ENTG.OQ, $120.09) Equifax (EFX.N, $182.61) Equitrans Midstream Corporation (ETRN.N, $8.48) Euronet Worldwid (EEFT.OQ, $141.8) Everbridge, Inc. (EVBG.OQ, $125.45) Expeditors International of Washington (EXPD.OQ, $108.76) ExxonMobil Corporation (XOM.N, $57.39) F5 Networks, Inc. (FFIV.OQ, $211.11) FLIR Sys (FLIR.OQ, $56.87) FMC Corporation (FMC.N, $111.92) FTI Consulting (FCN.N, $142.17) Facebook Inc. (FB.OQ, $298.66) Fair Isaac (FICO.N, $500.95) Fastenal Co (FAST.OQ, $51.11) FedEx Corporation (FDX.N, $283.54) Fidelity National Information Services Inc (FIS.N, $144.05) FireEye (FEYE.OQ, $19.94) First Solar (FSLR.OQ, $86.15) Fiserv (FISV.OQ, $122.17) Five9 (FIVN.OQ, $164.22) FleetCor Technologies, Inc. (FLT.N, $279.5) Flowserve Corp. (FLS.N, $39.46) Fortinet, Inc. (FTNT.OQ, $186.39) Fortive (FTV.N, $70.9) Fortune Brands Home & Security (FBHS.N, $97.15) Freeport-McMoRan (FCX.N, $33.76) Gartner Inc (IT.N, $187.27) Gates Industrial Corporation (GTES.N, $16.35) Generac Hldg (GNRC.N, $323.8) General Dynamics Corporation (GD.N, $180.83) General Electric (GE.N, $13.28) Genpact (G.N, $43.2) Global Payments (GPN.N, $207.97) GoDaddy (GDDY.N, $80.21) Graco (GGG.N, $72.9) Graftech International Ltd. (EAF.N, $12.51) Graphic Pack (GPK.N, $18.35) Grubhub Inc. (GRUB.N, $63.38) Guidewire (GWRE.N, $102.46) HP Inc. (HPQ.N, $32.05) Halliburton (HAL.N, $21.92) Heico Corp (HEI.N, $127.98) Helmerich & Payne, Inc. (HP.N, $28.44) Hess Corporation (HES.N, $74.48) Hewlett Packard Enterprise (HPE.N, $15.7) Hexcel Corporation (HXL.N, $56.36) HollyFrontier Corporation (HFC.N, $38.02) Honeywell International Inc. (HON.N, $216.8) Howmet Aerospace (HWM.N, $31.82) HubSpot (HUBS.N, $485.85)


5 April 2021

Hubbell (HUBB.N, $190.39) Huntington Ingalls (HII.N, $204.23) Huntsman C (HUN.N, $29.47) IAA US (IAA.N, $56.26) IDEX (IEX.N, $212.25) IPG Photonics (IPGP.OQ, $217.8) ITT (ITT.N, $90.83) Illinois Tool Works, Inc. (ITW.N, $221.38) Ingersoll-Rand Inc. (IR.N, $49.61) Inphi (IPHI.OQ, $180.54) Intel Corp. (INTC.OQ, $64.55) International Business Machines (IBM.N, $133.23) International Paper Co. (IP.N, $54.29) Intuit Inc. (INTU.OQ, $395.23) JB Hunt Transport Services (JBHT.OQ, $169.8) Jack Henry & Associates (JKHY.OQ, $154.59) Jacobs Engineering (J.N, $129.95) JetBlue Airways Corporation (JBLU.OQ, $20.37) Johnson Controls Inc (JCI.N, $59.9) Juniper Networks (JNPR.N, $25.62) KLA Corporation (KLAC.OQ, $347.29) Kansas City Southern (KSU.N, $266.98) Keysight Technologies (KEYS.N, $143.79) Kinder Morgan Inc. (KMI.N, $16.84) Kirby Corporation (KEX.N, $60.23) Knight Transportation (KNX.N, $48.76) L3Harris Technologies, Inc. (LHX.N, $203.62) Lam Research Corp. (LRCX.OQ, $639.3) Landstar System Inc. (LSTR.OQ, $167.7) Leidos (LDOS.N, $96.45) Lennox International (LII.N, $316.74) Lincoln Electric (LECO.OQ, $123.71) Linde Plc. (LIN.N, $280.84) Littelfuse (LFUS.OQ, $267.4) Lockheed Martin Corporation (LMT.N, $371.02) Lumentum Hldg (LITE.OQ, $92.57) Lyft (LYFT.OQ, $64.64) Lyondell (LYB.N, $105.55) MKS Instruments (MKSI.OQ, $195.84) MSA Safety (MSA.N, $151.51) MSC Industrial Direct Co. (MSM.N, $91.29) Macquarie Infra (MIC.N, $32.18) Manhattan Assoc (MANH.OQ, $120.9) ManpowerGroup Inc. (MAN.N, $101.29) Marathon Oil Corporation (MRO.N, $11.79) Martin Mari Mat (MLM.N, $333.88) Marvell Technology Group Ltd. (MRVL.OQ, $49.66) Masco (MAS.N, $60.99) MasterCard Inc. (MA.N, $363.3) Maxim Integrated Products (MXIM.OQ, $95.45) Mercury Systems (MRCY.OQ, $72.42) Microchip Technology Inc. (MCHP.OQ, $160.17) Micron Technology Inc. (MU.OQ, $92.41) Microsoft (MSFT.OQ, $242.35) Middleby (MIDD.OQ, $165.49) MongoDB (MDB.OQ, $290.33) Monolithic Power (MPWR.OQ, $367.52) Mosaic Co. (MOS.N, $31.26) Motorola Solutions (MSI.N, $188.36) Murphy Oil Corporation (MUR.N, $17.42) NCR (NCR.N, $37.94) NVIDIA Corporation (NVDA.OQ, $552.47) National Instruments Corp. (NATI.OQ, $44.09) NetApp (NTAP.OQ, $73.65) Netflix Inc. (NFLX.OQ, $539.42) New Relic (NEWR.N, $62.9) NewMarket VG (NEU.N, $383.01) Newmont (NEM.N, $61.81) Nielsen Holdings Inc (NLSN.N, $25.33) Nordson (NDSN.OQ, $202.38) Norfolk Southern (NSC.N, $271.18) Northrop Grumman Corporation (NOC.N, $322.24) NortonLifeLock Inc (NLOK.OQ, $21.42) Nuance Commns (NUAN.OQ, $44.91) Nucor Corporation (NUE.N, $79.88) Nutanix (NTNX.OQ, $27.22) ON Semiconductor Corp. (ON.OQ, $42.89) ONEOK Inc (OKE.N, $51.35) Occidental Petroleum Corporation (OXY.N, $27.38) Okta (OKTA.OQ, $229.7) Old Dominion Freight Line (ODFL.OQ, $243.69) Olin (OLN.N, $39.26) Oracle Corporation (ORCL.N, $71.81) Oshkosh Corporation (OSK.N, $119.54) Owens Corning (OC.N, $93.79) PPG Industries, Inc (PPG.N, $151.96) PTC (PTC.OQ, $143.87) Paccar Inc (PCAR.OQ, $92.03)


5 April 2021

Packaging Corp. of America (PKG.N, $135.57) PagerDuty (PD.N, $41.17) Palo Alto Networks, Inc. (PANW.N, $328.05) Parker Hannifin Corporation (PH.N, $316.21) PayPal (PYPL.OQ, $247.54) Paychex (PAYX.OQ, $98.76) Paycom Software, Inc. (PAYC.N, $376.75) Paylocity Hldg (PCTY.OQ, $184.03) Pegasystems (PEGA.OQ, $117.99) Pentair Plc (PNR.N, $62.39) Phillips 66 (PSX.N, $83.16) Pioneer Natural Resources Company (PXD.N, $164.6) Pluralsight (PS.OQ, $22.42) Proofpoint (PFPT.OQ, $128.56) Pure Storage (PSTG.N, $21.97) Qorvo (QRVO.OQ, $192.9) Quanta Services (PWR.N, $89.17) Qurate Retail (QRTEA.OQ, $11.82) RPM International (RPM.N, $92.43) Raytheon Technologies (RTX.N, $77.28) RealPage, Inc. (RP.OQ, $87.67) Reliance Steel & Aluminum Co. (RS.N, $155.65) Republic Services, Inc. (RSG.N, $99.72) RingCentral (RNG.N, $305.01) Robert Half International (RHI.N, $77.66) Rockwell Automation (ROK.N, $263.44) Rollins (ROL.N, $34.83) Roper Tech (ROP.N, $410.35) Royal Gold (RGLD.OQ, $111.45) Ryder (R.N, $76.91) SS&C Technologies, Inc. (SSNC.OQ, $71.01) Sabre (SABR.OQ, $15.26) Salesforce.com (CRM.N, $218.72) Schlumberger (SLB.N, $28.1) Schneider National, Inc. (SNDR.N, $25.14) Science App (SAIC.N, $82.6) Scotts Miracle (SMG.N, $250.0) Sealed Air Corp. (SEE.N, $45.6) Sensata Tech (ST.N, $58.57) ServiceNow, Inc. (NOW.N, $507.01) Sherwin-Williams Company (SHW.N, $249.75) Silgan Holdings (SLGN.OQ, $41.99) Skyworks Solutns (SWKS.OQ, $187.7) Smartsheet (SMAR.N, $65.36) Snap-On (SNA.N, $231.74) SolarEdge Technologies (SEDG.OQ, $283.39) SolarWinds (SWI.N, $17.88) Sonoco Products (SON.N, $64.0) Southern Copper Corporation (SCCO.N, $69.41) Southwest Airlines Co. (LUV.N, $61.3) Spirit AeroSystems (SPR.N, $49.59) Splunk, Inc. (SPLK.OQ, $138.27) Square (SQ.N, $229.51) Stanley Black & Decker (SWK.N, $200.66) Steel Dynamics, Inc. (STLD.OQ, $50.97) Stericycle, Inc (SRCL.OQ, $68.11) Switch, Inc. (SWCH.N, $16.74) Synnex Corp (SNX.N, $116.98) Synopsys Inc. (SNPS.OQ, $254.23) Take-Two Interactive Software Inc. (TTWO.OQ, $180.15) Targa Resources Corp (TRGP.N, $32.1) Teledyne Tech (TDY.N, $417.43) Teradata Corp (TDC.N, $38.93) Teradyne Inc. (TER.OQ, $128.81) Texas Instruments Inc. (TXN.OQ, $192.06) Textron (TXT.N, $57.03) Timken (TKR.N, $82.16) Toro (TTC.N, $105.36) Trade Desk (TTD.OQ, $658.84) Trane Technologies (TT.N, $165.44) TransDigm (TDG.N, $603.71) TransUnion (TRU.N, $92.26) Trex Co (TREX.N, $94.79) Trimble (TRMB.OQ, $80.735) Trinity Inds (TRN.N, $28.49) TripAdvisor, Inc. (TRIP.OQ, $55.25) Twilio (TWLO.N, $352.04) Twitter (TWTR.N, $63.83) Tyler Tech (TYL.N, $431.82) Uber (UBER.N, $57.6) Ubiquiti Inc. (UI.N, $289.15) Union Pacific (UNP.N, $220.21) United Airlines Holdings, Inc. (UAL.OQ, $57.82) United Parcel Service Inc. (UPS.N, $171.28) United Rentals (URI.N, $331.71) Univar Inc. (UNVR.N, $22.0) UniversalDisplay (OLED.OQ, $238.14) VMware Inc. (VMW.N, $152.4)


5 April 2021

Valero Energy Corporation (VLO.N, $75.3) Valmont Industries (VMI.N, $241.69) Valvoline (VVV.N, $26.17) VeriSign Inc. (VRSN.OQ, $201.9) Verisk Analytics (VRSK.OQ, $179.81) ViaSat Inc. (VSAT.OQ, $50.34) Visa Inc. (V.N, $216.86) Vulcan Materials (VMC.N, $166.39) W. W. Grainger, Inc. (GWW.N, $406.35) W.R. Grace & Co. (GRA.N, $61.19) WEX (WEX.N, $216.44) Waste Management, Inc. (WM.N, $129.28) Watsco (WSO.N, $267.22) Wayfair Inc. (W.N, $338.0) WestRock (WRK.N, $52.19) Western Digital (WDC.OQ, $71.37) Western Union (WU.N, $25.15) Westinghouse Air Brake Technologies Corp (WAB.N, $78.99) Westlake Chem (WLK.N, $91.55) Williams Companies Inc (WMB.N, $23.9) Woodward Inc (WWD.OQ, $123.14) Workday Inc (WDAY.OQ, $254.97) XPO Logistics, Inc. (XPO.N, $127.48) Xerox (XRX.N, $24.59) Xylem (XYL.N, $104.64) Zendesk (ZEN.N, $139.8) Zillow Group (Z.OQ, $133.41) Zscaler (ZS.OQ, $175.77) Zynga Inc (ZNGA.OQ, $10.48) eBay Inc. (EBAY.OQ, $63.11) nVent Electric (NVT.N, $28.65)

Disclosure Appendix

Analyst Certification

I, Jonathan Golub, CFA, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

As of December 10, 2012 Analysts’ stock rating are defined as follows:

Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most att ractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European (excluding Turkey) ratings ar e based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the an alyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin America, Turkey and Asia (excluding Japan and Australia), stock ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark (India - S&P BSE Sensex Index); prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst ’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time. Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.


5 April 2021

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 53% (32% banking clients)

Neutral/Hold* 34% (25% banking clients)

Underperform/Sell* 11% (20% banking clients)

Restricted 2%

Please click here to view the MAR quarterly recommendations and investment services report for fundamental research recommendations. *For purposes of the NYSE and FINRA ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.

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