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Date: 3/22/13

Analyst Name: Jacob Allen

CIF Stock Recommendation Report (Spring 2013)

Company Name and Ticker: CareFusion Corp. (CFN)

Section (A) Summary

Recommendation Buy: Yes No Target Price: Stop-Loss Price:

Sector: Healthcare Industry: Medical Equipment/ Supplies/ Distribution

Market Cap (in Billions): $7.556

# of Shrs. O/S (in Millions): 222.69

Current Price: $33.82 52 WK Hi: $34.65 52 WK Low: $23.77 EBO Valuation: $26.01

Morningstar (MS) Fair Value Est.: $37.00

MS FV Uncertainty: Medium

MS Consider Buying: $25.90

MS Consider Selling: $49.95

EPS (TTM): 1.43 (Yahoo!) EPS (FY1): 2.16 EPS (FY2): 2.42 MS Star Rating: 3

Next Fiscal Yr. End ”Year”: 2013 “Month”: June

Last Fiscal Qtr. End: Less Than 8 WK: Y N

If Less Than 8 WK, next Earnings Ann. Date:

Analyst Consensus Recommendation: Outperform

Forward P/E: 13.98 Mean LT Growth: 11.42% PEG: 1.22 Beta: 0.94

% Inst. Ownership: 92.12%

Inst. Ownership- Net Buy: Y N

Short Interest Ratio: 1.10 Short as % of Float: 1.00

Ratio Analysis Company Industry Sector

P/E (TTM) 19.64 30.76 27.52

P/S (TTM) 2.08 6.16 11.54

P/B (MRQ) 1.38 3.02 2.23

P/CF (TTM) 13.03 17.46 15.52

Dividend Yield N/A 1.23 1.66

Total Debt/Equity (MRQ) 21.07 39.50 19.40

Net Profit Margin (TTM) 10.73 4.95 -22.82

ROA (TTM) 4.65 6.47 4.31

ROE (TTM) 7.29 11.94 7.26

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Investment Thesis: CareFusion Corp. (CFN) is a very young company with good potential. They are a dominant player in their product market and are expected to continue this trend with the possibility of capturing even more market share. That being said, they are a slow growth company who will not see a great increase in margins very quickly. Their progress will come over the next 5-10 years. Their ratios put them as slightly undervalued but I believe their stock price is a little bit too high to purchase at the moment. If the current price was in the range of $28-30 I would advise a buy recommendation, however I believe it is too high currently. Pros:

Good ratios

High market share

International exposure with good potential for international growth

Doing very well for a new company

Good history of positive earnings surprises

Products are always in demand by medical facilities, demand could increase with implementation of Affordable Health Care Act.

Cons:

Price could be run up too high

High growth in recent month means a missed window of opportunity

No dividends + slow growth rate = a long time until solid returns are seen

Summary Provide brief summary of your analysis in each section that follows

Company Profile: CareFusion Corp. (CFN) is a medical equipment supplier that focuses on improving the safety and lowering the cost of healthcare. They are headquartered in San Diego, CA and operate primarily in the United States. They have an international presence as well. Their operations consist of two segments: Medical Systems and Procedural Solutions; these are the two segments that they spun from Cardinal Health.

Fundamental Valuation: I chose a 5-year growth rate for CFN and the fundamental valuation came to be $26.01 suggesting a major overvaluation currently. However I do not agree with this evaluation because it does not incorporate market share or any other macroeconomic impact affects a stock’s price.

Relative Valuation: The relative valuation has CFN currently slightly overvalued at its current trading price. Forward P/E is the most prominent ratio in the health care industry which provided the valuation of $32.14.

Revenue and Earnings Estimates: Revenue estimates have been decreasing however earnings have been rising. This is due to the expected single-digit growth over the next 5-10 years.

Analyst Recommendations: Analysts have become more bearing on CFN over the past three months bringing their rating from 1.87 three months ago to 2.12 currently. Their overall recommendation is a hold.

Institutional Ownership: Net buyers has had a positive increase. JP Morgan Asset Management and The Vanguard Group both have > 5% ownership in CFN. The ownership combined with a net by is a bullish sign for the stock.

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Affordable Health Care Act tax expected to increase expenses by up to $40 million a year in the future

Will be hard to increase margin with increased taxes from AHC Act

Believe it will drop a few dollars in the coming week/months while the XLV will continue upward trend

Short Interest: CFN has a very good short interest ratio. Their current days to cover is 1.00 suggesting a bullish sentiment from investors. Their short interest is much better than competitors.

Stock Price Chart: Great growth since incorporation in 2009. Very good growth in past few months compared to XLV, S&P 500 and competitors. Technical analysis shows no death crosses in the near future. However a very high RSI suggests a dip in the stock price will occur soon

Section (B) Company Profile (two pages maximum)

Company Summary

CareFusion Corp. (CFN) is a medical equipment supplier that focuses on improving the

safety and lowering the cost of healthcare. They are headquartered in San Diego, CA and

operate primarily in the United States. They have an international presence as well. CFN

employs over 15,000 people across the globe, with 6,300 employed in the U.S. CFN completed

their spinoff from Cardinal Health on August 31, 2009 to become their own entity. Their

operations consist of two segments: Medical Systems and Procedural Solutions; these are the

two segments that they spun from Cardinal Health.

Medical Systems incorporates three business units: Infusion Systems, Dispensing

Technologies and Respiratory Technologies. The Medical Systems area is organized around its

medical equipment business. CFN develops, manufactures and markets the equipment and

related supplies needed for medical management.

The Procedural Solutions segment is organized around disposable products and reusable

surgical instruments. The Procedural Solutions segment consists of three business units:

Infection Prevention, Medical Specialties and Special Disposables. CFN also develops,

manufactures and markets these products.

CFN’s total revenue for FY 2012 was $3,598 million. Medical Systems accounted for

$2,314 million, or 64.31%, and Procedural Solutions accounted for $1,284 million, or 35.69%.

The largest source of revenue for Medical Systems was Dispensing Technologies with $1,038

million in revenues, equating to 44.86% of Medical Systems income. The largest source of

revenue for Procedural Solutions was Infection Prevention with $576 million in revenues,

equating to 44.86% of Procedural Solutions income.

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Total revenues increased by 4.6% from FY 2011 to FY 2012. International Revenue for FY

2012 was $790 million, or 22% of total revenue.

*All information from summary is taken from CFN’s 2012 10-K Report located on their website

www.CareFusion.com.

Business Model, Competition, Environment and Strategy

As mentioned, CFN operates in two segments: Medical Systems and Procedural

Solutions. Because they operate in these two segments, their main competitors are Baxter

International (BAX) and Becton Dickinson and Co. (BDX). These two main competitors compete

directly with CFN’s Medical Systems business segment. With regards to medical systems, CFN

currently holds a dominate market share in infusion pumps and medication-dispensing, with

25% and 70% global market share respectively (MorningStar.com). CFN’s focus is on improving

the safety and reducing the costs of healthcare on a global scale.

Because health care is a constant need, CFN is not a seasonal or cyclical company. They

operate with stead demand throughout the entire year. With the new health care act passed,

the Affordable Health Care Act, one could predict that CFN will see increased demand of their

products from medical facilities in the future due to more people being insured in the U.S. The

Affordable Health Care Act legislation will also add a 2.3% annual excise tax on the sales of

certain medical devices in the U.S. CFN currently expects the impact of the tax to be

approximately $15 million to $20 million in FY 2013, rising to approximately $30 million to $40

million annually thereafter (CFN 10-K).

Revenue and Earnings History

Discuss any pattern in revenue and earnings (e.g., increasing year over year; seasonal; etc.)

**From Morningstar

There does not seem to be any pattern between higher or lower revenues during a

specific season/quarter. The only trend notable is that higher revenues lead to a higher EPS.

Earnings Per Share (recent four quarters, 2012):

Q1: 0.14

Q2: 0.45

Q3: 0.38

Q4: 0.49

Total: 1.46

Revenue (recent four quarters, 2012):

Q1: $919M

Q2: $965M

Q3: $837M

Q4: $909M

Total: $3,630M

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This is a trend that is consistent is most companies. The only outlier was in the first quarter in

2012 when the EPS was 0.14. I could not find an explanation as to why the number was so low.

The most recent earnings report on February 7, 2013, saw CFN just beat Wall Street’s

earnings estimates with an EPS of $0.48. The stock responded well to this news, continuing its

climb. CFN had been rising the weeks prior to the report and has continued to climb since.

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Section (C) Fundamental Valuation (EBO)

Include the following here:

Inputs (provide below input values used in your analysis)

EPS forecasts (FY1 & FY2): 2.16 & 2.42

Long-term growth rate: 11.42%

Book value /share (along with book value and number of shares outstanding):

Book value: $5.231 Billion

# of shares outstanding: 217.3

Book value / share: 24.07

Dividend payout ratio: N/A

Next fiscal year end: 2013

Current fiscal month: 9

Target ROE: 10.85

Output

Above normal growth period chosen: 5

EBO valuation (Implied price from the spreadsheet): $26.01

CFN PARAMETERS FY1 FY2 Ltg

EPS Fore casts 2.16 2.42 11.42% Mode l 1: 12-ye ar fore casting horiz on (T=12).

Book value /share (last fye ) 24.07 and a 7-ye ar growth pe riod.

Discount Rate 9.57%

Divide nd Payout Ratio (POR) 0.00% Please download and save this template to your own storage device

Ne xt Fsc Ye ar e nd 2013 You only ne e d to input value s to ce lls highlighte d in "ye llow"

Curre nt Fsc Mth (1 to 12) 9 The re st o f the spre adshe e t is calculate d automatically

Targe t ROE (industry avg .) 10.85% Ple ase re ad "Guide line s_for_Fundame ntalValuation_ProfLe e _Spre adshe e t" file care fully

Ye ar 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Long-term EPS Growth Rate (Ltg) 0.1142 0.1142 0.1142 0.1142 0.1142

Forecasted EPS 2.16 2.42 2.70 3.00 3.35 3.73 4.16

Beg. of year BV/Shr 24.070 26.230 28.650 31.346 34.351 37.698 41.428

Implied ROE 0.092 0.094 0.096 0.097 0.099 0.100

ROE (Beg. ROE, from EPS forecasts) 0.090 0.092 0.094 0.096 0.097 0.099 0.100 0.102 0.104 0.105 0.107 0.109

Abnormal ROE (ROE-k) -0.006 -0.003 -0.002 0.000 0.002 0.003 0.005 0.006 0.008 0.010 0.011 0.013

growth rate for B (1-POR)*(ROEt-1) 0.000 0.090 0.092 0.094 0.096 0.097 0.099 0.100 0.102 0.104 0.105 0.107

Compounded growth 1.000 1.090 1.190 1.302 1.427 1.566 1.721 1.894 2.087 2.303 2.545 2.817

growth*AROE -0.006 -0.004 -0.002 0.000 0.002 0.005 0.008 0.012 0.016 0.022 0.028 0.036

required rate (k) 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096 0.096

Compound discount rate 1.096 1.201 1.315 1.441 1.579 1.730 1.896 2.077 2.276 2.494 2.733 2.994

div. payout rate (k) 0.000

Add to P/B PV(growth*AROE) -0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.01 0.01 0.01

Cum P/B 0.99 0.99 0.99 0.99 0.99 0.99 1.00 1.00 1.01 1.02 1.03 1.04

Add: Perpetuity

beyond current yr (Assume this yr's AROE forever) -0.06 -0.03 -0.01 0.00 0.02 0.03 0.04 0.06 0.08 0.09 0.11 0.13

Total P/B (P/B if we stop est. this period) 0.94 0.96 0.98 0.99 1.01 1.03 1.04 1.06 1.09 1.11 1.14 1.17

Implie d price 24.19 24.74 25.15 25.58 26.01 26.45 26.90 27.45 28.05 28.70 29.40 30.15

Che ck:

Beg. BV/Shr 24.07 26.23 28.65 31.35 34.35 37.70 41.43 45.58 50.23 55.43 61.27 67.81

Implied EPS 2.16 2.42 2.70 3.00 3.35 3.73 4.16 4.65 5.20 5.83 6.55 7.36

Implied EPS growth 0.120 0.114 0.114 0.114 0.114 0.114 0.118 0.120 0.121 0.122 0.124

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Sensitivity Analysis

EBO valuation would be (you can include more than one scenario in each of the following):

$25.15 if changing above normal growth period to 3 years

$26.84 if changing growth rate from mean (consensus) to the highest estimate 12.60

$25.03 if changing growth rate from mean (consensus) to the lowest estimate 10.00%

$32.60 if changing discount rate to 8%

$26.01 if changing target ROE to 15%

*Discount Rate: 0.0279 + 0.94(0.1 – 0.0279) = 9.57%

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Section (D) Relative Valuation

From the top panel

CFN has competitive ratios across the board with many of its ratios falling below or near the

industry average. The most notable ratios to look at are forward P/E, P/B and PEG. These ratios

value the company in line or possibly slightly undervalued compared to the competitors. The

PEG of 1.22 is low enough to suggest that there is a good potential for future growth. The P/S

and P/CF are also in line with competitors and suggest it is currently valued correctly.

From the bottom panel

When looking at the derived stock prices from competitors, it would seem that CFN is

either valued correctly at the moment or is slightly over valued. With P/E being the most

relevant ratio to the healthcare sector, the median value of $32.14 would put the stock at a

very slight overvaluation currently. The median prices from the PEG and P/S have the company

currently undervalued while the P/CF has the company overvalued. The P/B has some very high

numbers and therefore make it irrelevant to this evaluation of derived stock prices.

The current 52-week high is $34.65. The PEG and P/s have CFN valued above this. With

the forward P/E and P/CF valuing CFN under this number. CFN is currently trading at $34.17.

I Chose Baxter, Becton Dickinson, and C R Bard because they all compete directly with

CareFusion in the medical equipment production and distribution. Baxter and Becton Dickinson

CFN

Mean FY2

Earnings Estimate Forward Mean LT PEG P/B ROE Value P/S P/CF

Ticker Name Mkt Cap Current Price (next fiscal year) P/E Growth Rate (MRQ) 5 yr ave Ratio TTM TTM

1 BAX Baxter International 37,614.48$ 69.37$ 5.22$ 13.29 8.51% 1.56 5.42 30.42% 0.18 2.65 12.18

2 BDX Becton Dickinson & Co 17,815.33$ 91.74$ 6.24$ 14.70 7.70% 1.91 3.99 23.06% 0.17 2.29 10.87

3 BCR C R Bard Inc 8,337.81$ 100.98$ 7.61$ 13.27 9.89% 1.34 4.30 23.38% 0.18 2.82 12.64

4 CAH Cardinal Health Inc. 15,723.86$ 42.35$ 3.82$ 11.09 10.50% 1.06 2.40 12.29% 0.20 0.15 10.56

CFN CareFusion Corp. 7,555.95$ 33.82$ 2.42$ 13.98 11.42% 1.22 1.38 5.69% 0.24 2.08 13.03

Implied Price based on: P/E PEG P/B Value P/S P/CF

1 BAX Baxter International $32.16 $43.16 $132.83 $24.85 $43.09 $31.61

2 BDX Becton Dickinson & Co $35.58 $52.77 $97.78 $24.13 $37.23 $28.21

3 BCR C R Bard Inc $32.11 $37.08 $105.38 $25.65 $45.85 $32.81

4 CAH Cardinal Health Inc. $26.83 $29.18 $58.82 $27.23 $2.44 $27.41

High $35.58 $52.77 $132.83 $27.23 $45.85 $32.81

Low $26.83 $29.18 $58.82 $24.13 $2.44 $27.41

Median $32.14 $40.12 $101.58 $25.25 $40.16 $29.91

Cougar Investment Fund Relative Valuation Template

Please download and save this template to your own storage device

You only need to input values to ce lls highlighted in "ye llow"

The rest of the spreadsheet is calculated automatically

Please read "Stock Recommendation Guide lines" document carefully

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are larger cap companies than CareFusion but CFN still competes directly with them because of

their specialized approach in their products. I chose Cardinal Health because CareFusion is a

spin-off of Cardinal. They spun off in 2009 taking the Medical Systems and Procedural Solutions

business segments with them.

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Section (E) Revenue and Earnings Estimates

Copy/Paste the “Historical Surprises” Table from Reuters.com, “Analysts” tab (include both

revenue and earnings; make note that revenues might be in “millions”)

HISTORICAL SURPRISES

Sales and Profit Figures in US Dollar (USD) Earnings and Dividend Figures in US Dollar (USD)

Estimates vs Actual Estimate Actual Difference Surprise %

SALES (in millions)

Quarter Ending Dec-12 907.48 909.00 1.52 0.17

Quarter Ending Sep-12 840.80 837.00 -3.80 -0.45

Quarter Ending Jun-12 956.24 968.00 11.76 1.23

Quarter Ending Mar-12 893.39 919.00 25.61 2.87

Quarter Ending Dec-11 914.18 915.00 0.82 0.09

Earnings (per share)

Quarter Ending Dec-12 0.53 0.54 0.01 2.16

Quarter Ending Sep-12 0.42 0.44 0.02 3.99

Quarter Ending Jun-12 0.49 0.51 0.02 3.28

Quarter Ending Mar-12 0.45 0.49 0.04 9.33

Quarter Ending Dec-11 0.44 0.44 0.00 0.92

CFN has a pattern of positively surprising the market with higher number than expected.

For the past five quarters reported in the above graph, CFN only missed estimates once in

revenues. This was during the 3rd quarter of 2012. However, in earnings, CFN has not missed

estimates once in the past five reports. In all instances, the stock has responded appropriately

to the positive surprises with gains that day. There were no extreme jumps or declines when

these reports came out either.

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Copy/paste the “Consensus Estimates Analysis” Table from Reuters.com, “Analysts” tab

(include both revenue and earnings)

CONSENSUS ESTIMATES ANALYSIS

Sales and Profit Figures in US Dollar (USD) Earnings and Dividend Figures in US Dollar (USD)

# of Estimates Mean High Low 1 Year

Ago

SALES (in millions)

Quarter Ending Mar-13 14 910.12 942.00 889.00 925.21

Quarter Ending Jun-13 14 1,004.20 1,029.69 979.00 1,033.20

Year Ending Jun-13 16 3,661.69 3,696.03 3,644.00 3,758.96

Year Ending Jun-14 16 3,787.26 3,875.07 3,745.00 3,894.53

Earnings (per share)

Quarter Ending Mar-13 16 0.53 0.56 0.48 0.49

Quarter Ending Jun-13 16 0.65 0.70 0.59 0.59

Year Ending Jun-13 17 2.16 2.19 2.13 2.02

Year Ending Jun-14 17 2.42 2.45 2.35 2.23

LT Growth Rate (%) 5 11.42 12.60 10.00 9.49

The range of estimates does not seem to be too extreme. The high and low estimates

are relatively close together for both revenues and earnings. The high revenue is 0.94% higher

than the mean and the low revenue is 0.48% lower than the mean for FY 13. For earnings, the

high estimate is 1.39% higher than the mean and the low estimate is 1.39% lower than the

mean. The divergent are very similar, with neither the high or low estimate being very far from

the mean.

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Currently, there are only five analysts providing a LT-Growth rate. The rate rages from

10.00% to 12.60% providing a mean of 11.42%.

Copy/paste the “Consensus Estimates Trend” Table from Reuters.com, “Analysts” tab (include

both revenue and earnings)

CONSENSUS ESTIMATES TREND

Sales and Profit Figures in US Dollar (USD) Earnings and Dividend Figures in US Dollar (USD)

Current 1 Week

Ago 1 Month

Ago 2 Month

Ago 1 Year

Ago

SALES (in millions)

Quarter Ending Mar-13 910.12 910.12 911.64 918.49 925.21

Quarter Ending Jun-13 1,004.20 1,004.20 1,004.48 982.99 1,033.20

Year Ending Jun-13 3,661.69 3,661.69 3,663.07 3,654.88 3,758.96

Year Ending Jun-14 3,787.26 3,787.26 3,786.18 3,752.00 3,894.53

Earnings (per share)

Quarter Ending Mar-13 0.53 0.53 0.53 0.55 0.49

Quarter Ending Jun-13 0.65 0.65 0.65 0.64 0.59

Quarter Ending Jun-13 2.16 2.16 2.16 2.15 2.02

Quarter Ending Jun-14 2.42 2.42 2.41 2.40 2.23

The consensus estimates for revenue are trending down for both quarter and year

ending estimates. There is no significant difference between the downward trend for FY1 or FY2

for revenues.

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On the other hand, earnings estimates are trending upward as of a year ago until now.

The most notable trend visible is the large jump from 2.23 EPS at FY2 one year ago to a 2.42 EPS

for FY2 as the current estimate. I believe this is because analysts see the potential growth of

this new company whereas one year ago there was more skepticism.

Copy/paste the “Estimates Revisions Summary” Table from Reuters.com, “Analysts” tab

(include both revenue and earnings)

ESTIMATES REVISIONS SUMMARY

Last Week Last 4 Weeks

Number Of Revisions: Up Down Up Down

Revenue

Quarter Ending Mar-13 0 0 0 0

Quarter Ending Jun-13 0 0 0 0

Year Ending Jun-13 0 0 1 1

Year Ending Jun-14 0 0 2 0

Earnings

Quarter Ending Mar-13 0 0 0 1

Quarter Ending Jun-13 0 0 1 0

Year Ending Jun-13 0 0 0 1

Year Ending Jun-14 0 0 2 0

There are very few revisions. In the past four weeks 6 analysts total have increased their

revenue estimates for revenue and earnings alike. In that same time period one analyst

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decreased the revenue estimate for FY 13 and two analysts decreased their earnings estimate

for the quarter ending March-13 as well as for FY 13. There is no notable trend, with so few

analysts making changes to their estimates it is tough to find a pattern. If there was to be any

sort of pattern, it would be trending toward upward revisions, a positive sign for the company.

The financial outlook for the company is positive. Growth is expected but not at a high

rate (MorningStar.com). CFN is a new company who is still growing. Their product line will not

see a sharp increase in demand because the medical equipment is a relatively consistent

industry with neither sharp increases nor decreases.

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Section (F) Analysts’ Recommendations

Copy/paste the “Analyst Recommendations and Revisions” Table from Reuters.com,

“Analysts” tab. NOTE: Make sure you copy the entire table including the “Mean Rating” at the

bottom of the table.

ANALYST RECOMMENDATIONS AND REVISIONS

1-5 Linear Scale Current 1 Month

Ago 2 Month

Ago 3 Month

Ago

(1) BUY 5 6 7 7

(2) OUTPERFORM 4 3 2 3

(3) HOLD 7 6 6 5

(4) UNDERPERFORM 0 0 0 0

(5) SELL 0 0 0 0

No Opinion 0 0 0 0

Mean Rating 2.12 2.00 1.93 1.87

The trend of analyst recommendations over the last three months has been bearish. The

mean rating three months ago was 1.87 and it is currently at 2.12. The most significant

movement tends to be from buy to hold. The hold rating has increased from 5 analysts three

months ago to 7 analysts currently. This is consistent with what I have read elsewhere about

CFN. Their growth potential is starting to be seen as slow and very long term

(MorningStar.com). I believe this is the main reasoning for the reduced recommendations.

Currently there are no analysts who rate CFN as underperform or sell. This was true

three months ago and is true today.

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Revision Date

Upgrade or Downgrade

Current Recommendation

Previous Recommendation

Firm Last Revision

The most recent revision date

The earliest revision date in the last two months

**** When searching CNBC.com I found no revisions by analysts during the past two months.

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Section (G) Institutional Ownership

Copy/paste the completed “CIF Institutional Ownership” spreadsheet here.

Cougar Investment Fund Institutional Ownership Template

Please download and save this template to your own storage device

You only need to input values to cells highlighted in "yellow"

The rest of the spreadsheet is calculated automatically

Please read "Stock Recommendation Guidelines" document carefully

CFN

Ownership Activity # of Holders % Beg. Holders Shares

% Shares

Shares Outstanding 222,693,258 100.00%

# of Holders/Tot Shares Held 514 100.98% 205,145,029 92.12%

# New Positions 40 7.86%

# Closed Positions 35 6.88%

# Increased Positions 213 41.85%

# Decreased Positions 201 39.49%

Beg. Total Inst. Positions 509 100.00% 207,374,931 93.12%

# Net Buyers/3 Mo. Net Chg 12 51.45% -2,229,902 -1.00%

Ownership Information % Outstanding

Top 10 Institutions % Ownership 39.30%

Mutual Fund % Ownership 1.67%

Float % 99.75%

> 5% Ownership

Holder Name % Outstanding Report Date JP Morgan Asset Management

5.8 12/31/2012

Vanguard Group, Inc. 5.8 12/31/2012

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On a net basis, institutions have increased their positions by 12. The interest in this

stock medium, with two big name owners holding more than five percent. JP Morgan Asset

Management and The Vanguard Group both hold 5.8% of CFN. This can be seen as a bullish

indicator for the future. These two owners are very well known in the investment world and

obviously see potential for this stock to grow in the future. The investment by JP Morgan and

Vanguard combined with a positive net buy provide a bullish outlook on CFN.

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Section (H) Short Interest (two pages)

From http://www.nasdaq.com/ (NASDAQ’s website)

CFN

Settlement Date Short Interest Avg Daily Share Volume Days To Cover

2/28/2013 2,211,605 2,373,587 1.000000

2/15/2013 2,015,916 2,170,246 1.000000

1/31/2013 1,640,934 1,312,239 1.250484

1/15/2013 1,326,721 1,203,320 1.102550

12/31/2012 1,403,791 1,070,765 1.311017

12/14/2012 2,003,198 836,333 2.395216

11/30/2012 2,331,245 1,180,022 1.975595

11/15/2012 2,361,665 1,533,352 1.540198

10/31/2012 2,360,133 1,173,615 2.010994

10/15/2012 2,419,591 1,003,316 2.411594

9/28/2012 2,946,669 1,729,623 1.703648

9/14/2012 2,956,375 2,446,749 1.208287

8/31/2012 2,192,355 1,436,729 1.525935

8/15/2012 2,023,013 2,893,890 1.000000

7/31/2012 2,533,318 1,332,505 1.901170

7/13/2012 2,644,994 1,101,522 2.401218

6/29/2012 2,501,589 1,396,963 1.790734

6/15/2012 3,838,202 1,576,713 2.434306

5/31/2012 4,717,890 1,911,650 2.467967

5/15/2012 4,776,331 1,976,009 2.417161

4/30/2012 4,409,139 1,654,157 2.665490

4/13/2012 3,283,373 1,934,646 1.697144

3/30/2012 2,772,818 1,267,072 2.188367

3/15/2012 2,136,751 1,310,331 1.630696

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BAX

21

BDX

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From http://finance.yahoo.com/

Complete the following table with information from the “share statistics” table.

Avg Vol Avg Vol Shares Float (3 month) (10 day) Outstanding

1,663,940 1,537,010 222.59M 222.04M

Shares Short Short Ratio Short % of Float Shares Short

(Most recent date) (Most recent date) (Most recent date) (2 weeks prior)

2.21M (2/28/13) 1.10 (2/28/13) 1.00% (2/28/13) 2.02M

The market sentiment has become more bullish over the last year. The current days to

cover for CFN is 1.00 which is very good. The highest it reached over the past year was 2.5 days

suggesting that investors have been bullish on the stock almost all year long. The same cannot

be said for its competitors. BAX is currently at 1.8 days to cover with a high of 4 days to cover

over the past year and BDX is currently at 7.2 days to cover with a high during the year of 10.8

days to cover.

When comparing these competitors against CFN, investors seem much more bullish

towards CFN than they are toward either BAX or BDX.

Settlement Date

2/28/2013

Short Interest

2,211,605

Average Daily Shares

Volume

# of

Days to cover

1.00

2,373,587

23

Section (I) Stock Charts

A three months price chart

Copy/paste the “3 Mos.” stock chart here

A one year price chart

Copy/paste the “1 Yr” stock chart here

24

A five year price chart

Copy/paste the “5 Yrs.” stock chart here

Additional price chart

Technical Analysis:

6-Month

25

2-year

The results from the 3-month, 1-year and 5-year graphs show consistent growth since

their IPO in 2009. Their stock price has risen over 30% in the past year, higher than the S&P 500,

the XLV, and its two main competitors, BAX and BDX. This is seen in all three price charts. More

recently, CFN has started to outgrow their competitors, the S&P, and the XLV at a greater rate

than before. They have also recently reached a 52-week high and are trading very near that

currently.

The technical analysis is promising. The technical graphs show good moving averages

with no death crosses in the near future. RSI is very high at the moment suggesting that CFN

will more than likely drop a few points in the very near future. This is to be expected because

the price has been driven higher at a fast rate the past couple months and should be expected

to drop soon before it will be able to grow at a consistent rate again.