This publication is a general market commentary and does not constitute a research report. Any reference to a research report or a recommendation is not intended to represent the

whole report and is not itself a research report or recommendation. This commentary is for informational purposes only and does not contain investment advice. This publication may be

wholly or partially based on industry rumour, gossip and innuendo and as such is not to be relied upon as investment advice. Not authorized for distribution into the United States or to U.S.

persons. Canaccord Genuity Wealth Management is a division of Canaccord Corp. Member – Canadian Investor Protection Fund.

Monday, May 14, 2018 Follow us on Twitter @CGWM_MrngCoffee

Overnight Futures Source: Bloomberg

Contract Last Change

S&P/TSX Composite 16,005.00 0.26%

S&P/TSX 60 Index 949.50 0.30%

S&P 500 2,733.00 0.23%

NASDAQ Composite 6,974.25 0.25%

Dow Jones Mini 24,881.00 0.31%

Commodities & Currencies Source: Thomson ONE

Last Change

Change Crude Oil (US$/brrl) 70.81 0.16%

Gas (US$/mmbtu) 2.84 0.67%

Gold (US$/oz) 1318.90 -0.14%

Copper (US$/oz) 3.09 -0.80%

Canadian Dollar 0.7829 0.15%

Bitcoin (US$) 8403.01 -3.38%

10-Year Canada 2.30 0.00%

10-Year U.S. 2.99 -0.05%

Volatility Index (VIX) 13.17 4.11% Home Replete Home

Homebuilder Lennar

(LEN) has announced

that standard features

in its new homes will

include built-in Wi-Fi, smart locks,

doorbells, thermostats and lights — all

controlled by Alexa, Amazon’s (AMZN)

voice-activated digital assistant. Each house will come with two Alexa-

enabled smart speakers, an Echo Show

and an Echo Dot. New homeowners will

also get a free visit from an Amazon

technician to help set everything up

and teach them how to use it. Anyone can visit these new "Amazon

Experience Centers" to see what it's like

to yell at a speaker to open the blinds,

or push a button to order more toilet

paper from Amazon Prime. The

companies are launching the houses in

15 cities across the U.S. to start.

Before the Bell Source: Thomson Reuters Canada's main stock index looked set to open higher, with increasing

U.S. drilling activity supporting a rise in oil prices. U.S. President Donald Trump helped ease some trade tensions

between U.S. and China, after he said he’d help ZTE Corp “get back

into business, fast”. Futures for major Wall Street indexes were up ahead of the second

round of trade talks between the two countries this week, mirroring

similar movement in Asia. Meanwhile, European stocks edged lower. A strong euro pushed the

U.S. dollar down, while gold prices edged up

Stocks to Watch

Canopy Growth (WEED) announced it has entered into a non-binding

agreement to purchase, subject to certain conditions, the remaining

33% stake of BC Tweed Joint Venture not currently owned by the

company for up-to-C$374M of shares.

• Brookfield Asset Management (BAM.A). The investment firm made

a $3.3 billion approach for Australian hospital group Healthscope,

trumping a local buyout proposal and sending shares of the target

higher.

• Facebook (FB). The company has so far suspended around 200

apps in the first stage of its review into apps that had access to large

quantities of user data, a response to a scandal around political

consultancy Cambridge Analytica. • Tesla Inc (TSLA). The company has registered a new electric car firm

in Shanghai, as China prepares to scrap rules on capping foreign

ownership of new-energy vehicle (NEV) ventures.

Monday, May 14, 2018 2018Page 2

Featured in Today’s Canaccord Genuity Global Morning Summary Click here for more

Rating Changes Canada(1) Thomson Reuters Corp. (TRI-NYSE | US$37.64 | US$ 26,781 M)

Apparent over-reaction to near-term spike in corporate costs; Upgraded to BUY, from Hold; trimming

PT to US$43, from US$44

Target Price and Estimate Changes Canada(1) Artis REIT (AX.UN-TSX | C$13.74 | C$ 2,113 M) Shifting portfolio to reduce risk Badger Daylighting Ltd. (BAD-TSX | C$26.68 | C$ 990 M) Q1/2018: Growth profile keeps getting better Carmanah Technologies Corporation (CMH-TSX | C$4.95 | C$ 93.7 M) Fundamental improvements underway Dream Office REIT (D.UN-TSX | C$24.34 | C$ 1,591 M) Transformation nearly complete, focus moves to value

creation through redevelopment Exchange Income Corporation (EIF-TSX | C$33.05 | C$ 1,051 M) Q1 shows benefit of portfolio diversification Hardwoods Distribution, Inc. (HDI-TSX | C$18.80 | C$ 405 M) Q1/2018 in line, valuation remains attractive Onex Corp. (ONEX-TSX | C$91.15 | C$ 10,397 M) Solid realization at Mavis Discount Oil and Gas, Integrated Q1/18 Large-cap wrap-up

United States(1) Halozyme Therapeutics (HALO-NASDAQ | US$18.82 | US$ 2,691 M) 1Q in line; continued ENHANZE momentum ReWalk Robotics (RWLK-NASDAQ | US$1.07 | US$ 32.3 M) More of the same in the Q1; expanded

reimbursement and pipeline remain key to unlocking value Zynerba Pharmaceuticals (ZYNE-NASDAQ | US$9.23 | US$ 125 M) In-line 1Q; 2018 pivotal FXS and Ph2b epilepsy

trial starts

Australia(3) Tilt Renewables Limited (TLT-NZSE | NZD1.85 | NZD 579 M) FY18 result - difficult year, but positive pipeline

progression

Portfolio Strategy Canada(1) Financial Market Performance For the week ending May 11, 2018

Monday, May 14, 2018 2018Page 3

Technical Analysis Canada(1) Canadian Technical Comment TSX/S&P 500: Pending short-term equity market weakness an opportunity to add

exposure for developing intermediate-term rally

Company Updates Canada(1) Algonquin Power & Utilities Corp. (AQN-TSX | C$12.70 | ) Q1/18 Review and outlook Northland Power Inc. (NPI-TSX | C$24.49 | C$ 4,588 M) Q1/18 Review and outlook Yellow Pages Limited (Y-TSX | C$7.24 | C$ 203 M) Q1/18: Mixed results with disappointing digital returns, but

sharp beat in EBITDA Pipelines Q1/18 Review & Outlook

United States(1) Biomedical Devices and Services IRTC, BSX & ATRC – Bullish conviction higher for each coming out of the HRS

meeting AAR (AIR-NYSE | US$46.81 | ) OKC MRO facility visit provides positive AM data points

Market Movers Source: Bloomberg

Toronto 52-Week Highs:

Acadian Timber Corp ADN $20.24

Axmin INC AXM $0.15

Canfor Pulp Products INC CFX $21.48

Constellation Software INC CSU $985.00

Circa Enterprises INC CTO $1.39

Great Canadian Gaming Corp GC $51.50

GFM Resources LTD GFM/H $0.15

Gamehost INC GH $11.98

Gear Energy LTD GXE $1.11

Hammond Manufacturing -CL A HMM/A $2.49

Hammond Power Solutions INC HPS/A $10.05

Intercontinental Gold AND ME ICAU $0.62

Intact Gold Corp ITG $0.81

Kirkland Lake Gold LTD KL $25.36

Kingsmen Resources LTD KNG $0.25

Lassonde Inds Inc-Class A LAS/A $285.93

Logistec Corp - Class B LGT/B $51.00

Midas Gold Corp MAX $1.20

MEG Energy Corp MEG $8.66

Mercer International INC MERC/U $15.00

Magna International INC MG $81.94

Methanex Corp MX $90.27

Olympia Financial Group INC OLY $36.00

Pacton Gold INC PAC $0.55

Smooth Rock Ventures Corp SOCK $0.09

SSR Mining INC SSRM $14.62

Suncor Energy INC SU $51.40

Teranga Gold Corp TGZ $5.40

Theratechnologies INC TH $11.50

Tamarack Valley Energy LTD TVE $4.04

Vatic Ventures Corp VCV $0.32

Wall Financial Corp WFC $26.90

Westhaven Ventures INC WHN $0.19

Toronto 52-Week Lows:

Atco LTD -CL 'Ii' ACO/Y $38.49

Aguia Resources LTD AGRL $0.20

Allegiant Gold LTD AUAU $0.37

Breaking Data Corp BKD $1.00

Monday, May 14, 2018 2018Page 4

Backstageplay INC BP/H $0.15

Bioasis Technologies INC BTI $0.55

Cogeco INC CGO $64.25

CI Financial Corp CIX $24.07

Canadian Utilities Ltd-A CU $31.57

Canadian Utilities LTD B CU/X $31.65

Decisive Dividend Corp DE $3.76

Dorel Industries-Cl A DII/A $24.25

Dorel Industries-Cl B DII/B $23.73

Erdene Resource Development ERD $0.32

Espial Group INC ESP $1.54

Extendicare INC EXE $7.70

Millennial Esports Corp GAME $0.27

Hydro ONE LTD H $19.70

Imperial Metals Corp III $1.80

K-Bro Linen INC KBL $33.03

KP Tissue INC KPT $10.12

Lico Energy Metals INC LIC $0.05

Lxrandco Inc-Class B LXR $1.05

Magellan Aerospace Corp MAL $16.53

Premium Brands Hold-Sub RCT PBH/R $116.81

Paramount Resources LTD -A POU $13.80

Prospero Silver Corp PSL $0.07

Platinum Group Metals LTD PTM $0.18

Smooth Rock Ventures Corp SOCK $0.07

Canadian Spirit Resources SPI $0.06

Supremex INC SXP $3.62

Till Capital LTD TIL $2.00

Tinka Resources LTD TK $0.44

Tmac Resources INC TMR $6.10

Thomson Reuters Corp TRI $46.69

Wealth Minerals LTD WML $1.05

WOW Unlimited Media INC WOW/A $1.15

U.S. 52-Week Highs:

AIA Group LTD AAIGF $9.39

Abiomed INC ABMD $374.75

Adobe Systems INC ADBE $241.93

Aercap Holdings NV AER $56.11

Align Technology INC ALGN $288.36

Astellas Pharma INC ALPMF $15.40

Ansys INC ANSS $173.20

Anadarko Petroleum Corp APC $69.28

Aspen Technology INC AZPN $95.09

Booz Allen Hamilton Holdings BAH $41.16

Boliden AB BDNNF $37.59

BHP Billiton PLC BHPBF $23.09

BHP Billiton Limited BHPLF $25.24

Bio-Rad Laboratories-A BIO $286.84

Broadridge Financial Solutio BR $118.34

Boston Scientific Corp BSX $30.41

Capgemini SE CAPMF $138.65

CDW Corp/De CDW $79.00

Cnooc LTD CEOHF $1.80

Cullen/Frost Bankers INC CFR $119.66

Christian Dior SE CHDRF $426.00

Chemed Corp CHE $330.24

Cantel Medical Corp CMD $124.28

Sumitomo Mitsui Trust Holdin CMTDF $43.35

Constellation Software INC CNSWF $774.80

Copart INC CPRT $55.31

China Resources Power Holdin CRPJF $1.94

CSX Corp CSX $63.88

Cintas Corp CTAS $183.99

Electronic Arts INC EA $134.58

Graftech International LTD EAF $18.78

EOG Resources INC EOG $120.00

Epam Systems INC EPAM $131.75

AXA Equitable Holdings INC EQH $21.50

E*Trade Financial Corp ETFC $65.14

East West Bancorp INC EWBC $70.01

Expeditors Intl Wash INC EXPD $73.04

Fair Isaac Corp FICO $180.42

Fairfax Financial Hldgs LTD FRFHF $565.00

Fortinet INC FTNT $60.57

Hamamatsu Photonics KK HPHTF $41.36

Hexcel Corp HXL $69.90

Icon PLC ICLR $126.59

Illumina INC ILMN $267.32

IHS Markit LTD INFO $52.28

Intuit INC INTU $196.28

Jazz Pharmaceuticals PLC JAZZ $166.80

Kirby Corp KEX $91.30

Lundin Petroleum AB LNDNF $31.45

Lamb Weston Holdings INC LW $68.70

Mastercard INC - A MA $194.09

Moody'S Corp MCO $174.75

Methanex Corp MEOH $70.60

Magna International INC MGA $64.12

Msci INC MSCI $161.45

Madison Square Garden CO- A MSG $254.81

Vail Resorts INC MTN $238.21

Noble Energy INC NBL $35.34

Monday, May 14, 2018 2018Page 5

NRG Energy INC NRG $35.17

Netapp INC NTAP $72.81

Nutanix INC - A NTNX $59.87

NEX Group PLC NXGRF $13.38

Oneok INC OKE $66.04

Okta INC OKTA $51.00

Occidental Petroleum Corp OXY $85.79

Pegasystems INC PEGA $67.95

Progressive Corp PGR $62.99

Pool Corp POOL $150.99

Prada S.P.A. PRDSF $5.86

PTC INC PTC $88.52

Robert Half Intl INC RHI $63.50

Start Today CO LTD SATLF $35.24

Santander Consumer USA Holdi SC $19.63

Schwab (Charles) Corp SCHW $59.94

Stora Enso Oyj-R SHS SEOJF $20.46

Servicemaster Global Holding SERV $57.07

Shimadzu Corp SHMZF $29.10

SVB Financial Group SIVB $324.77

China Petroleum & Chemical-H SNPMF $1.05

Synovus Financial Corp SNV $54.38

S&P Global INC SPGI $201.44

Splunk INC SPLK $117.86

Sarepta Therapeutics INC SRPT $93.92

Shiseido CO LTD SSDOF $70.50

Steris PLC STE $104.09

Suncor Energy INC SU $40.21

Swedish Match AB SWMAF $47.68

Atlassian Corp Plc-Class A TEAM $66.00

Transunion TRU $69.56

2U INC TWOU $98.30

Textron INC TXT $66.16

Tyler Technologies INC TYL $232.12

Ultimate Software Group INC ULTI $263.59

Upm-Kymmene OYJ UPMKF $37.11

Visa Inc-Class A Shares V $132.09

Webster Financial Corp WBS $64.11

WEX INC WEX $176.83

Wirecard AG WRCDF $146.47

Want Want China Holdings LTD WWNTF $0.94

XPO Logistics INC XPO $109.95

Zendesk INC ZEN $57.31

Zions Bancorporation ZION $58.28

U.S. 52-Week Lows:

ADT INC ADT $7.32

AMP LTD AMLTF $2.69

BT Group PLC BTGOF $2.90

Anheuser-Busch Inbev Sa/Nv BUDFF $93.86

Canadian Utilities Ltd-A CDUAF $24.71

Coty Inc-Cl A COTY $14.04

AXA Equitable Holdings INC EQH $20.39

Fannie MAE FNMA $1.21

Hydro ONE LTD HRNNF $15.46

PPG Industries INC PPG $100.36

Sanofi SNYNF $76.90

Symantec Corp SYMC $18.85

Thomson Reuters Corp TRI $36.52

Quest® Screen: Q-Discount • The Q-discount screen divides Quest’s most stable valuation metric (Quest market-to-book) by the most

closely associated operating metric Cash Flow Return on Capital (CFROC) ÷ WACC.

• A long-term view at how the relationship between the above two ratios has changed over time is taken into

account.

• A Q-discount lower than the 10-year average (Q-discount relative to Long Run Avg.) suggests that the

valuation has moved favourably once the change in cash flow returns has been taken into consideration.

Stocks Ticker Market

Cap (m)

Quest

market-

to-book

CFROC/

WACC

Q-

discount

CFROC/WACC

- 10 year avg

Q-

discount

rel. LRA

Included in CG Portfolio

Conditions >= 0.00 <= 1.00 >= 1.00 <= 0.9

Canfor Pulp CFX 1,055.8 0.6 1.72 0.34 1.06 0.79 Cdn. Small Cap

CI Financial CIX 5,379.3 2.0 2.44 0.82 2.41 0.78 Cdn. Dividend

Cdn. Focused Dividend

Monday, May 14, 2018 2018Page 6

Cdn. Focused Equity

Fortuna Silver FVI 901.4 0.9 1.41 0.61 1.46 0.75 Cdn. Small Cap

Inter Pipeline IPL 7,028.2 1.1 1.35 0.81 1.19 0.80 Cdn. Dividend

Cdn. Focused Dividend

Magna MG 22,405.1 0.9 2.08 0.43 1.40 0.88

Cdn. Dividend

Cdn. Focused Dividend

Cdn. Focused Equity

Med. Facilities DR 339.1 0.8 3.42 0.24 3.60 0.76 Cdn. Small Cap

Teck Resources TECK.B 15,643.0 0.4 1.13 0.39 1.01 0.70 Cdn. Focused Dividend

Cdn. Focused Equity

ZCL Comp ZCL 245.8 1.6 2.20 0.72 1.24 0.74 Cdn. Small Cap

Based on data as at May 11, 2018

For more on this Quest filter, click here

Portfolio Strategy Incubator EM Concerns Resurface In his latest piece, Canaccord Genuity North

American Portfolio Strategist Martin Roberge

notes the S&P 500 (SPX) and S&P/TSX Composite

(.TTT) had a strong week on the back of

softening U.S. inflation data, which have

capped the ascension in bond yields and the

US$ appreciation. The latter, along with the

decision by U.S. President Trump to pull out from

the Iran deal, boosted commodities where the

rally is now broadening outside of oil prices. As a result, the late-cycle trade led markets this

week with the energy (+2.0%) and materials

(+2.1%) sectors strongly outperforming utilities (-

1.6%) and telecoms (+0.1%). Once again, REITs

(+1.9%) keep diverging with bond proxies. As

Roberge highlighted in his Mid-Week note

Wednesday, REITs exhibit the third-highest

correlation to oil prices after the energy and

materials sectors. This elevated correlation likely

results from REITs’ inflation attributes in times of

rapidly rising commodity prices fuelling inflation

expectations. The S&P TSX Real Estate Index

(TTRE) is only 1% away from an all-time high. Roberge’s focus is on emerging markets (EMs)

where equities have underperformed DMs. As

usual, the culprit seems to be the steep US$

appreciation (~5%) from March lows. Many EMs have US$-dominated debt which becomes more expensive to

service when the dollar depreciates. As such, EM debt concerns have resurfaced lately with some investors

fearing that further EM currency depreciation could bring back memories of the 1998 and 2008 EM currency crisis.

Roberge believes such fears are premature.

Monday, May 14, 2018 2018Page 7

This week, the spotlight will be on inflation and retail sales in Canada. Intensifying price pressures would likely

cement expectations that the BoC will deliver a rate hike this summer. In the US, we await retail sales, building

permits, housing starts and industrial production. Elsewhere, Q1/18 GDP growth statistics are on deck in Europe

and in Japan. In China, we will focus on retail sales and industrial production. In India, inflation statistics should

help gauge the RBI. Last, in Brazil, the central bank is expected to deliver a 25bps rate cut understanding that

inflation remained below 3% since July 2017.

Click here for more

Canadian Equities of Interest Listed Alphabetically by Symbol

NAFTA

T minus three days…U.S. House Speaker Paul Ryan has set a May 17 deadline to be notified of a new NAFTA trade

deal to give the current Congress a chance of passing it, while Mexico’s top trade official has said time was

running short to meet such a deadline. Ryan, who controls legislation in the House of Representatives, set his

deadline in remarks delivered last week to the Ripon Society in Washington. Under the “fast track” trade

negotiating law, there are lengthy notification periods before U.S. President Donald Trump could sign a new North

American Free Trade Agreement and before Congress could begin considering it. Letting negotiations drag on much longer would punt consideration to a new Congress elected in November

that will take office in January 2018, one that could cede more control to Democrats. “We have to have the

paper – not just an agreement, we have to have the paper – from USTR by May 17 for us to vote on it this year, in

December, in the lame duck” session, Ryan said. A spokeswoman for Ryan said that he was referring to a

notification of intent to sign the NAFTA agreement, not necessarily the full text. Last week’s talks hit an obstacle as the U.S. and Mexico sought to settle differences over the key issue of

automobiles. Ryan also expressed scepticism that a deal could be reached in time and noted that several major

issues remained unresolved, such as U.S. demands for more access to Canada’s dairy market and to make an

investment dispute arbitration system optional.

Bitcoin Spot (BTC=BTSP : US$8,443.01), Net Change: -577.98, % Change: -6.41%

Hive Blockchain Technologies* (HIVE : $1.30), Net Change: 0.02, % Change: 1.56%, Vol: 1,367,480

Bitcoin Invt Trust* (GBTC : US$14.10), Net Change: -0.48, % Change: -3.29%, Vol: 3,952,731

Exeblock Technology* (XBLK : $0.23), Net Change: 0.00, % Change: 1.10%, Vol: 86,768

Ether Capita* (ETHC : $2.11), Net Change: -0.18, % Change: -7.86%, Vol: 71,092

Nothing cryptic about this. Reuters reported on Friday that prosecutors in South Korea raided the largest

cryptocurrency exchange in the country, UPbit. According to CoinDesk Korea, investigators from the Prosecutors’

Office of the southern district of Seoul searched the head office of the exchange in the Gangnam-gu district on

May 10-11. UPbit is suspected of fraud for allegedly selling cryptocurrency to customers that it does not actually hold,

according to the report. “We have secured hard disks and accounting books through confiscation. Analysis is

expected to take days,” the Prosecutors’ Office stated. When asked for comment by CoinDesk Korea, an UPbit

representative said, “At this time, I cannot answer anything about this seizure.” However, the exchange’s support website confirms the investigation in a note posted Friday and states that its

services are still operational, saying: “UPbit is currently under investigation by the prosecution, and we are working

diligently. UPbit services such as all transactions and withdrawals are operating normally. Your assets are kept

securely in your account, so you can rest assured that you can use UPbit services.”

Monday, May 14, 2018 2018Page 8

The news comes as authorities in the country have been investigating cryptocurrency exchanges amid regulatory

tightening in the country. In March, prosecutors reportedly raided the offices of three cryptocurrency exchanges

on suspicion of siphoning off funds from customers' accounts. One of the exchanges raided was Coinnest, the

fifth-largest in Korea at the time. Kim Ikhwan, the firm’s founder, and another executive were taken into custody

in early April.

Click here for more

CES Energy Solutions* (CEU : $5.66), Net Change: -0.61, % Change: -9.73%, Vol: 2,181,789 Quest▼2

The Morning Coffee’s exclusive supplier of Polysaccharide polymer derivitized starch. Canaccord Genuity Oilfield

Services Analyst John Bereznicki has lowered his target on CES Energy, as margin compression drove a Q1 EBITDA

miss. While the company met his Q1/18 revenue estimate (of $297.1 million) it fell well short of his $47.4-million

EBITDA expectation (consensus EBITDA was ~$48 million). Lower-than-expected interest and depreciation costs resulted in ~$0.03 in positive EPS variance relative to

Bereznicki’s $0.04 estimate. While CES generated sequential revenue growth of 8% in Q1/18, this was

accompanied by cash gross margin erosion of ~140 bps over this same period. According to management, this

was driven by input cost inflation that CES was unable to recoup from its customers. While strengthening oil prices give increasing conviction CES can derive at least modest real pricing power by

late 2018, Bereznicki has nonetheless tempered his margin assumptions through 2019, although he continues to

believe CES enjoys a rich organic growth portfolio. Bereznicki expects CES to realize at least modest real pricing power across most of its business segments by late

2018 as its larger competitors implement pricing increases in response to rising oil prices and input costs. Note that

CES deployed $17.8 million in capital in Q1/18 and exited the quarter with in-line net debt of $431.7 million (2.4x

2018E EBITDA). The company intends to spend $68 million in capital this year, including sustaining expenditures of

$18 million.

Click here for more

Finning* (FTT : $33.28), Net Change: -0.55, % Change: -1.63%, Vol: 616,877 Quest►7

On the right tract. Canaccord Genuity Engineering & Construction Analyst Yuri Lynk has raised his target on

Finning, following in-line Q1/2018 results. With backlog higher by 129% y/y at $1.6 billion, Finning boasts excellent

visibility, with Lynk forecasting a 24% 2017-2019 EPS CAGR driven by: 1) a supportive macro: construction and

mining equipment demand is improving; 2) improved demand for product support: planned 797 rebuilds in

Canada are scheduled to triple in 2019 while the digital/e-commerce road map increases market share; and 3)

Catepillar (CAT)/Finning initiatives: such as electric and autonomous trucks. At an investor meeting last week, Finning raised the ceiling on ROIC potential in each of the business units and

set a new target for SG&A/revenue of 18% versus ~20% in 2017. All told, Yuri say he came out of the quarter

incrementally more upbeat on Finning shares. Q1/2018 adjusted-EPS increased 40% y/y to 39 cents, slightly above Lynk’s estimate of 36 cents and in line with

the consensus of 39 cents. Revenue was 7% above his estimate and consensus as it increased 19% y/y. Gross

margin declined 170 bps y/y to 26.3% due to product mix and a ~$3.5 million impact due to an unplanned

maintenance outage of testing equipment at OEM. SG&A was 20.1% of revenue compared to 21.9% in Q1/2017

as management was able to deliver revenue leverage on the fixed cost base. Note that Canada accounted for more than half of the revenue increase on strong performance in all lines of

business. Product support revenue increased 11% y/y on strong parts demand in all markets. New equipment

deliveries increased 62% y/y driven by increased mining, infrastructure and oil & gas activity.

Click here for more

Monday, May 14, 2018 2018Page 9

Pretium Resources* (PVG : $9.15), Net Change: 0.34, % Change: 3.86%, Vol: 743,273 Quest►5

Who's down with PVG? Yeah, you know...Canaccord Genuity Precious Metals Analyst Rahul Paul remains bullish

on Pretium Resources following its Q1/18 financial results. While Q1/18 production was pre-released (12% ahead

of his initial expectations), lower gold sales (timing related) and a higher proportion of expensed (vs capitalized)

development resulted in the lower earnings miss relative to his forecasts. While AISC of $1,009/oz was higher than Paul’s estimate of $802/oz, he notes that the total spend (including

capital/operating costs and corporate G&A) for Q1/18 was $69.5 M (within the quarterly range of $68-70 M

implied by H1/18 guidance). As such, the AISC variance also appears to be driven by lower sales (timing related),

and could reverse if the inventoried ounces are sold in Q2/18. Although Paul sees the potential for some share price weakness in light of the headline EPS miss and higher costs,

he considers Q2/18 results to be the key catalyst and sees the potential for strong share price performance if

management is able to deliver on guidance. H1/18 guidance has been maintained (150-200 koz @ AISC of $700-

900/oz), and appears attainable even with no material improvement relative to the Feb/March production run-

rate (Paul’s H1/18 estimate of 162 koz @ $888/oz is within the guidance). So far, operations appear to be tracking in line with plan, and Paul sees potential for improved grades and

production in Q2/18, considering the increased benefit of grade control (all of Q2/18 vs just one month in Q1/18)

and greater operational flexibility provided by additional high-grade stopes coming online.

Click here for more

SSR Mining* (SSRM : $13.86), Net Change: 0.57, % Change: 4.29%, Vol: 597,813 Quest▲10

As easy as A, B, Seabee. Canaccord Genuity Precious Metals Analyst Rahul Paul remains decidedly bullish on SSR

Mining, following its Q1/18 financial results. Earnings of $0.05 came in ahead of his expectations, driven largely by

non-operating items (consolidated costs were in line with his expectations, with production performance pre-

released). Of note was strong cost performance at Seabee, where total cash costs of $481/oz came in 21% below

his expectations. Guidance remains unchanged and Paul believes the company remains on track for another strong year in 2018.

In addition to operating/financial results, he expects near-mine (Marigold) and regional (Seabee) exploration to

provide for additional catalysts going forward. After updating for the quarter, he now forecasts production of 336

koz AuEq at total cash costs of $723/oz, in line with guidance of 340 koz AuEq at total cash costs of $715 - $770/oz.

Paul expects that guidance could prove conservative if the outperformance at Seabee were to continue. Subsequent to the quarter, SSR divested its remaining holdings in Pretium Resources (PVG) for pre-tax proceeds

of ~$35M. Paul notes this further bolsters the company’s already strong balance sheet ($473M in cash and

equivalents at quarter-end).

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Thomson Reuters* (TRI : $48.14), Net Change: -1.85, % Change: -3.70%, Vol: 2,890,142 Quest▼2

Read it on Bloomberg. Thomson Reuters reported Q1/18 results on Friday with headline numbers broadly in line to

a little below due to higher corporate costs. Canaccord Genuity Telecom & Media Analyst Aravinda

Galappatthige notes that its Financial & Risk (F&R) business is now reported under discontinued items, given its

pending sale (55% stake) in H2/18 to private equity firm Blackstone Group (BX). Also, there are some changes to

the base periods that impacts comparability with forecasts, Galappatthige suspects due to certain components

of F&R that are to be retained being incorporated in continuing segments. Hence, he focuses on growth rates for

comparability. Adj EBITDA was $430M, up 3.6% y/y vs. Galappatthige’s $443M estimate, which assumes 7.1% growth. The variance

was due to us under-estimating corporate costs by $10M. Meanwhile, adj EPS came in at $0.28 up from $0.25 last

year, and compared to his $0.30 estimate. Legal revenues grew 3.7% y/y and 2% ex-f/x to $872M. This compares

Monday, May 14, 2018 2018Page 10

with Galappatthige’s expectation of 1.5% ex f/x growth. Legal recurring revenues remained healthy growing 4%,

while print declined only 2%. The transactions revenue decline eased to 1%. Meanwhile, adj. EBITDA was up 1.6%

to $$319M. This compares with his expectation of 2.8% growth. Galappatthige notes 2018 guidance reflects massive corporate costs. The highlight was $500-600M in total

corporate costs due to stranded costs and incremental investments to reposition the company following the exit

of F&R. The stranded and other costs component of this, which could be ~$250M of this $500-600M, is expected

to ease to $50M by 2020. Previously, the company also indicated that the underlying corporate cost base of $280-

290M could be halved over time.

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U.S. Macro Strategy You Ain't Seen Nuttin' Yet In his latest piece, Canaccord Genuity Chief Market Strategist Tony Dwyer has taken his trusty intermediate-term

oversold signal a step further. In early April, his “whooshes can become ramps” noted how a trusty 14-week

stochastic indicator for the S&P 500 (SPX) index hit a level that identified the close proximity to an intermediate-

term low in a non-recession environment. Each week, Dwyer takes this indicator a step further, by looking at the

overbought / oversold level for each individual component of the S&P 100 Index (OEX).

The indicator suggests you ain’t

seen nothing yet. In mid-April,

over 61% of the stocks in the OEX

reached oversold, the highest

percent since February 2016.

Dwyer went back to the post-

dotcom bust and found that

since 2003, in a non-recession

environment, whenever the

percentage of OEX components

moved above 55% (oversold

extreme), and then dropped

back below 55%, it was an

excellent signal and the next leg

higher in the bull market was

underway.

In fact, of the seven prior

instances since July 2003

(excluding the bear market),

there were only two instances

when the intermediate-term low

occurred AFTER the signal. In

those two instances the signal

was within ~2 months of the low

and the SPX had a median loss of

only -4.28%. These losses were

more than made up for as the SPX

experienced a median gain of

Monday, May 14, 2018 2018Page 11

23.78% to peak before the next major correction that caused another oversold extreme.

Fundamental, tactical and historical framework remain positive. Dwyer reminds us it is essential to remember

“the” peak of a cycle comes well after the initial inversion of the 2-10yr UST yield curve that eventually results in a

recession. As a result, intermediate-term corrections offer opportunities rather than something to fear.

Throughout this cycle, each intermediate-term correction feels like the fundamental backdrop is at risk, only to

ultimately realize that positive influences that drive our core thesis still exist. These include: 1) solid global growth;

2) positive domestic activity driving EPS; 3) capital spending improvement; 4) real household median incomes

jumping with strong employment; and 5) the demographic-driven push to higher home ownership. Dwyer would

add to his overweight sectors of Financials, Info Tech and Industrials with an intermediate-term time horizon.

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U.S. Equities of Interest Listed Alphabetically by Symbol

Dropbox* (DBX : US$31.25), Net Change: -0.74, % Change: -2.31%, Vol: 7,334,092

This ain’t my first rodeo. Canaccord Genuity Enterprise Software Analyst Richard Davis likes Dropbox on any dips,

saying on Friday maybe it’s easier to be calm after you’ve gone through more than 1,000 earnings calls. Davis

says he got a handful of inbound questions Thursday night as to whether “someone knows something” because

Dropbox dipped in after hours, answering, “Seriously, does anyone really believe that significant fund managers

are frantically selling or buying after hours?” Here are the facts, Davis points out: Dropbox delivered an upside on essentially every financial metric. The

company made admirable progress on customer additions, ARPU, and product innovation. Most importantly, the

firm’s trajectory toward becoming perhaps the leading platform for Team Content Collaboration did not falter. Davis says this stock reaction reminds us of the recent silliness in which fretting about Atlassian’s quarter led to a

dip to which savvy investors said, “Thank you very much”, and gobbled up shares from weak hands. Indeed,

Dropbox reported a typically strong first quarter post-IPO with upside across all relevant financial and operating

metrics – revenue, operating income, FCF, deferred revenue, customer additions and ARPU. Moreover, Dropbox announced multiple key partnerships in Q1 such as with Salesforce (CRM), Google (GOOGL),

and Adobe (ADBE), further deepening its already strong ecosystem. Note that Dropbox issued 2018 guidance

calling for revenue of $1.355B at the high end, for 22% growth y-o-y, ahead of Davis’ $1.310B estimate (18%

growth). Operating margins are now expected to fall in the 9-10% range, ahead of his 7.2% estimate, while FCF

guidance is for $340-350M, vs his prior $329M estimate.

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Facebook* (FB : US$186.77), Net Change: 1.25, % Change: 0.67%, Vol: 20,970,106 Quest▲9

Facecoin? No? You prefer Bitbook? As Gizmodo pointed out on Friday, sometimes life comes at you fast. Last

Tuesday, news broke that Facebook formed a blockchain division. Now it there is word that the company is

looking into creating its own cryptocurrency. Cheddar reported on Friday that Facebook is allegedly “exploring” incorporating cryptocurrency onto their

platform with a potential eye towards payment transactions. Admittingly, the report was a bit vague about any

further details or concrete plans on what the social media platform might want to do with the technology ever

company wants to pivot towards. Asked for comment, a Facebook spokesperson did not deny that the company was looking into the possibility of

creating its own cryptocurrency but emphasized that its efforts in this area are still in their early days. “Like many

other companies, Facebook is exploring ways to leverage the power of blockchain technology,” the

Monday, May 14, 2018 2018Page 12

spokesperson said in an email. “This new small team will be exploring many different applications. We don’t have

anything further to share.” The lack of details certainly won’t hold back speculation about what the company might want to do in this space

and potentially could only fuel more of the fire: Are ZuckerCoins going to be arriving in your Facebook wallet

anytime soon? Imagine a company with over 2 billion users do with a decentralized currency.

Nvidia* (NVDA : US$254.25), Net Change: -5.94, % Change: -2.28%, Vol: 30,275,076 Quest▲9

Plenty of game left. Nvidia’s ascent stalled on Friday, as investors worried that a short-term surge in demand for

graphics chips from cryptocurrency miners may be undermining its core business with computer gamers. Most

analysts continued to hold a positive opinion about the stock with at least nine brokerages raising their price

targets for Nvidia shares. Net income rose to $1.24 billion, or $1.98 per share, in the first quarter ended April 29, from $507 million, or 79 cents

per share, a year earlier. Total revenue rose to $3.21 billion from $1.94 billion. Excluding items, Nvidia earned $2.05

per share; analysts on average had expected earnings of $1.46 per share on revenue of $2.91 billion. But too

many cryptocurrency clients and fewer cloud computing orders than expected underwhelmed many investors,

although Nvidia said a supply shortage that hit its core video game audience had eased. The company best known for chips that enhance video game graphics has diversified into an array of businesses

including artificial intelligence, self-driving cars and digital mining, but investors are most concerned with its

inroads in the market for cloud computing. Revenue from Nvidia’s data centre business rose 71% to $701 million,

which missed some targets. But for the first time, Nvidia disclosed that it made $289 million in sales – about 9% of its overall $3.2 billion in revenue

– from chips for mining cryptocurrencies. Analysts had expected a much lower $200 million and the greater

reliance on the fast-growing but volatile business contributed to Friday’s pullback.

Symantec* (SYMC : US$19.47), Net Change: -9.72, % Change: -33.30%, Vol: 112,192,609 Quest▼2

Everybody’s working for the weekend. Some more than others. Symantec lost a third of its value on Friday after

the cyber-security firm disclosed its board’s audit committee was investigating “concerns” raised by a former

employee and that it might have to restate results. As it lost $6 billion in market cap, at least nine analysts downgraded the Symantec, which disclosed the

whistleblower probe late on Thursday, saying it might miss a deadline for filing its annual 10-K report, may need to

restate some financial results and might revise guidance. Symantec VP Cynthia Hiponia said the probe began “in connection with concerns raised by a former employee.”

She did not say whether that person had approached Symantec or raised the issue with securities regulators. She

added that the company had voluntarily advised the U.S. SEC that it was investigating the matter. Sean X. McKessy, a former chief of an SEC program that rewards whistleblowers for turning in firms that violate

U.S. securities laws, said the warning of a delay in filing the 10-K suggests that the issue is related to accounting

practices. He said the SEC has likely begun an informal review of the matter, but would likely wait to see results of

the company’s probe before deciding how to proceed.

Yelp* (YELP : US$44.02), Net Change: -3.73, % Change: -7.81%, Vol: 8,037,031 Quest►6

This selloff is rated two out of four stars. Profit-taking was the order of the day on Yelp shares on the back of the

company’s strong corporate results that beat Wall Street expectations. For the quarter ended March 31, Yelp

posted a loss of $0.01 per share on revenue of US$223.1 million, handily beating the consensus expectations for a

loss of $0.05 on $220.1 million. “We had a great start to 2018, accelerating advertising revenue growth and

attracting a record number of new advertisers in the first quarter,” said Jeremy Stoppelman, Yelp’s co-founder

and CEO.

Monday, May 14, 2018 2018Page 13

For the unfamiliar, Yelp started out by giving users a way to see what others have said about a business or what

dishes are popular at a restaurant. Since its founding in 2004, Yelp has amassed 127 million reviews in areas such

as retail, restaurants, home and local services and beauty in more than 30 countries. Users can now make

restaurant reservations, get price quotes from businesses, hold a place in line for a restaurant, get food delivered

and earn cash from Yelp’s loyalty program. But while Yelp’s shift toward non-term contracts might be a hit with advertisers, investors remain cautious.

Management notes that longer contracts are still available and says first-time and seasonal advertisers

appreciate the change; the move widens the top of the company’s funnel, giving it an opportunity to build

longer relationships with advertisers. It’s likely to quickly boost revenue and customer count, while lowering

revenue per customer. Going forward, Yelp expects second-quarter revenue of $230-233 million compared to

current consensus estimate of $231.1 million.

Expected Earnings Source: Thomson Reuters

Gluskin Sheff + Associates Inc (GS). Expected Q3 earnings of 20 cents per share

THE LAST DROP: Best Buy has redesigned their logo in order to make it more modern. Best Buy’s CEO said, “With

this new logo, we’re going to sell a lot of VCRs.”

– Jimmy Fallon

Quest®: Canaccord Genuity’s proprietary online valuation and analytical tool which combines consensus

market figures with the Quest® Discounted Cash Flow (DCF) Valuation Model. Quest® triAngle is Canaccord Genuity’s proprietary 15-factor, stock-picking tool, which systematically measures

Value, Quality and Momentum and presents the results in a simple, easy to understand score. It takes a multi-

pronged approach to Value, Quality and Momentum using five factors for each component, which adds more

consistency of performance unlike a reliance on one single measure. It uses a mix of historic and forecast data,

and combines absolute valuation data with comparisons relative to history. The triAngle is designed to

generate stock ideas and provide a consistent framework for analysis of portfolio holdings. How the triAngle score is calculated * Canaccord Genuity and its affiliated companies may have a Corporate Finance or other relationship with the

company and may trade in any of the Designated Investments mentioned herein either for their own account

or the accounts of their customers, in good faith and in the normal course of market making. The authors have

not received, and will not receive, compensation that is directly based upon or linked to one or more specific

Corporate Finance activities, or to coverage contained in the Morning Coffee. 1. Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX)

The recommendations and opinions expressed in this research report accurately reflect the Investment

Analyst’s personal, independent and objective views about any and all the Designated Investments and

Relevant Issuers discussed herein. 3. Canaccord Genuity (Australia) Limited is the Australian affiliate of global capital markets group Canaccord

Genuity Group Inc. (CF : TSX). The recommendations and opinions expressed in this research report accurately

Monday, May 14, 2018 2018Page 14

reflect the Analyst’s personal, independent and objective views about any and all the designated investments

and relevant issuers discussed herein.