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 Bank Vontobel's financial analysts apply a variety of valuation methodologies (e.g. DCF and EVA
modelling, 'sum-of-the-parts', break-up and event-related analysis, peer group and market multiple comparisons) to their own financial projections for the companies they cover.
Overall, our investment recommendations take into consideration an assessment of the company in its entirety and of the sector to which it belongs ("bottom-up approach").
Price target calculation is based on a number of factors, observations and assumptions, including but not limited to: key business performance indicators and ratios, public and
private valuation multiples, comparison with one or more peer groups of comparable companies, overall equity market valuations, and with the company's own history and track
record.
The stock recommendations published by Vontobel's research team are defined as follows:
| Rating |  | Definition |
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Large cap
| |
SLI Index (inc. tolerance) / non-Swiss stocks of similar market capitalisation
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Buy
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Price target (when set) implies 10% or more upside on a 12-month horizon
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Hold
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Price target (when set) implies 0-10% upside on a 12-month horizon
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Reduce
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Price target (when set) implies downside on a 12-month horizon
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| Rating | | Definition |
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Mid & small cap
| |
Other Swiss stocks / non-Swiss stocks of similar market capitalisation
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Buy
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Price target (when set) implies 15% or more upside on a 12-month horizon
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Hold
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Price target (when set) implies 0-15% upside on a 12-month horizon
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Reduce
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Price target (when set) implies downside on a 12-month horizon
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| Analysts are required to review their recommendations under the following conditions |
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Buy
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When upside to price target falls below 5% (all caps)
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Hold
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When upside to price target reaches or exceeds 15% for large caps or 20% for mid & small cap; when downside to price target reaches or exceeds 5% (all caps)
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Reduce
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When upside to price target reaches or exceeds 5% (all caps)
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We reserve the right to waive repeated changes of recommendation during periods of unusually high equity market or specific stock price volatility.
Share prices used in this financial report are closing prices on the date given. Deviations from this rule are disclosed. The underlying figures of a company valuation, i.e. the
profit and loss statement, capital flow and balance sheet are estimates based on date and thus bear certain risks. They can change at any time without notice when other models,
assumptions, interpretations and/or estimates are applied.
The use of the valuation methods do not rule out the risk that the stock fails to achieve the "fair value" within the projected period. Numerous factors influence share price
performance. Unforeseen changes can arise from the emergence of competitive pressure, from a change in demand for the products of an issuer, technological development, from
macroeconomic activity, exchange rate fluctuation or from a shift in society's moral concept. Changes in taxation law or supervisory regulations can often have a grave,
unforeseen impact. This discourse on valuation methods and risk factors does not claim completeness.
Global Rating Overview per December 31, 2008
| VT Research Universe
(quantity)
| VT Research Universe
(as%)
| Share of IB clients
within each rating category
(as % IB clients)
|
| | | |
| Buy |
48
|
29%
|
27%
|
| Hold |
103
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61%
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25%
|
| Reduce |
17
|
10%
|
35%
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