BMO - Research Highlights May 28

May 28, 2010
TODAY'S HIGHLIGHTS
Canada/Int'l
Rating Upgrades Cenovus Energy

Estimates/Targets Raised Legend Int'l Holdings
Zarlink Semiconductor
Estimates/Targets Lowered CIBC
Royal Bank
TD Bank
Potash One
Featured Reports
Food Prod.: Key Takeaways and Stock Implications from Our Barbecue Conference
FINANCIALS
Banks Canada CIBC Q2/10 Earnings

Banks Canada CIBC Q2/10 Earnings: Credit and Capital Stronger Than...
Banks Canada Royal Bank Q2/10 Earnings; The Burden of High Expectations
Banks Canada Royal Bank Q2/10 Earnings: A Weak Quarter Relative to...
Banks Canada TD Bank Solid Q2/10 Earnings
Banks Canada TD Bank Q2/10 Earnings: Positive Momentum on the Asset...
ENERGY & UTILITIES
Oil & Gas Sector Comment Alberta Royalty Changes: Another Positive Surprise for...
Integrated Oils Canada Cenovus Energy Upgraded to Outperform; Highlights From Investor...
North American E&P Canada Paramount Resources Updated Resource Evaluation of Hoole Oil Sands Leases
North American E&P Sector Comment Alberta Royalty Curves Finalized; Natural Gas Deep...
MATERIALS
Metals & Mining Sector Comment Mining & Commodity Roundup - May 27, 2010
Fertilizers Int'l Legend Int'l Holdings Still Waiting for Wengfu
Fertilizers Canada Potash One Feasibility Capex/Tonne Rising But All-Inclusive
CONSUMER
Food Prod. Sector Comment Key Takeaways and Stock Implications from Our Barbecue...
TECH/TELECOM/MEDIA
Enterprise Hardware Sector Comment Notes from the Road - Bus Tour Recap
Specialty Hardware Canada Zarlink Semiconductor Q4/10 Revenues Above Forecast and Consensus
HEALTH CARE
Biotech Canada Theratechnologies After Panel, We Expect FDA Approval of Egrifa
MACRO
Quantitative/Technical Market Elements Daily Quantitative Commentary

Quantitative/Technical Relative Strength Filter Asia Credit Watch
Economics A.M. Notes Daily Economic Commentary
May 28, 2010
CIBC Research Comment
Toronto, Ontario
(CM-TSX; CM-NYSE)
Stock Rating: Market Perform

John Reucassel, CFA
Industry Rating: Market Perform
BMO Nesbitt Burns Inc.
Member of: Top 15 Quantitative Stock Selections (416) 359-4379
John.Reucassel@bmo.com
Assoc: John Fong, CFA, FSA
Q2/10 Earnings Price (27-May)

Target Price
$72.02
$78.00
52-Week High
52-Week Low
$77.38
$52.25
CIBC (CM)
Price: High,Low,Close Earnings/Share
10
Event
100 9
CIBC reported cash EPS of $1.61. Excluding unusual items, operating cash EPS
80 8
were $1.46. The consensus estimate was $1.49. While results were relatively
60 7
clean, we suspect the share sell-off yesterday reflected relatively high
40 6
expectations going into the quarter.
20 5
Volume (mln)
Impact 100 100
50 50
Neutral. The Tier 1 ratio was healthy at 13.7% and impaired loan formations 0 0
diminished during the quarter. Good results in credit and trading were offset by 150
CM Relative to S&P/TSX Comp
150
lower-than-expected spreads in retail markets.

100 100
50 50
Forecasts 2005 2006 2007 2008 2009
Last Data Point: May 26, 2010
Our 2010E cash EPS are unchanged at $6.35, and we have reduced our 2011E
(FY-Oct.) 2008A 2009A 2010E 2011E
cash EPS to $7.20 from $7.30 primarily due to lower spread expectations. EPS - Cash -$5.80 $2.73 $6.35 $7.20
P/E 11.3x 10.0x
Valuation EPS - GAAP -$5.89 $2.64 $6.28 $7.13

P/E 11.5x 10.1x
We have reduced our target price to $78 from $80, reflecting 10.8x our 2011E
Cash ROE n/a 9.4% 20.8% 21.0%
cash EPS. CM’s valuation could improve over the next few years as it winds Specific Prov. ($mm) $773 $1,505 $1,300 $1,080
Dividend $3.48 $3.48 $3.48 $3.48
down its structured credit run-off portfolio. Tier One Capital 10.5% 12.1% 14.1% 14.5%
Quarterly EPS - Cash Q1 Q2 Q3 Q4
Recommendation 2008A -$4.36 -$2.98 $0.13 $1.09
2009A $0.31 -$0.21 $1.04 $1.59
Q2/10 confirmed that credit trends remain on a positive trajectory. We believe 2010E $1.60a $1.61a $1.56 $1.58
that 2011E cash EPS are a reasonable reflection of “normalized” earnings. Dividend $3.48 Yield 4.8%
Book Value $30.00 Price/Book 2.4x
Looking through the credit recovery, it is not necessarily apparent that the bank Shares O/S (mm) 388.5 Mkt. Cap ($mm) $27,977
has above-average growth potential relative to its peer group beyond 2011. CM Float O/S (mm) 388.5 Float Cap ($mm) $27,977
Wkly Vol (000s) 8,414 Wkly $ Vol (mm) $542.5
remains Market Perform rated. Net Debt ($mm) na Next Rep. Date 25-Aug (E)
Notes: All values in C$; EPS are fully diluted; Cash EPS add back
amortization of intangibles throughout
Major Shareholders: Widely held
First Call Mean Estimates: CANADIAN IMPERIAL BANK COMM
(C$) 2010E: $6.28; 2011E: $7.25
Changes Annual EPS Annual EPS Quarterly EPS Target

2011E $7.30 to $7.20 2011E $7.23 to $7.13 Q3/10E $1.57 to $1.56 $80.00 to $78.00
Q4/10E $1.59 to $1.58
This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under
FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 6 to 9.
May 28, 2010
CIBC Research Comment
Corporate Debt – Banks
George Lazarevski, CFA

(416) 359-7488
george.lazarevski@bmo.com
Assoc: Gaurav Dhiman
Q2/10 Earnings: Credit and Capital

Stronger Than Expected
Event: CIBC reported Q2/10 results.
bps CIBC
Impact: Neutral. Subordinated Debt Indicative Spreads
550
Key Points: CIBC reported cash earnings of $624 million, or $1.61 500
10 Yr
per share, compared with a loss of $81 million, or ($0.21) per share, 450 5 Yr
in the year-ago quarter. Adjusting for certain items, cash earnings of 400 2 Yr
$1.46 per share came in below the consensus estimate of $1.49 per 350
share. Overall, we would characterize the CIBC results as neutral 300
from a corporate debt perspective. The primary contributor to the 250
underperformance in the quarter was the Wholesale segment, which 200
saw a significant drop in advisory fees and equity new issue 150
revenue. In addition, the second quarter results did not include 100
merchant banking gains similar to Q1/10. On a positive note, asset 50
quality trends showed some improvement. Loan losses came in 0

Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
below our expectations and gross impaired loans remained
relatively flat at $2.0 billion. In addition, new impaired loan Source: BMO Capital Markets
formations improved sequentially to $566 million compared to
$686 million in Q1/10. Finally, capital was stronger than expected
Relative Value
with a Tier 1 ratio of 13.7% and TCE ratio of 8.6%.
Sector Value: CIBC deposit note spreads in the 5-year part of the
Credit and Spread Implications curve are approximately 6 bps back of Royal bank credit and 2 bps
through BMO credit. At these levels we recommend a switch into
Near Term: The sovereign debt crisis in Europe could result in BMO credit versus CIBC credit.
increased volatility of Canadian banks spreads over the near term.
Credit Curve: Year to date, average bank 2s-5s and the 5s-10s
Medium Term: The outlook on Canadian bank spreads over the curves have steepened 8 bps and 2 bps, respectively, to 20 bps and
medium term is highly uncertain given the issues in Europe and the 33 bps. We prefer the short end of the curve (5-year or less) given
potential for global growth to decline. the current uncertainty in the market.
Recommendation
We remain cautious on Canadian bank credit given the uncertainty

in Europe and the potential contagion to other markets. Any
extension of the confidence problems beyond Europe would likely
DBRS S&P Moody’s
put additional pressure on Canadian bank credit spreads, which
have widened over 60% since the end of the first quarter. We AA A+ Aa2
recommend a market weight position in CIBC credit. Negative Stable Negative
May 28, 2010
Royal Bank Research Comment
Toronto, Ontario
(RY-TSX; RY-NYSE)
Stock Rating: Outperform John Reucassel, CFA

Industry Rating: Market Perform BMO Nesbitt Burns Inc.
(416) 359-4379
Member of: Top 15 Large Cap Stock Selections John.Reucassel@bmo.com
Top 15 Income Stock Selections Assoc: John Fong, CFA, FSA
Price (27-May) $56.85 52-Week High $62.89

Q2/10 Earnings; The Burden of High Expectations Target Price $63.00 52-Week Low $42.90
Royal Bank of Canada (RY)
4.5
Event
60
4.0
Release of Q2/10 cash EPS of $0.91. Excluding an unfavourable accounting
50
adjustment and a Visa gain, operating cash EPS were $0.93 versus our estimate 3.5
40
of $1.06 and consensus of $1.10.
3.0
30
Impact 20
Volume (mln)
2.5
200 200
Negative. Royal reported weaker-than-expected results from some of its core
100 100
retail and wealth businesses. Results were partially offset by better-than- 0 0
expected capital and credit. 150
RY Relative to S&P/TSX Comp
150
100 100
Forecasts
50 50
2005 2006 2007 2008 2009
We decreased our 2010 and 2011 cash EPS estimates to $4.15 and $4.90 from Last Data Point: May 26, 2010
$4.35 and $5.15, respectively. The reduced forecasts reflect more modest
(FY-Oct.) 2008A 2009A 2010E 2011E
expectations from wealth management, narrower projected spreads and lower EPS - Cash $3.47 $3.40 $4.15 $4.90
P/E 13.7x 11.6x
corporate contribution, partially offset by lower specific loan loss provisions.
Our quarterly trading revenue forecast of $1 billion is unchanged. EPS - GAAP $3.38 $2.57 $4.04 $4.79
P/E 14.1x 11.9x
Cash ROE 18.2% 15.2% 17.6% 18.7%

Valuation Specific Prov. ($mm)$1,430 $2,785 $2,007 $1,340
Dividend $2.00 $2.00 $2.00 $2.00
We decreased our target price to $63 from $67 to reflect our lower earnings Tier One Capital 9.0% 13.0% 13.9% 13.8%
estimates. Our target represents 12.9x 2011E cash EPS. Quarterly EPS - Cash Q1 Q2 Q3 Q4
2008A $0.97 $0.72 $0.95 $0.84
2009A $0.81 $0.66 $1.08 $0.85
Recommendation 2010E $1.03a $0.91a $1.08 $1.13
Over the last three quarters, RY’s results have come in below consensus Dividend $2.00 Yield 3.5%
expectations, which could reflect one of three possibilities: consensus forecasts Shares O/S (mm) 1,423.4 Mkt. Cap ($mm) $80,922
Float O/S (mm) 1,423.4 Float Cap ($mm) $80,922
overestimate the ultimate earnings power of RY; RY is investing in future Wkly Vol (000s) 20,912 Wkly $ Vol (mm) $1,121.3
growth initiatives that are dampening current earnings; or some combination of Net Debt ($mm) na Next Rep. Date 26-Aug (E)
Notes: All values in C$; EPS are fully diluted; Cash EPS add back
both. We believe it is some combination of both and the premium valuation amortization of intangibles throughout
enjoyed by the shares is likely to come under some pressure in the near term. Major Shareholders: Widely held
First Call Mean Estimates: ROYAL BANK OF CANADA (C$)
Nonetheless, we believe that looking through the credit recovery, RY has above- 2010E: $4.49; 2011E: $5.25
average growth prospects. RY remains Outperform rated.
Changes Annual EPS Annual EPS Quarterly EPS Target

2010E $4.35 to $4.15 2010E $4.24 to $4.04 Q3/10E $1.11 to $1.08 $67.00 to $63.00
2011E $5.15 to $4.90 2011E $5.04 to $4.79 Q4/10E $1.15 to $1.13
May 28, 2010
Royal Bank Research Comment

(416) 359-7488
Q2/10 Earnings: A Weak Quarter Relative to

Expectations
Event: Royal Bank (RBC) released Q2/10 results.
bps Royal Bank of Canada
Impact: Neutral. 500 Subordinated Debt Indicative Spreads
Key Points: RBC reported Q2/10 cash earnings of $1.3 billion, or 450
10 Yr
$0.91 per share, compared to $938 million (excluding the $1 billion 400 5 Yr
goodwill charge), or $0.66 per share, in the year-ago period. 350
2 Yr
Excluding certain items, Q2/10 core earnings were $0.94 per share, 300
which was significantly below the consensus estimate of $1.10. 250
Overall, it was a relatively weak quarter for RBC. Capital markets
200
revenues came in lower than expected due to weaker trading
150
revenues and a 25% decline in corporate and investment banking
100
revenues. Management indicated that the sovereign debt crisis in
Europe put pressure on volumes in the early part of the quarter. In 50
addition, Canadian banking earnings came in below our 0

expectations given margin compression from the narrowing in
Prime-BA spreads. On a positive note, asset quality trends showed Source: BMO Capital Markets
some improvement. Specific loan loss provisions were $477 million
compared to our estimate of $605 million. In addition, capital ratios
Relative Value
improved in the quarter with a Tier 1 ratio of 13.4%.
Sector Value: Canadian bank credit spreads have widened over
Credit and Spread Implications 60% as a result of the sovereign debt crisis in Europe. At current
levels, we recommend an overweight position in BMO credit
Near Term: Canadian bank credit spreads will likely remain given that it trades 8 bps back of Royal Bank credit compared to
volatile over the near term given the uncertainty in Europe. flat earlier in the year.
Medium Term: We remain cautious on Canadian bank credit over Credit Curve: Year to date, average bank 2s-5s and the 5s-10s
the medium term given the lack of clarity of the European sovereign curves have steepened 8 bps and 2 bps, respectively, to 20 bps and
debt crisis and the potential contagion to other markets. 33 bps. We prefer the short end of the curve (5-year or less) given
the current uncertainty in the market.
Recommendation
The sovereign debt crisis in Europe has caused increased volatility
in Canadian bank spreads over the past quarter, as exhibited by the
60% widening in deposit note spreads in the quarter. As a result of
the uncertainty in Europe, we remain cautious on Canadian bank
DBRS S&P Moody’s
credit and believe any extension of the confidence problems beyond
AA AA- Aaa
Europe would likely put additional pressure on bank credit spreads.
Stable Positive Negative
We recommend a market weight position in RBC credit.
May 28, 2010
TD Bank Research Comment
Toronto, Ontario
(TD-TSX; TD-NYSE)
Stock Rating: Outperform

John Reucassel, CFA
Member of: Top 15 Large Cap Stock Selections (416) 359-4379
Top 15 Income Stock Selections John.Reucassel@bmo.com
Assoc: John Fong, CFA, FSA
Top 15 Quantitative Stock Selections

Target Price $83.00  52-Week Low $51.00
Solid Q2/10 Earnings Toronto-Dominion Bank (TD)
6.5
80
6.0
Event 70
5.5
TD reported cash operating EPS of $1.36 versus consensus of $1.40. Declining 60
5.0
loan loss provisions helped drive operating EPS growth, offset by a more 50 4.5
modest contribution from TD Securities. 40 4.0
30 3.5
Volume (mln)
Impact 100 100
50 50
Neutral. 0 0
TD Relative to S&P/TSX Comp
150 150
Forecasts 100 100
Our 2010E cash EPS are unchanged at $5.80 and we adjusted our 2011E cash
50 50
2005 2006 2007 2008 2009
EPS to $6.60 from $6.65 due to more modest spread expectations. Last Data Point: May 26, 2010
(FY-Oct.) 2008A 2009A 2010E 2011E

Valuation EPS - Cash $5.39 $4.19 $5.80 $6.60
P/E 12.7x 11.1x
Our target price is unchanged at $83, representing 12.6x 2011E cash EPS.
EPS - GAAP $5.00 $3.61 $5.24 $6.04
P/E 14.0x 12.1x
Recommendation Cash ROE 16.2% 14.2% 14.8% 15.9%
Specific Prov. ($mm)$1,063 $2,016 $1,872 $1,210
Q2/10 results showcased the earnings potential for the Canadian P&C and Dividend $2.36 $2.44 $2.44 $2.44
wealth management franchises, and provided initial indications of improving Tier One Capital 9.8% 11.3% 11.9% 12.4%
conditions in the U.S. regional bank. While credit trends remain favourable, the Quarterly EPS - Cash Q1 Q2 Q3 Q4
2008A $1.42 $1.24 $1.34 $1.38
increase in impaired formations in debt securities classified as loans highlights 2009A $0.96 $0.82 $1.16 $1.25
2010E $1.57a $1.44a $1.39 $1.40
that there are still credit challenges to overcome. The bank’s Tier 1 capital, at
12% remains healthy, although pro forma the South Financial acquisition Tier 1 Dividend $2.44 Yield 3.3%
could decline to 11.5%. There are tentative signs of increased loan demand in Shares O/S (mm) 868.2 Mkt. Cap ($mm) $63,709
Float O/S (mm) 868.2 Float Cap ($mm) $63,709
the U.S. Northeast, which should help TD’s US banking business. Given its Wkly Vol (000s) 16,561 Wkly $ Vol (mm) $1,073.5
industry average valuation, above-industry-average franchises in Canada and Net Debt ($mm) na Next Rep. Date 02-Sep (E)
Notes: All values in C$; EPS fd; CEPS add back amort. of intang. &
interesting growth potential in the U.S. through TD Ameritrade and TD USA, goodwill; 2009 cash EPS has not been restated to reflect adoption of
the shares remain Outperform rated. financial instruments admendments.
First Call Mean Estimates: TORONTO-DOMINION BANK (C$)
2010E: $5.93; 2011E: $6.79
Changes Annual EPS Annual EPS Quarterly EPS

2011E $6.65 to $6.60 2011E $6.09 to $6.04 Q3/10E $1.41 to $1.39
Q4/10E $1.42 to $1.40
May 28, 2010
TD Bank Research Comment

(416) 359-7488
Q2/10 Earnings: Positive Momentum on the

Asset Quality Front
Event: TD Bank released Q2/10 results.
bps
Toronto Dominion Bank
Impact: Neutral. Subordinated Debt Indicative Spreads
500
Key Points: Despite earnings falling short of consensus, we view 450
this as a solid quarter for TD Bank from a corporate debt 400 10 Yr

perspective. The Canadian P&C division reported another quarter of 5 Yr
350
2 Yr
record earnings, the U.S. retail segment exceeded our expectations 300
due to lower loan loss provisions coupled with improved margins
250
and asset quality trends showed some improvement in the quarter.
200
Specific loan loss provisions of $482 million came in below our
150
expectations of $550 million. The one weak spot in the quarter was
100
Wholesale, which experienced a quicker moderation in earnings
than we expected. Trading revenues were $402 million, which was 50
slightly below our expectations of $425 million. The Tier 1 capital 0

ratio improved in the quarter, up 50 bps to 12.0%.
Source: BMO Capital Markets
Credit and Spread Implications

Relative Value
Near Term: We believe Canadian bank credit spreads will remain
volatile over the near term given the continued uncertainty of the Sector Value: TD Bank trades the tightest among large Canadian
European sovereign debt crisis. bank alternatives. The current spread differential between TD
Medium Term: We remain cautious on Canadian bank credit over credit and BMO credit looks attractive, at 9 bps, compared to
the medium term given the lack of clarity of the European sovereign trading in line in the first quarter. We believe the spread widening
debt crisis and the potential contagion to other markets. in BMO credit is overdone and should outperform relative to other
bank credit.
Recommendation Credit Curve: YTD, average bank 2s-5s and the 5s-10s curves
have steepened by 8 bps and 2 bps, respectively, to 20 bps and 33
The sovereign debt crisis in Europe has caused increased volatility bps. We prefer the short end of the curve (5-year or less) given the
in Canadian bank spreads over the past quarter, as exhibited by the current uncertainty in the market.
60% widening in deposit note spreads in the quarter. As a result of
the uncertainty in Europe, we remain cautious on Canadian bank
credit and believe any extension of the confidence problems beyond
Europe would likely put additional pressure on bank credit spreads.
DBRS S&P Moody’s
TD Bank remains one of our preferred credits among Canadian
large bank alternatives due to its strong domestic franchise and AA AA- Aaa
robust capital position. Stable Stable Negative
Energy - Oil & Gas May 28, 2010
Research Comment
Calgary, Alberta
Randy Ollenberger
Industry Rating: Market Perform (403) 515-1502
Mark Leggett, CFA
(403) 515-1508
Alberta Royalty Changes: Another Positive Surprise

for the Cardium Players
The Government of Alberta finalized royalty curves, which has a minimal

impact. More importantly, several new incentive programs targeting
Summary
emerging resources and technologies were also announced, which we expect  The Government of Alberta finalized royalty
will be positively received by industry and the market. Of these programs, we curves as part of the follow-up to the Alberta
believe the extension of the 5% initial royalty rate on horizontal oil and Competitiveness Review. More importantly,
natural gas drilling has the most immediate impact. Other incentives that several new incentive programs targeting
were announced included a 5% shale gas royalty rate incentive (over a period
emerging resources and technologies were
of 36 months with no volume limit) and the adjustment of the Natural Gas
also announced, which we expect will be
Deep Drilling Program (NGDDP) to include wells with a vertical depth of
positively received by industry and the
2,000 metres (2,500 metres previously).
market.
For all new horizontal oil wells spud on or after May 1, 2010, the 5% front  The extension of the 5% initial royalty rate on
end rate has been extended, depending on the measured depth of the well, to horizontal oil drilling positively impacts our
apply to 50,000–100,000 boe of initial volumes over a time period of 18–48
NAV estimates for the Cardium players,
production months (see Table 1 for details). This announcement positively
including Midway, Angle, Vero, Anderson,
impacts our NAV estimates for the Cardium players, including Midway,
PetroBakken and Crew. NuVista also
Angle, Vero, Anderson, PetroBakken and Crew (see Table 2). NuVista
maintains Cardium acreage. Large Cap
also maintains Cardium acreage. Other unconventional oil plays that will
benefit include Angle’s Lone Pine oil play, Orleans’ Waskahigan oil play Producers and Integrateds that benefit include
and, to a lesser extent, Crew’s Princess play given significant freehold land. Canadian Natural, Husky, Cenovus and
Talisman.
On the natural gas side, the extension of the 5% royalty rate benefits lower-
 We believe North American natural gas prices
impact plays given that the 0.5 Bcf volume limit was maintained. The shale
will remain relatively weak and that the new
gas incentive is positive for Duvernay shale players including Celtic. We
royalty incentive programs will likely further
note the shale gas incentive program does not include the Montney.
stimulate additional natural gas drilling
For the Large Cap Producers and Integrateds, the changes should provide a activity in Alberta, which could contribute to
modest benefit. In particular, Canadian Natural, Husky and, to a lesser
the oversupply and weak price environment.
degree, Cenovus could benefit due to relatively larger proportion of
 We again expect the impact on equity prices
production and activity related to Alberta oil assets. Talisman could also see
to be minimal for the natural gas-focused
a benefit given its exposure to Cardium oil and deep natural gas drilling.
producers, but positive for Cardium players.
We believe North American natural gas prices will remain relatively weak and
that the new royalty incentive programs will likely further stimulate additional
natural gas drilling activity in Alberta, which could contribute to the
oversupply and weak price environment. As such, we again expect the impact
on equity prices to be minimal for the natural gas-focused producers, but
positive for Cardium players.
May 28, 2010
Cenovus Energy Research Comment
Calgary, Alberta
(CVE-TSX; CVE-NYSE)
Stock Rating: Outperform

Randy Ollenberger
(403) 515-1502
Randy.Ollenberger@bmo.com
Assoc: Matthew Brink

Upgraded to Outperform; Highlights From Investor Target Price $32.00  52-Week Low $24.26
Roadshow Price: High,Low,Close

Cenovus Energy Inc. (CVE)
Earnings/Share
2.1
34
2.0
Event 32
1.9
BMO Capital Markets hosted a series of meetings with investors and company 30
1.8
management, including the company's CEO Brian Ferguson. We came away 28 1.7
from the meetings impressed with the company's opportunity set and the belief 26 1.6
that the depth and breadth of it is not well understood by investors, as it was not 24 1.5
Volume (mln)
20 20
emphasized or exploited under Encana.
10 10
0 0
Impact 150
CVE Relative to S&P/TSX Comp
150
Positive.
100 100
50 50
Forecasts 2009
Nov Dec Jan Feb Mar Apr May Jun
2010

Our EPS estimate is unchanged at $1.73 in 2010 but increased slightly to $1.82
(FY-Dec.) 2008A 2009A 2010E 2011E
from $1.79 in 2011. Our estimates are based on production forecasts of 253,300 EPS $2.15 $2.03 $1.73 $1.82
P/E 16.1x 15.3x
boe/d in 2010 and rises to 265,200 boe/d in 2011.
CFPS $4.14 $3.79 $3.67 $3.91
P/CFPS 7.6x 7.1x
Valuation
NAV $30.83 $37.28 $33.50 $36.69
We believe that Cenovus’ shares are attractively valued, offering the EV/EBITDA na 7.0x 7.2x 6.8x
ROCE (%) 15% 13% 11% 12%
combination of predictable high-margin oil sands growth as well as other LT Liab. 24% 25% 23% 17%
numerous unexploited opportunities on the company's legacy land base, Quarterly EPS Q1 Q2 Q3 Q4
including Lower Shaunavon, Bakken, Pelican Lake and conventional heavy oil. 2008A $0.58 $0.96 $0.83 -$0.21
2009A $0.55 $0.68 $0.57 $0.22
At current prices the shares are trading at 7.2x 2010E EV/EBITDA of and a 2010E $0.47a $0.44 $0.41 $0.42
17% discount to our 2010 net asset value estimate. This is broadly in line with Dividend $0.80 Yield 2.9%
its peers, despite arguably higher margin growth. Our $32 target price implies a Book Value $13.17 Price/Book 2.1x
Shares O/S (mm) 751.7 Mkt. Cap ($mm) $20,920
7.7x 2011E EV/EBITDA and a slight discount to our risked net asset value Float O/S (mm) 751.7 Float Cap ($mm) $20,920
Wkly Vol (000s) 14,748 Wkly $ Vol (mm) $401.2
estimate of $33.50. Net Debt ($mm) $2,777.0 Next Rep. Date Jul (E)
Notes: All values in C$; EPS are diluted based on continuing
operations; CFPS is diluted discretionary
Recommendation Major Shareholders: Widely Held
First Call Mean Estimates: CENOVUS ENERGY INC (US$) 2010E:
We are upgrading Cenovus to Outperform from Market Perform following $1.56; 2011E: $1.77
recent share price weakness.
Changes Annual EPS Annual CFPS Rating

2011E $1.79 to $1.82 2011E $3.87 to $3.91 Mkt to OP
May 28, 2010
Paramount Resources Research Comment
Calgary, Alberta
(POU-TSX)
Mark Leggett, CFA
Stock Rating: Market Perform BMO Nesbitt Burns Inc.
Industry Rating: Market Perform (403) 515-1508
Mark.Leggett@bmo.com
Assoc: Jason Chang
Updated Resource Evaluation of Hoole Oil Sands Price (27-May)

Target Price
$17.47
$18.00 
52-Week High
52-Week Low
$18.75
$5.73
Leases Paramount Resources (POU)
Price: High,Low,Close
50 50
Event 40 40
Paramount provided results of an updated resource evaluation on its Hoole oil 30 30

sands leases covering 48 sections (100% WI). The property is estimated to 20 20
contain roughly 634 MMbbl (best estimate case P50) of contingent bitumen 10 10
resources within the Grand Rapids formation, up from the initial evaluation of
0 0
458 MMbbl. The third-party evaluator assumes initial production of 25,000 b/d 20
Volume (mln)
20
in 2015 and fully developed production of 70,000 b/d in 2017 under the best 10 10
estimate case. Over the past six years, the company has drilled 59 oil sands 0 0
POU Relative to S&P/TSX Comp
evaluation wells. Paramount expects to submit an application for the 400 400
commercial development of the Hoole Grand Rapids resource in 2011. We 200 200
have updated the contingent resource estimate in our sum-of-parts NAV 0 0

2005 2006 2007 2008 2009
analysis. We estimate a value of $495 million (or $6.86 per share unrisked) Last Data Point: May 26, 2010
based on the updated best estimate contingent resource and a weighted average (FY-Dec.) 2008A 2009A 2010E 2011E
transaction metric of $0.78/bbl for undeveloped SAGD projects since 2007. We CFPS $2.65 $0.90 $1.28 $1.25
P/CFPS 9.5x 9.7x
have risked this Hoole valuation (25%) in our sum-of-parts NAV, which implies
EPS -$1.72 -$1.46 -$1.14 -$1.03
a risked value of $1.72 per share (up $0.60 from our previous estimate of P/E na na
$1.11).
CF/boe $35.66 $15.71 $20.65 $17.65
EV/EBITDA 5.9x 26.2x 14.1x 13.8x
ROCE -12.0% -11.0% -15.0% -12.0%
Impact D/CF 0.4x 1.0x 1.8x 2.6x
Slightly Positive. Quarterly CFPS Q1 Q2 Q3 Q4
2008A $0.36 $0.68 $0.60 $1.01
2009A $0.27 $0.21 $0.15 $0.30
Forecasts 2010E $0.30a $0.29 $0.34 $0.35
Our CFPS estimates of $1.28 in 2010 and $1.25 in 2011 are unchanged. Our Dividend $0.00 Yield 0.0%
financial estimates are based on production forecasts of 13,667 boe/d in 2010 Shares O/S (mm) 72.2 Mkt. Cap ($mm) $1,261
Float O/S (mm) 37.5 Float Cap ($mm) $655
and 15,820 boe/d in 2011, which are also unchanged. Wkly Vol (000s) 510 Wkly $ Vol (mm) $6.8
Net Debt ($mm) $162.8 Next Rep. Date Aug (E)
Valuation Notes: All values in C$; EPS (diluted), CFPS (diluted); P/CFPS ex.
Paramount's per fd equity interests of $4.84
Paramount currently trades at 2011E valuations of 9.7x P/CFPS and 13.8x Major Shareholders: Insiders (>50%)
First Call
EV/EBITDA (excluding equity interests). Our target price is supported by our Mean Estimates: PARAMOUNT RESOURCES LTD (C$/CF) 2010E:
na; 2011E: na
updated sum-of-parts analysis of $18.56 (based on flat AECO $5.50/Mcf).
Recommendation
We continue to rate Paramount shares Market Perform.
May 27, 2010
Energy - Royalty Trusts Research Comment
Calgary, Alberta
Gordon Tait, CFA

(403) 515-1501
Industry Rating: Market Perform Gordon.Tait@bmo.com
Assoc : Chris Bolton, CFA/Peter Kranz, P. Eng.
Alberta Royalty Curves Finalized;

Natural Gas Deep Drilling Program Expanded
The Government of Alberta finalized the new royalty curves for conventional
oil and gas production in the province. Changes to the royalty rates were Summary
originally announced on March 11, 2010.  The Government of Alberta finalized the new
The Government also unveiled the Emerging Resources and Technologies royalty curves for conventional oil and gas
Initiative (ERTI) to “accelerate new technologies to encourage development production in the province. Changes to the
of Alberta’s vast unconventional and deep resource pools”. Most notably, the royalty rates were originally announced on
minimum required Total Vertical Depth (TVD) to qualify for the Natural Gas March 11, 2010.
Deep Drilling Program was reduced to 2,000m from 2,500m. The Natural Gas  The minimum required Total Vertical Depth
Deep Drilling Program will now pay $625 per metre for each metre of a well (TVD) to qualify for the Natural Gas Deep
drilled over 2,000m TVD. For example, the majority of Cardium natural gas Drilling Program was reduced to 2,000m from
wells in Alberta average TVD of approximately 2,200m. Under the changes, 2,500m. The Natural Gas Deep Drilling
the drilling program will give producers approximately $125,000 for each new
Program will now pay $625 per metre for
Cardium well drilled (200 metres over 2,000 metres x $625 per metre). Within
each metre of a well drilled over 2,000m
our coverage universe, we believe Peyto Energy Trust (Outperform) has the
TVD. Within our coverage universe, we
greatest exposure to deep natural gas drilling in Alberta.
believe Peyto Energy Trust (Outperform)
The ERTI also contains incentives designed to encourage horizontal oil and has the greatest exposure to deep natural gas
natural gas drilling, coalbed methane development and shale gas development. drilling in Alberta.
Most of these initiatives were previously announced, but in some cases the
 Overall, the changes were largely as expected.
applicable time period has been extended, which we view as slightly positive.
Consequently, we are leaving estimates,
For more details on the changes, please see the comment published ratings and target prices unchanged. We have
concurrently by BMO Capital Markets Oil & Gas Producers research team. Outperform ratings on ARC, Baytex,
Overall, the changes were largely as expected. Consequently, our estimates, Bonavista, NAL Oil & Gas, Peyto,
ratings and target prices remain unchanged. We have Outperform ratings on Pengrowth and Vermilion. We are currently
ARC, Baytex, Bonavista, NAL Oil & Gas, Peyto, Pengrowth and restricted on Crescent Point.
Vermilion. We are currently restricted on Crescent Point.
May 27, 2010
Mining & Commodity Roundup Research Comment
Bart Melek
BMO Nesbitt Burns Inc. (Canada)
(416) 359-4906
Bart.Melek@bmo.com
Assoc: Lucas Litwiniuk, CFA
Biggest Commodity Movers

The Mining & May 26 vs May 19 May 26 vs Apr 25 Top Picks
Commodity Roundup Copper Baltic Dry
Copper
highlights the biggest WTI Crude Oil Gold Metallurgical Coal
Preferred Commodities
Thermal Silver
commodity and mining Zinc
Silver Iron Ore
stock movers Gold Thermal Coal
Aluminum Uranium Gold
throughout the most
Thermal Coal Iron Ore Zinc
recent week and Palladium Nickel
Platinum
month, and contains Molybdenum
Nickel
Palladium Uranium
key data and charts. It Zinc Aluminum
Steel Billet
also lists minor Iron Ore Lead
changes to mining -15% -10% -5% 0% 5% 10% 15% -30% -20% -10% 0% 10% 20% 30%
Metals & Mining
equity forecasts and Com pan y Ticke r Exp osu re
Anglo American AAL Diversif ied
valuations that may Biggest Stock Movers Consolidated Thompson CLM Iron Ore
Equinox EQN Copper
have resulted due to May 26 vs May 19 May 26 vs Apr 25 Ivanhoe Mines IVN Copper
South Gobi Energy SGQ Coal
changes in key SBB
RIC
assumptions. ELD Pre cio us Me tals
QUA
Com pan y Ticke r Exp osu re
CEY
FNX Alamos Gold AGI Gold
Featured Report ORE Fresnillo FRES Silver
CG New mont Mining NEM Gold
WLT RIC Osisko Mining OSK Gold

Randgold Resources GOLD Gold
FM
RSG
GEMD PCX
BIM CENX
PLZL BIM
Changes Tables
FM FXPO Please see pages 16-26
-20% -10% 0% 10% 20% 30% -50% -25% 0% 25% 50% 75%
Source: Bloomberg, BMO Capital Markets Please see pages 12-15 for analyst coverage.
Meredith Bandy, BMO Capital Markets Corp. (U.S.) (303) 436-1113 Andrew Kaip, BMO Nesbitt Burns Inc. (Canada) (416) 359-7224
Andrew Breichmanas, BMO Nesbitt Burns Inc. (Canada) (416) 359-8387 David Radclyffe, BMO Capital Markets Ltd. (U.K.) 44 (0)20 7246 5433
David Cotterell, BMO Capital Markets Ltd. (U.K.) 44 (0)20 7246 5430 Tony Robson, BMO Nesbitt Burns Inc. (Canada) (416) 359-4034
David Haughton, BMO Nesbitt Burns Inc. (Canada) (416) 359-4052 Edward Sterck, BMO Capital Markets Ltd. (U.K.)(44) (0)20 7246 5421
John Hayes, BMO Nesbitt Burns Inc. (Canada) (416) 359-6189 Data/Project Management: Simona Cheoreanu
This report was prepared in part by analysts employed by a Canadian affiliate, BMO Nesbitt Burns Inc., and a UK affiliate, BMO Capital Markets
Ltd., authorised and regulated by the Financial Services Authority in the UK, and who are not registered as research analysts under FINRA rules.
For disclosure statements, including the Analyst's Certification, please refer to pages 27 to 28
May 27, 2010
Legend International Research Comment
Toronto, Ontario
Holdings
(LGDI-NASDAQB) Joel Jackson, P.Eng., CFA
Stock Rating: Outperform(S) (416) 359-4250
Joel.Jackson@bmo.com
Industry Rating: Outperform

Target Price na  52-Week Low $0.57
Still Waiting for Wengfu Legend Int'l Holdings Inc. (LGDI)
-0.05
5
Event 4
-0.10
3
We have revised our model following recent announcements from LGDI, and
2
LGDI’s presentation at the BMO CM Ag, Protein and Fertilizer conference. -0.15
0 -0.20
Impact Volume (mln)
40 40
Neutral. 20 20
0 0
LGDI Relative to S&P 500
Forecasts 4000 4000
China’s Wengfu is completing a feasibility study focusing on the viability of 2000 2000
phosphoric acid manufacture at LGDI’s Queensland phosphate development 0 0

2005 2006 2007 2008 2009
using washed phosphate rock from LGDI’s Paradise North asset. With results Last Data Point: May 26, 2010
from the study due in late June, the scenario is unconstrained, so we maintain a (FY-Dec.) 2008A 2009A 2010E 2011E
phosphate rock-only forecast for now (sales ramp to 4 million tonnes by 2020). EPS -$0.09 -$0.17 -$0.13 -$0.07
P/E na na
CFPS -$0.08 -$0.13 -$0.12 -$0.03

Valuation P/CFPS na na
Factoring in current FX rates and revised cost estimates, our 10% rock-only Rev. ($mm) A$0 A$0 A$0 A$60
NAVPS is $1.25 at $130/t fob long-term rock prices (high end of current spot EBITDA ($mm) -A$23 -A$40 -A$33 -A$13
prices). A Wengfu phosphoric acid scenario could lead to a higher valuation
for LGDI, depending on a future deal, which, by no means, is certain. Quarterly EPS Q1 Q2 Q3 Q4
2008A -$0.02 -$0.02 -$0.02 -$0.03
2009A -$0.03 -$0.03 -$0.05 -$0.05
2010E -$0.05a -$0.04 -$0.03 -$0.02
Recommendation
Dividend $0.00 Yield 0.0%
We maintain our Outperform (Speculative) rating. LGDI has a long-term Book Value $0.38 Price/Book 2.6x
potential to become a phosphoric acid or phosphate fertilizer producer in Shares O/S (mm) 226.3 Mkt. Cap (US$mm) $224
Float O/S (mm) 130.0 Float Cap (US$mm) $129
conjunction with Wengfu and/or a de facto integrated phosphate rock source Wkly Vol (000s) 1,706 Wkly $ Vol (USmm) $1.5
Net Debt ($mm) -$57.8 Next Rep. Date Aug (E)
for India’s IFFCO. Execution as well as commitment from one or both of these
Notes: Share price, target price and market capitalization in US$, all
parties are key. The Queensland phosphate project schedule is expected to be other values in A$; (S) in rating denotes Speculative
Major Shareholders: Renika Pty Ltd. (22%), IFFCO (15%), Atticus
based on Wengfu’s feasibility study recommendation, and Wengfu’s support Capital (14%), Soros Fund Management (10%), Chabad House (9%)
may be imperative for any project scenario to materialize. First Call Mean Estimates: Not Available
Changes Annual EPS Annual CFPS

2011E -A$0.11 to -A$0.07 2011E -A$0.07 to -A$0.03
May 27, 2010
Potash One Research Comment
Toronto, Ontario
(KCL-TSX)
Stock Rating: Outperform(S)

Joel Jackson, P.Eng., CFA
Industry Rating: Outperform
(416) 359-4250
Joel.Jackson@bmo.com

Feasibility Capex/Tonne Rising But All-Inclusive Target Price $3.50 52-Week Low $2.00
Potash One Inc. (KCL)
Event 6
0.00
-0.05
KCL presented data points last week from its ongoing feasibility study. The 5
-0.10
plan was cited as production of 2 million mt at Legacy ramping to 2.85 million 4
3
mt in 3–5 years from start-up. Capex was cited as US$2.2–2.4B (US$770– -0.15
2
840/t) versus the pre-feasibility estimate of US$1.9B for 2.5 million mt 1
-0.20
(US$760/t) with increases due to FX rates, external infrastructure 0 -0.25

Volume (mln)
considerations (primarily port operations), and greater scale. We understand 100 100
50 50
prospective partners have little interest in a smaller initial mine (e.g. 1.43
0 0
million mt), which could expand later and require lower initial capital, as our KCL Relative to S&P/TSX Comp
4000 4000
prior scenario had assumed.
2000 2000
Impact 0
2005 2006 2007 2008 2009
0

Slightly Negative. Although estimates are still being finalized, capex rises, but
now includes needed infrastructure outside of the mine, and greater scale. Book Value $1.07 Price/Book 2.1x
Shares O/S (mm) 80.8 Mkt. Cap ($mm) $183
Float O/S (mm) 79.6 Float Cap ($mm) $181
Forecasts Wkly Vol (000s) 4,471 Wkly $ Vol (mm) $12.9
Net Debt ($mm) -$35.3 Next Rep. Date Jun (E)
We assume KCL’s targeted H2/13 commissioning for a 2.85 million mt mine.
Valuation
We estimate a 10% NAV of $1.6B and a 10% NAVPS of $3.91 at US$450/t
potash (fob Vancouver) assuming 75% foreign debt financing. Despite greater
capex, our NAV rises 13% after assuming a larger initial mine, but our NAVPS
falls 14% due to greater upfront financing needs and associated dilution.
Recommendation
With feasibility relatively imminent, KCL is the most advanced Saskatchewan
potash developer with all-inclusive feasibility capex/tonne estimates tracking Notes: All values in C$; (S) in rating denotes Speculative
lower than some incumbent producer brownfield expansions. Procurement of First Call Mean Estimates: POTASH ONE INC (C$) 2010E: -$0.09;
2011E: -$0.01
considerable project financing in 2010 remains KCL’s key catalyst. We
maintain our Outperform (S) rating but lower our target price to $3.50 from
$4.00.
Changes Target
$4.00 to $3.50
May 28, 2010
Food Kenneth B. Zaslow, CFA
BMO Capital Markets Corp.
212-885-4017
Industry Rating: Outperform kenneth.zaslow@bmo.com
Key Takeaways and Stock Implications from Our

Barbecue Conference Summary
Stock implications from our Barbecue Conference:  We compiled a list of the key highlights from our
TSN: Our above-consensus outlook appears conservative, as 1) protein Barbecue conference last week.
margins continue to improve, 2) TSN has allocated capital to structurally  We gain greater confidence in our favorable
improve its chicken margins, and 3) we would not be surprised if TSN outlook for TSN and SAFM (and have become
capitalized on recent volatility to opportunistically repurchase more debt. more positive on SFD) as 1) limited global
protein supplies should support higher protein
SAFM: We remain confident in our $6.00+ EPS in FY2011 reflecting tight
protein supplies, volume growth, and operational improvements. prices through at least 2011, 2) lower feed costs
should contribute to earnings momentum, 3)
PPC: While PPC continues to face company-specific challenges from its
greater financial flexibility has enabled protein
past, the strength in chicken fundamentals likely will be realized in FY2011.
companies to enhance operational efficiencies/
SFD: SFD’s management continues to take the appropriate actions of product mix and improve their balance sheets,
shifting toward packaged meats, restructuring its hog division, and and 4) initial signs indicate that foodservice
deleveraging its balance sheet. Despite “protective hedges,” tight global trends have begun to improve – albeit slowly.
supplies and moderating feed costs should create strong hog margins.
 Agribusiness outlook appears in transition.
MFI: Despite our comfort with MFI’s earnings power of $1.10+, the rapid Despite many unresolved issues, there is a
and significant increase in pork prices likely creates risk to MFI’s near-term strong case to be made that many issues can
earnings and may delay its ability to deliver its earnings power. fall in place in 2011 as 1) farmers will release
BG: Despite the unpredictability of quarterly earnings, we believe BG’s their crops (albeit late); 2) companies will deploy
guidance is achievable (even without the deployment of its $2.5 billion of cash), cash toward growth-enhancing acquisitions; 3)
reflecting ongoing improvement in agribusiness and solid sugar profits. US ethanol and global biodiesel policy may be
favorable; 4) China demand for US SBO may
ADM: Although F4Q10 is a transitional quarter, we believe ADM’s flexible
cushion crush margins, while China demand for
value-chain model and an improvement in fundamentals likely will enable
ADM to generate more than $2.80 in FY2011 for four consecutive years. soybeans may contribute to a recovery after the
fall; 5) albeit low/medium probability, China corn
CPO: CPO’s fundamentals continue to improve, while management outlined
demand may create dislocation opportunities; 6)
a credible growth strategy that appropriately incorporates acquisitions, in our
the rebound in protein margins should
view.
contribute to SBM demand; and 7) starch
VT: We continue to expect FY2010 to be a challenging year, while FY2011 demand should continue to recovery, while
will be the first year in which VT’s true earnings power will emerge. HFCS pricing outlook – albeit still early –
appears promising.
Refer to pages 19 to 20 for Important Disclosures, including Analyst's Certification.
Page 1 May 28, 2010

May 27, 2010
Enterprise Hardware & Keith Bachman
Imaging BMO Capital Markets Corp.

212-885-4010
keith.bachman@bmo.com
Jung Pak Corey Meehan
213-228-2546 212-885-4026
Industry Rating: Market Perform jung.pak@bmo.com corey.meehan@bmo.com
Summary
Notes from the Road – Bus Tour Recap
 We met with various industry leaders this week
and offer a few comments.
We met with various industry leaders and offer a few comments.  First, we believe XRTX is well positioned with both
storage systems and drive customers. We believe
1. Xyratex – Positive Fundamentals; Attractive Valuation
NTAP’s 50% product growth bodes well for
We believe XRTX is well positioned, and we reiterate our OUTPERFORM XRTX, and other storage customers such as Data
rating and $24 target price. Domain, EqualLogic and XIV are tracking well.
 In addition, we believe drive vendors have not
 Storage remains strong. We believe storage customers are all
changed order patterns despite some softness in
tracking well. NTAP’s 50% product growth for the April quarter bodes
HDDs/PCs. We remain comfortable with our $300
well for XRTX, in our view. Further, we believe all of Data Domain,
EqualLogic and IBM XIV are also tracking well, so we think our million projection for FY2010. Further, we believe
estimate for NSS growth of close to 60% for this year is reasonable. the potential for new customer wins with various
Japanese drive and component vendors place
 NTAP consistent. NTAP’s storage product split between JBL and
material upside tension to our FY2011 EPS
XRTX runs through 2011, with XRTX retaining 75% of revenues (or
estimates. We reiterate our OUTPERFORM rating
more accurately COGS). Because of some product launches, we believe
and $24 target price on XRTX.
XRTX probably has close to 80% of NTAP’s revenues at present, and
this amount could decline to 75% in FY2011. NTAP’s positive revenue  Second, we look for a potential recovery in
variance more than offsets any decline in percent distribution from MARKET PERFORM-rated BRCD. We believe
NTAP, in our view inventory levels are appropriate for both
the Ethernet and SAN businesses. In addition, we
 Some risks with DDUP. If there are any customer risks, we would
believe new hires in Ethernet could contribute
suggest that Data Domain’s business could be taken away from XRTX
modestly to the October quarter. While remain
over the next three years. However, we believe there is a new program
ramping with IBM that is at least as large as the Data Domain business. neutral, if BRCD is able to just meet consensus
Hence, we believe that this risk is manageable. revenue estimates for two quarters in row, we
believe the stock would benefit. We remain
modestly below consensus revenue estimates for
the October quarter.
 In the body of this note, we also offer comments
on OUTPERFORM-rated HPQ, as well as drives
and HBAs, which we wrote on earlier this week.
Refer to pages 7 to 8 for Important Disclosures, including Analyst's Certification.
Page 1 May 27, 2010

May 27, 2010
Zarlink Semiconductor Research Comment
Toronto, Ontario
(ZL-TSX)
Stock Rating: Outperform

Brian Piccioni, CFA
(416) 359-5761
Brian.Piccioni@bmo.com
Assoc: Rami Nasser

Target Price $2.50  52-Week Low $0.47
Q4/10 Revenues Above Forecast and Consensus Zarlink Semiconductor (ZL)
Price: High,Low,Close Earnings/Share(US$)
0.2
Event 3 0.1
Zarlink reported Q4/10 (Mar) revenue of $58.5 million, up 14% y/y and 8%
2 0.0
sequentially, and above our estimate of $57.0 million and the First Call Mean of
$57.1 million. We estimate Q4/10 operating EPS at $0.05 or $6.5 million 1 -0.1
(GAAP of $0.05), vs. $0.02 last year, our forecast of $0.05 and the First Call
0 -0.2
mean of $0.04. 40
Volume (mln)
40
20 20
Impact 0 0
ZL Relative to S&P/TSX Comp
200 200
Positive.
100 100
Forecasts 0 0
2005 2006 2007 2008 2009
We are revising our Q1/11 revenue forecast from $56.1 million to $57.5 million. Last Data Point: May 26, 2010
Our operating EPS forecast declines from $0.06 ($0.05 GAAP) to $0.05 ($0.09 (FY-Mar.) 2009A 2010A 2011E 2012E
EPS $0.12 $0.20 $0.25 $0.34
GAAP). Despite the elimination of the OPG business, our 2011 revenue is P/E 6.1x 4.5x
substantially unchanged at $237.4 million and our operating EPS forecast
CFPS $0.12 $0.29 $0.27 $0.34
remains $0.25. P/CFPS 5.7x 4.5x
Rev. ($mm) $227 $220 $237 $292

Gross Margin 50% 53% 52% 53%
Valuation R&D % of Sales 19% 20% 19% 19%
EBT Margin 8% 12% 14% 15%
Despite a sharp, and continuing, run up in the stock price over the past year,
Quarterly EPS Q1 Q2 Q3 Q4
Zarlink is trading at 6.3x our next four quarters Operating EPS forecast. 2009A $0.03 $0.04 $0.04 $0.02
EV/EBITDA is a modest 2.1x on a forecast basis. A target price of $2.50, or 10x 2010A $0.06 $0.05 $0.04 $0.05
2011E $0.05 $0.06 $0.07 $0.07
next four-quarter operating EPS of $0.25, seems conservative.
Recommendation Shares O/S (mm)
Float O/S (mm)
121.5
118.7
Mkt. Cap ($mm)
Float Cap ($mm)
$191
$186
Management continues to make headway in this turnaround story. The only Wkly Vol (000s) 1,401 Wkly $ Vol (mm) $1.7
Net Debt ($mm) -$8.4 Next Rep. Date July (E)
negative we can cite is lower-than-expected Q1/11 gross margin guidance, Notes: Share price, target price and capitalization in C$, all other
which we consider to be a minor point given the valuation and management’s values in US$
Major Shareholders: Stonehill Capital (9.0%), T. Rowe Price (8.9%)
comments regarding their expectation of a recovery in gross margin through in First Call Mean Estimates: ZARLINK SEMICONDUCTOR INC
(US$) 2010E: $0.07; 2011E: $0.18; 2012E: $0.25
2011. We retain our Outperform rating and $2.50 target price.
Changes Annual EPS Annual CFPS Quarterly EPS

2012E $0.31 to $0.34 2011E $0.28 to $0.27 Q1/11E $0.06 to $0.05
2012E $0.33 to $0.34 Q2/11E $0.07 to $0.06
Q3/11E $0.06 to $0.07
Q4/11E $0.06 to $0.07
May 27, 2010
Theratechnologies Biotechnology
(TH-TSX)
Jason Zhang, Ph.D.
Stock Rating: Outperform(S) BMO Capital Markets Corp.
212-885-4179
Industry Rating: Market Perform jason.zhang@bmo.com
Alex Arfaei
212-885-4033
alex.arfaei@bmo.com
After Panel, We Expect FDA Approval of Egrifa Securities Info

Price (27-May) $2.90 Target Price $8
52-Wk High/Low $6/$2 Dividend --
Mkt Cap (mm) $175 Yield --
Event Shs O/S (mm, BASIC) 60.5 Float O/S (mm) 59.7
Options O/S (mm) na ADVol (30-day, 000s) 224
Yesterday, FDA’s advisory panel voted unanimously (16 Yes, 0 No, 0 Price Performance
Abstain) that the overall risk-benefit assessment of Egrifa (tesamorelin) THERATECHNOLOGIES INC (TH)
supports its approval for the treatment of excess abdominal fat in HIV- P ric e: High,Low,Close(US$)
14
Relative t o S& P 500
60 0
infected patients with lipodystrophy. 12 50 0
10 40 0
Analysis 8
30 0
6
Although we expected a positive vote, we did not expect that it would be 4
20 0
unanimous. The panel agreed that the Phase III trials clearly met the primary 2
10 0
endpoint (decreasing Visceral Adipose Tissue or VAT) for the proposed 0 0

V olume (mln)
indication and that was the primary reason for the unanimous positive vote. 20 20
On the safety side, as we expected, the panel mostly downplayed the risk of 10 10
diabetes as small and manageable, but certainly worth studying in follow-up 0

20 05 2 006 2 00 7 20 08 2 009 2 01 0
0
Las t Dat a P oint : May 26, 2010

trials/patient registry. Some even argued against excluding diabetes patients
Valuation/Financial Data
in the final label because they believe physicians could manage the risk. All
(FY-Nov.) 2008A 2009A 2010E 2011E
panel members were understandably skeptical about the relationship between EPS GAAP -$0.85 -$0.25 $0.21 $0.11
VAT and cardiovascular (CV) benefit and asked for more data to examine P/E 13.8x 26.4x
First Call Cons. $0.02 $0.23
this relationship. Interestingly, most of panel acknowledged that FCF na $0.10 $0.03 -$0.05
lipohypertrophy is a serious problem from the patients’ perspective (thanks P/FCF 96.7x nm
EBITDA ($mm) na -$12 $15 $9
in part to patient testimonials) and that the magnitude of the benefit may EV/EBITDA 7.0x 11.7x
Rev. ($mm) na $20 $39 $36
have not been adequately captured in the trials. With a unanimous vote, the EV/Rev 2.7x 2.9x
probability of FDA approval of Egrifa is now significantly higher, pending Quarterly EPS 1Q 2Q 3Q 4Q
2009A -$0.18 -$0.09 $0.10 -$0.08
negotiations on final label, risk management, and post marketing 2010E -$0.07A -$0.07 $0.37 -$0.02
commitments between the company and the FDA. Balance Sheet Data (02/26/10)
Net Debt ($mm) -$70 TotalDebt/EBITDA nm
Total Debt ($mm) $0 EBITDA/IntExp na
Net Debt/Cap. nm Price/Book 4.5x
Forecasts Notes: All values in US$.
We expect the FDA to approve Egrifa either on July 27, 2010, or with a few Source: BMO Capital Markets estimates, Bloomberg, FactSet, Global
Insight, Reuters, and Thomson Financial.
months delay pending upcoming negotiations with the company.
Valuation
We value TH shares at $8/share using our portfolio valuation model.
Recommendation
We maintain our OUTPERFORM(S) rating on TH shares.
Please refer to pages 8 to 10 for Important Disclosures, including the Analyst's Certification.
May 27, 2010
Market Elements Research Comment
Quantitative/Technical Research
Mark Steele
(416) 359-4641
mark.steele@bmo.com
Assoc: Tiberiu Stoichita/Rahul Muralidhar
 Equity markets rebounded en masse; every Global, U.S. and  Commodity currencies led a broad-based rebound against the dollar
European economic sector rose at least 1%. and yen; yen carry trade implied volatility fell to 20%, off of the
 Flight to quality bonds sold off; Italy (a non-safe haven), part of the peak of 25% five sessions ago.
PIIGS, was the key mover to the downside; Western European  Commodities rose across the board; crude oil has had the largest
sovereign and European financial default risk measures churned. two-day rebound (8.4%) since the December 2008 bottom.
Levels*
Currencies (USD per) Commodities Government 10- Yr Benchmark Equity Indices & Sentiment
Symbol H/L Level %Chg Symbol H/L Level %Chg Symbol H/L Level Chg Symbol H/L Level %Chg
DXY  86.29 -1.0% DJ UBS 126.65 1.9% U.S.  3.36 0.17 S&P 1200 1,219 3.4%
EUR  1.2363 1.5% WTI Oil 74.85 4.7% Canada  3.38 0.12 S&P 500  1,103 3.3%
CHF  0.8688 0.8% NMX Gas 4.32 4.0% Germany  2.70 0.06 S&P/TSX  11,749 1.8%
GBP  1.4578 1.3% Gold  1,212.5 0.1% France  2.96 0.05 Euro STOXX 2,619 3.5%
JPYx10  0.1098 -1.2% Silver  18.52 2.5% Switzerland  1.56 0.07 FTSE 100 5,195 3.1%
CAD  0.9539 2.2% Platinum 1,562.5 2.8% Italy  4.10 0.08 Hang Seng 19,431 1.2%
AUD  0.8514 3.6% Palladium 463.5 5.6% Spain  4.23 0.03 Topix  870 1.3%
NZD 0.6837 3.1% CMX Cu 316.35 3.0% Greece 7.70 0.01 S&P/ASX 4,379 1.7%
BRL  0.5510 3.0% LME Al 3m 0.94 2.5% U.K.  3.61 0.06 Shang/Shen  2,860 1.6%
MXNx10  0.7804 2.3% LME Ni 3m 9.89 3.2% Australia  5.39 0.06 Sensex30  16,666 1.7%
ZAR  0.1322 2.7% LME Zn 3m 0.88 2.6% Hong Kong 2.42 0.02 CDX IG 5Yr 119.19 -5.8%
KRWx10  0.8271 2.6% Lumber 228.50 1.6% India  7.49 0.00 TRIN 0.33 -75%
SGD  0.7139 0.7% Corn 373.25 0.5% Japan  1.26 0.04 VIX 29.68 -15.2%
Moves
Currencies (spot) Commodities Government 10- Yr Benchmarks Equity Indices
AUD Palladium India Euro STOXX
NZD WTI Oil Greece
S&P 1200
BRL NMX Gas Hong Kong
LME Ni 3m Spain S&P 500

ZAR
CMX Cu Japan FTSE 100
KRW
Platinum France
MXN S&P/TSX
LME Zn 3m U.K.
CAD Sensex30
LME Al 3m Germany
EUR
Silver Australia S&P/ASX
GBP
DJ UBS Sw itzerland Shang/Shen
CHF Lumber Italy
Topix
SGD Corn Canada
JPY Gold U.S. Hang Seng
2.0% 0.0% 2.0% 4.0% 0.0% 2.0% 4.0% 6.0% 0.20 0.15 0.10 0.05 0.00 0.0% 1.0% 2.0% 3.0% 4.0%
Sectors
S&P Global 1200 S&P Europe 350 S&P 500 S&P/TSX Composite
Energy Financials Financials Energy
Materials Energy Energy Materials

Financials Materials Materials Info Tech
Industrials Industrials Info Tech Utilities
Info Tech Utilities Cons Disc Telecom

Cons Disc Cons Disc Industrials Cons Stap
Telecom Telecom Telecom Cons Disc
Utilities Cons Stap Utilities Industrials

Cons Stap Hlth Care Cons Stap Hlth Care
Hlth Care Info Tech Hlth Care Financials
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 0.0% 1.0% 2.0% 3.0% 4.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 0.0% 1.0% 2.0% 3.0% 4.0%
Source for all data and graphics in this publication: BMO Capital Markets, Bloomberg, Thomson
* H/L = at a new closing 52- wk High/Low; / = within 10% of the 52- week High/Low; Colour codes are inverted for bond and sentiment indications
This report was prepared in part by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s)
under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 9 to 10.
May 28, 2010
Relative Strength Filter Research Comment
Quantitative/Technical Research
Mark Steele
(416) 359-4641
mark.steele@bmo.com
Assoc: Tiberiu Stoichita/Rahul Muralidhar
Asia Credit Watch
 Close attention is to be paid to China and Asia.  This month, a basket of Asian sovereign default risk started
o Currency. trading: iTraxx SovX Asia Pacific.
o Default risk. o Our stripped down and more focused version is an
easier to remember “AsiaDoom.”
o Fit to euro woe.
Figure 1: Asia Credit Watch at 6:50 a.m. This Morning
Source: BMO Capital Markets, Bloomberg, Thomson, Markit

This report was prepared in part by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s)
under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 2 to 3.
May 28, 2010
Economic Research Research Comment
Dr. Sherry Cooper (800) 613-0205

Douglas Porter
Benjamin Reitzes
Robert Kavcic \
A.M. Notes
Dr. Sherry Cooper, Chief Economist

sherry.cooper@bmonb.com
416-359-4112
UNITED STATES – Robert Kavcic

Overnight action… U.S. equity futures point to a modestly higher open after yesterday’s blistering rally that saw the S&P 500
gain 3.3%. Volatility has returned in a big way with the VIX hitting its highest level since the March-2009 bottom in recent days,
leaving the S&P 500 down 7% with one more trading day left in the month—this year, selling in May was indeed the right play.
Despite yesterday’s strength, both the S&P 500 and the Dow remain stuck just below their 200-day moving averages, so follow
through today and into next week will be important from a technical perspective. Meantime, commodity prices are holding firm
with oil sitting above $75 and the euro continues to rebound off its Wednesday low, helping the overall risk appetite.
Today’s data… Personal income and spending (8:30 am) likely rose 0.4% and 0.2%, respectively, in April. Income remains 1%
below pre-recession levels, while spending has more than recouped its decline. As a result, the savings rate has fallen from a peak
of 6.4% in May-2009 to 2.7% in March, but likely ticked up to about 3% in April. Core PCE prices likely inched up 0.1% in the in
the month, which would pull the annual rate down to 1.1%, the slowest pace since 1963—more reason for inflation concerns to stay
on the back burner.
Later in the morning, we’ll get the Chicago PMI (9:45 am), which likely slipped to 62 in May from 63.8 in the prior month. Also,
the final revision of the University of Michigan Consumer Sentiment Index (10:00 am) should come in at 73 for May, down
slightly from the preliminary reading, but still up form last month’s 72.2 level and comfortably above the low of 65.7 set in August-
2009.
From the headlines…
Debt Worries Stall Benefits Bill… “Sprawling legislation that would extend jobless benefits, revive an array of business tax cuts
and impose a new levy on hedge-fund executives faltered in the House on Thursday after fiscally conservative Democrats voiced
concern the bill would dig the nation deeper into debt.” Wall Street Journal, (Link to Article)
Busy Hurricane Season Seen for the Atlantic… “The coming Atlantic hurricane season could be one of the busiest on record, with
the possibility of the next six months bringing nearly as many hurricanes as in 2005, when Hurricane Katrina pummeled the Gulf
coast, federal forecasters said Thursday.” Wall Street Journal, (Link to Article)
Please refer to page 6 for Disclosure Statements.

BMO Capital Markets Gameloft
Important Disclosures
Analyst's Certification
As to each company covered in this report, the analyst hereby certifies that the views expressed in this report accurately reflect my personal views about
the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific
recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their
affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating
new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Ltd. are not registered as research analysts with FINRA. These analysts
may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472
restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosure
For Important Disclosures on the stocks discussed in this report, please go http://researchglobal.bmocapitalmarkets.com/Company_Disclosure_
Public.asp.
Distribution of Ratings (Mar. 31, 2010)
Rating BMOCM US BMOCM US BMOCM US BMOCM BMOCM Starmine
Category BMO Rating Universe* IB Clients** IB Clients*** Universe**** IB Clients***** Universe
Buy Outperform 32.9% 13.1% 36.4% 39.4% 47.9% 53%
Hold Market Perform 63.2% 11.9% 63.6% 55.3% 48.5% 41%
Sell Underperform 3.9% 0% 0% 5.2% 3.6% 6%
* Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts.
** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as
percentage within ratings category.
*** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking
services as percentage of Investment Banking clients.
**** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts.
***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services as
percentage of Investment Banking clients.
Ratings and Sector Key

We use the following ratings system definitions:
OP = Outperform - Forecast to outperform the market;
Mkt = Market Perform - Forecast to perform roughly in line with the market;
Und = Underperform - Forecast to underperform the market;
(S) = speculative investment;
NR = No rating at this time;
R = Restricted – Dissemination of research is currently restricted.
Market performance is measured by a benchmark index such as the S&P/TSX Composite Index, S&P 500, Nasdaq Composite, as appropriate for each
company. BMO Capital Markets eight Top 15 lists guide investors to our best ideas according to different objectives (Canadian large, small, growth,
value, income, quantitative; and US large, US small) have replaced the Top Pick rating.
Other Important Disclosures

For Other Important Disclosures on the stocks discussed in this report, please go to http://researchglobal.bmocapitalmarkets.com/Company_Disclosure_
Public.asp or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY 10036 or Editorial Department, BMO Capital
Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3.
Prior BMO Capital Markets Ratings Systems

http://researchglobal.bmocapitalmarkets.com/documents/2009/prior_rating_systems.pdf
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Page 1  April 23, 2010

BMO Capital Markets Gameloft
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BMO - Research Highlights May 28

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May 28, 2010

Rating Upgrades Cenovus Energy

Banks Canada CIBC Q2/10 Earnings

ENERGY & UTILITIES

Biotech Canada Theratechnologies After Panel, We Expect FDA Approval of Egrifa

Quantitative/Technical Market Elements Daily Quantitative Commentary

Stock Rating: Market Perform

Q2/10 Earnings Price (27-May)

lower-than-expected spreads in retail markets.

Valuation EPS - GAAP -$5.89 $2.64 $6.28 $7.13

Changes Annual EPS Annual EPS Quarterly EPS Target

George Lazarevski, CFA

Q2/10 Earnings: Credit and Capital

share. Overall, we would characterize the CIBC results as neutral 300

from a corporate debt perspective. The primary contributor to the 250

underperformance in the quarter was the Wholesale segment, which 200

merchant banking gains similar to Q1/10. On a positive note, asset 50

quality trends showed some improvement. Loan losses came in 0

We remain cautious on Canadian bank credit given the uncertainty

Stock Rating: Outperform John Reucassel, CFA

Price (27-May) $56.85 52-Week High $62.89

Cash ROE 18.2% 15.2% 17.6% 18.7%

Changes Annual EPS Annual EPS Quarterly EPS Target

George Lazarevski, CFA

Q2/10 Earnings: A Weak Quarter Relative to

addition, Canadian banking earnings came in below our 0

Stock Rating: Outperform

Price (27-May) $73.38 52-Week High $77.37

modest contribution from TD Securities. 40 4.0

Forecasts 100 100

(FY-Oct.) 2008A 2009A 2010E 2011E

Changes Annual EPS Annual EPS Quarterly EPS

George Lazarevski, CFA

Q2/10 Earnings: Positive Momentum on the

Key Points: Despite earnings falling short of consensus, we view 450

this as a solid quarter for TD Bank from a corporate debt 400 10 Yr

slightly below our expectations of $425 million. The Tier 1 capital 0

Credit and Spread Implications

Alberta Royalty Changes: Another Positive Surprise

The Government of Alberta finalized royalty curves, which has a minimal

Stock Rating: Outperform

Price (27-May) $27.83 52-Week High $32.00

Roadshow Price: High,Low,Close

Last Data Point: May 26, 2010

Changes Annual EPS Annual CFPS Rating

Updated Resource Evaluation of Hoole Oil Sands Price (27-May)

Paramount provided results of an updated resource evaluation on its Hoole oil 30 30

have updated the contingent resource estimate in our sum-of-parts NAV 0 0

Gordon Tait, CFA

Alberta Royalty Curves Finalized;

Mining & Commodity Roundup Research Comment

Biggest Commodity Movers

WLT RIC Osisko Mining OSK Gold

Price (26-May) $0.99 52-Week High $1.60

phosphoric acid manufacture at LGDI’s Queensland phosphate development 0 0

CFPS -$0.08 -$0.13 -$0.12 -$0.03

Changes Annual EPS Annual CFPS

Stock Rating: Outperform(S)

Price (27-May) $2.27 52-Week High $3.87

(US$760/t) with increases due to FX rates, external infrastructure 0 -0.25

Last Data Point: May 26, 2010

Key Takeaways and Stock Implications from Our