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profile investment outlook. Upside risks to our thesis could stem from more favorable changes to the investment and/or regulatory environment in New York. Downside/upside risks: ED, like all utility stocks, is also sensitive to changes in the market level of interest rates. Utilities historically underperform if bond yields rise, and outperform when they fall. Furthermore, ED is a bellwether utility and has historically outperformed during market uncertainty as a large liquid “flight to safety" stock. Dover Corp (DOV) Our PO of $85 is based on 11.5x EV/EBITDA on our 2017 estimate, which would put DOV in line with the multi-industrial peer group average. We view the target multiple as conservative, as we expect the Street to focus on EPS growth upside in ‘17, driven by Energy coming off depressed profitability. Risks to our PO are: 1) Highly dependent on acquisition strategy, 2) A reduction in capital spending in the oil & gas market, and 3) Weak global industrial production growth. General Dynamics (GD) We derive our PO of $200 using a sum-of-the-parts valuation model. Our model factors in 19.5x P/E multiple on 2018E earnings for GD's defense business, which is in line with pure play defense peers, and 18x P/E multiple on Gulfstream's 2018E earnings. In our view, GD's competitive business jet product portfolio and growth outlook in defense could provide near-term and medium-term organic growth. Additionally, the company's strong balance sheet and solid cash generation could sustain dividend growth and share repurchases. Downside risks to our PO are: 1) A downturn in business jets, due to an exogenous factor. 2) Given that business jets are priced in dollars, an unexpected devaluation in the dollar could significantly impact order activity, 3) We are forecasting a declining defense budget, which would then place a cap on the top-line growth for the defense primes. We view the Administration change as a potential ceiling to defense stocks as political control, in our view, is a key driver of defense spending. Decline in defense spending authorization (a leading indicator), which in turn could impact treasury outlays. Potential budget cuts to the Navy's fleet could encumber GD as well as a slowdown in procurement for the Army (armored vehicles). 4) Poor execution on defense programs could adversely impact margins. Hess Corp. (HES) Our price objective of $80 / share is based on a 5-year outlook which assumes a 5.5x DACF multiple and a commodity deck of $67.50 WTI and $70 Brent to which we add $10 / sh for Liza in offshore Guyana. The multiple is based on a finite timeline to delivery which is supported by core NAV. The risks to our price objective are: 1} the oil and gas price environment, (2) slowdowns in development drilling that leave production below expectations, and (3) news flow around HES' exploratory and appraisal drilling activities that could impact the stock. MGM Resorts International (MGM) Our $33 PO is based on 11.5x our 2017 EBITDA estimate {implied 10x 2018E EBITDA). This is in line with its historical trading range and supported by our detailed sum of the parts analysis. Upside risks are: a stronger than anticipated recovery in Las Vegas, improving consumer sentiment and its 56% ownership stake in MGM China. Downside risks are: balance sheet and liquidity risks proving worse than expected, continued Strip competition, and continuing near-term softness in the Macau market. Bankof America 16 Top 10 US Ideas Quarterly | 03 January 2017 Merrill Lynch HOUSE_OVERSIGHT_014637