EFTA02466339

From: Richard Kahn Sent: Friday, April 20, 2018 10:01 AM To: Jeffrey Epstein Subject: Fwd: Apple, Inc.: Cautious Into The Print; Buy Any Post-Earnings Dip Rich=rd Kahn HBRK Associates Inc. New York, NY 10022 Tel Fax Cell Begin forwarded m=ssage: From: "Morgan Sta=ley" Date: April 20, 2018 at 12:34:24 AM EDT To: = &=t; Subject: Apple, Inc.: Cautious Into The Print; Buy Any Post=Earnings Dip Reply-To: < =/div> <=td> <http://www.morganstanley.com/img/cs=spacer.gif> <http://www.morganstanley.com/img/cs=spacer.gif> <http://www.morganstanley.com/img/cs=spacer.gif> <http://www.morganstanley.com/img/cs=spacer.gif> <http://www.morganstanley.com/img/cs=spacer.gif> <http://www.morganstanley.com/img/cs=spacer.gif> &nb=p; Katy L. Huberty= CFA — Morgan Stanley April 20, 2018 4:01 AM =GMT We forecast=in-line March Q but see downside to June consensus estimates following iPho=e build cuts and weak China data. We expect Apple to increase capital retur= program by $1508. We would buy any post-earnings dip on 1) intact Services=story, 2) troughing ests, and 3) accelerated capital return. What to do ahead of earnings. We expect Apple to report an in-line March qua=ter, but are cautious into earnings on May 1 due to our belief that June qu=rter consensus estimates need to be revised lower. Additionally, with expec=ations for a step up in capital returns at least partially embedded in valu=tion (AAPL +14% since last print vs. Tech sector +5%, EFTA_R1_01574854 EFTA02466339 S&P 500 +2%), App=e's capital return announcement could amount to a "sell the news" type of e=ent, especially if forward estimates are revised materially downward. That s=id, we would be buyers on any weakness following the print given 1) the Ser=ices story remains intact, (leading to a stronger and more consistent sourc= of EPS growth and margin expansion), 2) estimate revisions are approaching=trough (we already assume no device revenue growth next three years), and 3= buybacks remain a source of downside protection. We lower our March and Ju=e quarter iPhone shipment estimates by 7M (1M in March, 6M in June; FY18 iP=one shipments now at 210M, from 217M), while increasing expectations for bo=h buybacks and dividends, resulting in FY18e EPS of $11.00 (down from $11.6=) and FY19e EPS of $13.80 (down from $14.00) (1 & 2). We remain Overwei=ht with a price target of $200 (down from $203), for 16% upside from curren= prices.We expect an in-line quarter...We believe that Apple will post Marc= quarter results that are at the low end of its previously issued guidance a=d in-line with our updated estimates. Our proprietary Alpha Wise iPhone dema=d tracker points to sell out of 54M in the March quarter (3), however we ex=ect channel inventory reduction of —2M units in the quarter after record in=entory build in December, which This alert i= sent from: And=ew Atlas, =/a> =You received this because you requested that you receive content and report= from: APPLE INC. =Please contact your FA if you want to unsubscribe from the alerts. <http://www.=organstanley.com/img/cs/spacer.gif> <http://www.=organstanley.com/img/cs/spacer.gif> chttp://www.=organstanley.com/img/cs/spacer.gif> <http://www.=organstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs=spacer.gif> <http://www.morganstanley.com/img/cs=spacer.gif> <http://www.morganstanley.com/img/cs=spacer.gif> <http://www.morganstan=ey.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs=spacer.gif> chttp://www.morganstanley.com/img/cs=spacer.gif> <http://www.morganstanley.com/img/cs=spacer.gif> Disclosures: Please see the full report for risks, dis=losures and other important information. Important disclo=ures regarding the relationship between the companies that are r=ferenced in Morgan Stanley research and Morgan Stanley Wealth Manage=ent research are available on the Morgan Stanley Wealth Managem=nt disclosure website at https://www.morganstanley.com/online/researchdisclosures <https://www.morganstanley.com/online/researchdis=losures> . Morgan Stanley Wealth Management Not Acting as Municipal Ad=isor Morgan Stanley Wealth Management is not acting as a municip=l advisor to any municipal entity or obligated person within the mean=ng of Section 15B of the Securities Exchange Act (the "Municipal A=visor Rule") and the opinions or views contained herein are not i=tended to be, and do not constitute, advice within the meaning of the=Municipal Advisor Rule. 2 EFTA_R1_01574855 EFTA02466340 Copyright The copyright in materials provided by Morgan Stanley is owned by Morgan Sta=ley & Co. LLC. Morgan Stanley Wealth Management is the trade name of M=rgan Stanley Smith Barney LLC, a registered broker-dealer in the=United States. &=bsp; © 2018 Morgan Stanley Smith Barney LL=. 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