EFTA02343088.pdf

From: Richard Kahn Sent: Wednesday, February 1, 2017 1:42 PM To: jeffrey E. Subject: Fwd: Apple, Inc.: Smooth Sailing Into Supercycle stock 127 premarket shares owned: 414,000 cost basis: 98.19 unrealized gain: =nbsp;11,927,368 total position value: =/span>52,578,000 Richard =ahn HBRK Associates Inc. Begin forwarded message: From: =/b>"Morgan Stanley" <m Subject: =/b>Apple, Inc.: =mooth Sailing Into Supercycle Date: =/b>January 31, 2017 at 9:26:29 PM =ST To: =/b> Reply-T <http://www.morganstanley.com/img/cs/spacer.gif> =td class=""> = =/a> =td class=""> =td valign="middle" style="padding: 0cm 0cm 0cm 0cm" class=""> <http://www.morganstanley.com/> =Wealth = Management =/p> =/td> EFTA_R1_01310792 EFTA02343088 Subscription =otification =ebruary 1, 2017 =0:p class=""> =/span> <http://www.morganstanley.com/img/cs/spacer.gif> = = =td class=""> =div style="font-size: 10.Opt; color: 4666666; font-weight: normal" =lass=""> = = Download =eport = =/div> =/td> = = <http://www.morganstanley.com/img/cs/spacer.gif> Apple, =nc.: Smooth Sailing Into Supercycle Katy L. Huberty, CFA — Morgan =tanley February 1, 2017 2:21 AM =MT Apple is =ur top pick with the upcoming iPhone supercycle accentuated by the =ossibility of repatriation, tax reform, and M&A. Stronger Dec =uarter and better than feared March guidance pave the path to our base =ase of $150, with $190 bull case becoming increasingly likely. December quarter suggests platform story intact. Over 20% normalized =ervices revenue growth, re-accelerating iPhone unit growth, and =onstraints across several products are encouraging signs customer =oyalty remains high and growth will accelerate further with new =roducts expected to launch later this year. We are also encouraged by =ainland China returning to growth (1) at constant currency, which is =onsistent with the acceleration recently reported by BABA. Growth in =ac, i Pad, and Services revenue in China supports our view that users =emain loyal to the platform but many are waiting for a new iPhone form =actor to upgrade. March quarter guidance better than feared. The =id-points of revenue and gross margin guidance are above our recently =owered estimates as improving China demand, normalization of supply, =nd price concessions from suppliers help offset currency risk. While =he pace of recovery could slow in June as Apple prepares for its =iggest iPhone launch in three years, we expect the market to look =hrough any weakness as was the case ahead of iPhone 6.We're =ncreasingly convinced Street estimates are too low for FY18. iPhone =eturned to growth despite no major form factor change and currency =eadwinds during the December quarter. iPhone engagement and loyalty =ates remain high, supported by 21% Services revenue growth (backing out =548M litigation benefit a year ago). New OLED displays, improved =attery technology, and a redesigned form factor at the high-end of the =ortfolio are likely to accelerate upgrade rates in FY18. China will =ead growth, in our view, and could account for all incremental iPhone =hipments embedded in consensus models next year, even if the upgrade =ate d 2 EFTA_R1_01310793 EFTA02343089 This =lert is sent from: =ndrew Atlas, =a href="mailto =/p> =lass="">Andrew.Atlas@morganstanley.com =ou received this because you asked to be alerted to: APPLE=INC. =br class=""> Please contact your FA if you want to unsubscribe from =he alerts. =/p> =span style="font-size: 10.0pt; color: #666666" class=""> = =br class="webkit-block-placeholder"> =span style="font-size: 10.0pt; color: #666666" class=""> = =br class="webkit-block-placeholder"> =!-- end content --> 3 EFTA_R1_01310794 EFTA02343090