<table><tr><th>From:</th><th>Richard Kahn</th></tr><tr><td>Sent:</td><td>Friday, April 20, 2018 10:01 AM</td></tr><tr><td>To:</td><td>Jeffrey Epstein</td></tr><tr><td>Subject:</td><td>Fwd: Apple, Inc.: Cautious Into The Print; Buy Any Post-Earnings Dip</td></tr></table>

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: =>

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Subject: <u>Apple, Inc.:</u> Cautious Into The Print; Buy Any Post=Earnings Dip

Reply-To: <

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Katy L. Huberty= CFA — Morgan Stanley

April 20, 2018 4:01AM =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%,

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

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