<table><tr><th>From:</th><th>Richard Kahn</th></tr><tr><td>Sent:</td><td>Sunday, January 8, 2017 10:46 PM</td></tr><tr><td>To:</td><td>Jeffrey Epstein</td></tr><tr><td>Subject:</td><td>Fwd: Apple, Inc.: 2017 Top Pick with Growing List of Catalysts</td></tr></table>

Richard Kahn
HBRK Associates Inc.
575 =exington Avenue, 4th Floor
New =ork, NY 10022
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Begin forwarded message:

From: =/b>"Morgan Stanley" <██████████████████████>

Subject: =/b>Apple, Inc.: 2017 =op Pick with Growing List of Catalysts

Date: =/b>January 8, 2017 at 5:04:45 PM =ST

To: =/b>█████████████████████

Reply-To: =/b><███████████████████████████████

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Wealth =anagement

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Subscription Notification

January 8, 2017

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## Katy L. =uberty, CFA — Morgan Stanley

## January =, 2017 10:00 PM GMT

The market is focusing too =uch on near-term supply chain noise and not enough on three potential =atalysts: 1) iPhone supercycle led by China, 2) cash repatriation, and =) US tax reform. Apple is a top US IT Hardware pick in 2017 with 26% =pside to our PT, 61% upside to bull case.

pent-up Apple demand, is a top especially =ick in US in IT China, Hardware =head in of 2017 a major with form several factor potential change catalysts. with significant First, =ecent technology iPhone =nhancements, weakness signals including improved battery technology. Second, Apple is =he largest potential beneficiary of cash repatriation, with $216B =rapped overseas. Third, while border adjustment provisions could limit =pside, Apple could see as much as an 11 point reduction in tax rate. Of =he three catalysts, we believe the iPhone supercycle is most debated by =nvestors who see China as a risk, not an opportunity, after weak demand =n recent quarters. Our view is that China consumer loyalty to Apple =emains high, evidenced by stable market share of 80% at the high-end of =he market, and that weak demand is a function of the lack of a form =actor change during the iPhone 65/7 cycles which will be addressed with =he AMOLED iPhone launch later this year. In fact, our analysis of China =pgraders suggests that even a flat China upgrade rate next cycle will =esult in at least 20% iPhone unit growth, compared to current consensus =f 10%. We expect supply chain data points and repatriation discussions =o positively impact valuation beginning in late C1Q. At llx our FY18 =supercycle) base case EPS, Apple trades at a discount to the 14.5x P/E =ultiple when iPhone 6 launched. We view a return to double digit iPhone =nit growth, larger base of high margin, recurring services revenue, and =ncreased access to international cash as multiple enhancers. Net, our =148 PT assumes a 14x multiple on base case FY18 EPS of $10.60. Higher =Phone unit growth (20%+ vs. our 12% base case)

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<http://www.morganstanley.com/img/cs/spacer.gif> Disclosures:
Please see =he full report for risks, disclosures and other important =nformation.

Important disclosures regarding the =elationship between the companies that are referenced in Morgan Stanley =esearch and Morgan Stanley Wealth Management research are available on =he Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.com/online/researchdisclosures.

## January =, 2017 10:00 PM GMT (cont.)

Morgan Stanley Wealth Management Not Acting as Municipal =dvisor Morgan Stanley Wealth Management is not acting as a municipal =dvisor to any municipal entity or obligated person within the meaning =f Section 158 of the Securities Exchange Act (the "Municipal Advisor =ule") and the opinions or views contained herein are not intended to =e, and do not constitute, advice within the meaning of the Municipal =dvisor Rule.

## Copyright

The =opyright in materials provided by Morgan Stanley is owned by Morgan =tanley & Co. LLC. Morgan Stanley Wealth Management is the trade =ame of Morgan Stanley Smith Barney LLC, a registered broker-dealer in =he United States.

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