Fwd: Apple, Inc.: Addressing The Top 5 Investor Questions
[{"sender": "\"Morgan Stanley\" <ms-wmir@morganstanley.com>", "recipients": [], "timestamp": "May 29, 2019 at 6:35:01 PM EDT", "subject": "Apple, Inc.: Addressing The Top 5 Investor Questions", "body": "Katy L. Huberty, CFA — Morgan Stanley\nMay 29, 2019 10:28 PM GMT\n\nGiven the risk of further restrictive trade measures, we answer investors' top questions. We expect\nshares to remain choppy, with a near-term floor around $160. Our estimates are unchanged but\npeer multiple contraction drives our SoTP-driven PT to $231 (from $240).\n\nWhat is the latest view on iPhone demand in China? On Apple's April 30th earnings call, CEO Tim\nCook noted that the November-December period was likely to be the trough in iPhone demand in\nChina, following an improvement in performance during the March quarter helped by iPhone price\ncuts, VAT tax rollbacks, increased financing options and better consumer confidence. Data from\npush-messaging service provider Jigaung shows that the improvement in iPhone demand likely\npersisted through April, where Apple gained over 175bps of Chinese smartphone installed base\nshare Y/Y (1). However, the increasingly tough trade rhetoric and actions recently taken by US and\nChinese authorities make it less likely this trend will continue into May/June. Late last week,\nfollowing the Huawei blacklist, President Trump commented that \"it's possible that Huawei would be\n________included in a trade deal\", suggesting recent actions could be bargaining chips to use in trade\nnegotiations that can be worked out by/around the G20 Summit in late June, but with Apple guiding\nJune quarter revenue down 8% Q/Q (vs. trailing 3 year seasonality of -14% Q/Q), the risk remains\nthat weaker near-term demand in China increases the risk of a revenue shortfall. For reference, we\nmodel 37M iPhone shipments in the June quarter (-10% Y/Y), in-line with iPhone builds, which\nimplies a 5th consecutive quarter of double digit iPhone shipment declines in China. If we assume\nChinese demand significantly weakens in the last 6 weeks of the quarter and iPhone shipments\ninstead fall 50% Y/Y (a 10 point further deceleration from March Q declines), then we'd expect 2.3M\nlower iPhone units (-6% vs. our current model), $1.6B lower revenue (-2.9%) and a $0.05 hit to EPS\n(-2"}, {"sender": "Richard Kahn", "recipients": ["Jeffrey Epstein [jeevacation@gmail.com]"], "timestamp": "5/30/2019 3:19:40 PM", "subject": "Fwd: Apple, Inc.: Addressing The Top 5 Investor Questions", "body": ""}]