Stock Report | February 28, 2015 | NNM Symbol: AAPL | AAPL is in the S&P 500

Apple Inc
S&P Capital IQ
Recommendation
HOLD ★★★★★ Price 12-Mo. Target Price
$128.46 (as of Feb 27, 2015 4:00 PM ET) $125.00
Report Currency
USD
Investment Style
Large-Cap Growth
S&P Capital IQ Equity Analyst Scott Kessler

GICS Sector Information Technology Summary This company is a prominent provider of hardware including iPhone smartphones,
Sub-Industry Technology Hardware, Storage & Peripherals iPad tablets, Mac computers, and iPod digital media players.

Key Stock Statistics (Source S&P Capital IQ, Vickers, company reports)

52-Wk Range $133.60– 73.05 S&P Oper. EPS 2015E 8.53 Market Capitalization(B) $748.247 Beta 0.92
Trailing 12-Month EPS $7.39 S&P Oper. EPS 2016E 8.94 Yield (%) 1.46 S&P 3-Yr. Proj. EPS CAGR(%) 12
Trailing 12-Month P/E 17.4 P/E on S&P Oper. EPS 2015E 15.1 Dividend Rate/Share $1.88 S&P Quality Ranking B+
$10K Invested 5 Yrs Ago $46,590 Common Shares Outstg. (M) 5,824.7 Institutional Ownership (%) 61

Price Performance Analyst's Risk Assessment

30-Week Mov. Avg. 10-Week Mov. Avg. GAAP Earnings vs. Previous Year Volume Above Avg. STARS
LOW MEDIUM HIGH
12-Mo. Target Price Relative Strength Up Down No Change Below Avg.
Our risk assessment reflects our view of a
120 seemingly ever-evolving market for
consumer-oriented technology products,
80 potential challenges associated with the
Share Price

60 company's growing size and offerings, and

possible changes in the pace or success of
40 7-for-1
product innovations following recent
management changes.
Volume(Mil.)

Revenue/Earnings Data
1200
800
Revenue (Million U.S. $)
400 1Q 2Q 3Q 4Q Year
0
5 5 2015 74,599 -- -- -- --
5 4 4
3 2014 57,594 45,646 37,432 42,123 182,795
1 2013 54,512 43,603 35,323 37,472 170,910
AM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM 2012 46,333 39,186 35,023 35,966 156,508
2011 26,741 24,667 28,571 28,270 108,249
2010 2011 2012 2013 2014 2015
2010 15,683 13,499 15,700 20,343 65,225
Past performance is not an indication of future performance and should not be relied upon as such.
Analysis prepared by Equity Analyst Scott Kessler on Jan 28, 2015 06:08 PM, when the stock traded at $115.31. Earnings Per Share (U.S. $)
Highlights Investment Rationale/Risk 2015 3.06 E2.10 E1.66 E1.72 E8.53
2014 2.07 1.66 1.28 1.42 6.45
➤ We project 21% revenue growth for FY 15 ➤ We note AAPL's significant market position in 2013 1.97 1.44 1.07 1.18 5.68
(Sep.), reflecting healthy iPhone revenue key areas, and what we view as high customer 2012 1.98 1.76 1.33 1.24 6.31
growth and some challenges related to the satisfaction and switching costs. Higher vol- 2011 0.92 0.91 1.11 1.01 3.95
iPad. We see revenues being aided by new of- umes, a focus on common components, and a 2010 0.52 0.48 0.50 0.66 2.16
ferings across multiple consumer categories, greater emphasis on software and services Fiscal year ended Sep. 30. Next earnings report expected: Late
including the iPhone 6, iPhone 6 Plus, and Ap- should aid profitability, in our view. We believe April. EPS Estimates based on S&P Capital IQ Operating Earnings;
historical GAAP earnings are as reported in Company reports.
ple Watch. We project a 4% gain for FY 16. the balance sheet will be increasingly em-
➤ The annual gross margin narrowed to 38% in FY ployed for dividends and stock repurchases, as Dividend Data
13 and widened to 39% in FY 14. We project this well as M&A. In August 2014, AAPL purchased
Beats Electronics and Beats Music, to enhance Amount Date Ex-Div. Stk. of Payment
margin will remain largely stable through FY 16, ($) Decl. Date Record Date
despite increases in deferred software rev- its accessories and music services offerings
7-for-1 Apr 23 Jun 9 Jun 2 Jun 6 '14
enues, reflecting market saturation and compe- and businesses, we think, for $3 billion. In Sep- 0.470 Jul 22 Aug 7 Aug 11 Aug 14 '14
tition. We believe iPhone and iPad margins will tember 2014, the company announced new 0.470 Oct 20 Nov 6 Nov 10 Nov 13 '14
be aided by efficiencies, offset somewhat by iPhones, a payments service, and Apple Watch. 0.470 Jan 27 Feb 5 Feb 9 Feb 12 '15
risks related to average selling prices. In October 2014, AAPL announced new iPads. Dividends have been paid since 2012. Source: Company reports.
➤ Our EPS projections assume a consistent tax ➤ Risks to our recommendation and target price
Past performance is not an indication of future performance and
rate in the mid-20% range and declines in the include weaker end-market demand, pricing should not be relied upon as such.
share count. In March 2012, AAPL announced a pressures, competitive handset and tablet of-
dividend and a share repurchase plan. In April ferings gaining traction, carrier efforts to re-
2013, it announced a $50 billion increase in the duce or eliminate subsidy payments, and less
repurchase program and a 15% increase in the success with product launches/innovations.
dividend. In April 2014, it announced a $30 bil- ➤ Our 12-month target price of $125 reflects com-
lion buyback and an 8% increase in the divi- parisons with calendar year 2015 P/E and P/
dend. In June 2014, a 7-for-1 stock split was im- E-to-growth multiples of the S&P 1500 Technol-
plemented. As of September 2014, AAPL had ogy sector. AAPL's P/E was recently 8% that of
$155 billion in cash and investments. the IT sector.

Please read the Required Disclosures and Analyst Certification on the last page of this report.
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Unless otherwise indicated, there is no intention to update this document.
Stock Report | February 28, 2015 | NNM Symbol: AAPL

Apple Inc
Business Summary January 28, 2015 Corporate Information

CORPORATE OVERVIEW. Apple makes smartphones, tablet devices, computers, and portable digital media Investor Contact
players, and sells a variety of related software, services, and accessories. In early 2013, AAPL reclassified P. Oppenheimer (44 20 7552 5782)
its product-based operating categories with updated shipment and revenue data for FY 11 (Sep.) and FY 12.
However, we continue to look at the company based on its major hardware product lines, which are
Office
iPhones, iPads, Mac computers, and iPods.
1 Infinite Loop, Cupertino, CA 95014.
AAPL's iPhone directly accounted for more than half of FY 13 revenues, with over 150 million units sold.
AAPL sold over 125 million iPhones in FY 11, contributing 50% of revenues. This was AAPL's fastest-grow- Telephone
ing segment over the past couple of years, and while we expect the rate of growth to slow as the business 408-996-1010.
becomes larger and more mature, we still see substantial opportunities related to international, enterprise
Fax
and education markets. We note the fall 2013 introductions of the iPhone 5s and the iPhone 5c.
408-996-0275.
Released in April 2010, the iPad quickly became the best-selling tablet computer by far. Before the iPad,
unit sales for similar computing devices were less than 200,000 units, according to market researchers. In Email
FY 10, the first year of availability, AAPL sold over 7 million iPads, accounting for around 8% of total rev- [email protected]
enues. In FY 11, AAPL sold over 32 million iPads, accounting for 18% of revenues. In FY 12, over 58 million
Website
iPads were sold, accounting for 20% of revenues. In FY 13, over 71 million iPads were sold, accounting for
http://www.apple.com
19% of revenues. We believe the tablet form factor will become even more popular for the foreseeable fu-
ture, but we see new entrants diluting AAPL's overall market share over time. Nonetheless, we expect
AAPL to continue to dominate in the upper part of this fast-growing computing market, especially with the Officers
fall 2013 introductions of the iPad Air and iPad Mini Retina Display.
Chrmn SVP & CFO
Sales of AAPL's computers, commonly known as Macs, made up 15% of revenues in FY 12 and 13% of rev-
A.D. Levinson L. Maestri
enues in FY 13. On a unit shipment basis, Macs had grown notably faster than what was been reported for
the PC industry. Mac revenues advanced as greater unit shipments offset deteriorating blended average CEO SVP, Secy & General
selling prices. However, we believe cannibalization has contributed to recent revenue and shipment T.D. Cook Counsel
declines. D.B. Sewell
The company's personal media players, iPods, made up around 4% of FY 12 sales and 3% of FY 13 sales. COO
J.E. Williams
AAPL has indicated it believes it holds over three-quarters of the media player market, but considering that
the company has a large majority of this mature category, we believe AAPL will likely continue to face
declining unit shipments.
Board Members
COMPETITIVE LANDSCAPE. The company primarily competes in the handset, tablet, computer and media T. D. Cook M. S. Drexler
player markets. We think AAPL uses its ability to design and develop its own operating system, hardware, A. A. Gore, Jr. R. A. Iger
application software, and services to differentiate itself from competitors. We see the appeal behind the A. Jung A. D. Levinson
products having a lot to do with its stated goal of providing customers with products that have superior R. D. Sugar S. L. Wagner
ease of use, seamless integration, and innovative industrial design. Reflecting what we view as AAPL's
perceived quality and notable cachet, the company is able to compete in the middle to high-end segments
of its target markets and charge above-average prices for its products. Domicile
California
AAPL has a substantial hardware presence across key categories, and we believe this helps garner inter-
est from third-party application developers who continue to produce content and applications for the Founded
iPhone and iPad. We think AAPL's application business is one of the key elements that helps differentiate 1977
its devices from other products, and is very important to future sales growth and pricing power. Further-
more, we view the iTunes App Store as an effective way of not only distributing content effectively, but al- Employees
so keeping the customer base entrenched. We think iCloud functionality encourages customers to buy 97,000
more AAPL products and use them more regularly.
Stockholders
FINANCIAL TRENDS. Although AAPL's sales are affected by broader macroeconomic conditions, we be- 26,112
lieve the company has generally been less cyclical than peers, given its strong brand, innovative and high-
quality products, loyal customer base, and exposure to fast-growing markets. Considering the maturity of
the computer and portable media player markets, we expect unit shipments and average selling prices for
Macs and iPods to decline. But with anticipated growth in the smartphone and tablet markets, and consid-
ering our view that AAPL will largely sustain notable share in these areas, we see increasing shipments of
and revenues from iPhones and iPads over the next couple of years.

We believe iPhones and Mac products offer margins above the level of the company as a whole, and this
should support gross margins, as they make up a large percentage of total revenues. The company should
benefit from operating leverage as sales increase faster than costs and expenses, supporting the upward
trend of operating margins, which have widened from the single digits to over 30%.

AAPL has what we view as a very strong balance sheet, with some $155 billion in cash and investments
and $35 billion in debt as of September 2014. AAPL boasts return metrics, such as return on equity (ROE),
that are relatively high compared to other large/mega-cap hardware and software companies.

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Stock Report | February 28, 2015 | NNM Symbol: AAPL

Apple Inc
Quantitative Evaluations Expanded Ratio Analysis

S&P Capital IQ 5+ 1 2 3 4 5 2014 2013 2012 2011

Fair Value LOWEST HIGHEST Price/Sales 3.70 3.06 3.21 3.50
Rank Based on S&P Capital IQ's proprietary quantitative model, stocks Price/EBITDA 11.18 9.37 8.60 10.65
are ranked from most overvalued (1) to most undervalued (5). Price/Pretax Income 12.64 10.42 9.02 11.09
P/E Ratio 17.11 14.11 12.06 14.63
Fair Value $163.90 Analysis of the stock's current worth, based on S&P Capital IQ's Avg. Diluted Shares Outstg (M) 6,122.7 6,521.6 6,617.5 6,556.5
proprietary quantitative model suggests that AAPL is Undervalued
Calculation by $35.44 or 27.6%. Figures based on calendar year-end price

Investability 99 Key Growth Rates and Averages

Quotient LOWEST = 1 HIGHEST = 100
Percentile AAPL scored higher than 99% of all companies for which an S&P Past Growth Rate (%) 1 Year 3 Years 5 Years 9 Years
Capital IQ Report is available.
Sales 6.95 18.06 35.01 36.91
Net Income 6.68 12.13 37.84 51.85
Volatility LOW AVERAGE HIGH
Ratio Analysis (Annual Avg.)
Technical BULLISH Since January, 2015, the technical indicators for AAPL have been Net Margin (%) 21.61 23.32 23.08 19.37
BULLISH. % LT Debt to Capitalization 20.63 10.90 6.54 3.63
Evaluation
Return on Equity (%) 33.61 35.70 37.16 32.76
Insider Activity UNFAVORABLE NEUTRAL FAVORABLE

For further clarification on the terms used in this report, please visit www.standardandpoors.com/stockreportguide

Company Financials Fiscal Year Ended Sep. 30

Per Share Data (U.S. $) 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
Tangible Book Value 17.52 18.71 17.17 11.10 7.28 4.95 3.29 2.32 1.64 1.26
Cash Flow 7.75 6.72 6.80 4.23 2.32 1.41 0.84 0.61 0.36 0.25
Earnings 6.45 5.68 6.31 3.95 2.16 1.30 0.77 0.56 0.32 0.22
S&P Capital IQ Core Earnings 6.47 5.68 6.29 3.94 2.16 1.30 0.77 0.56 0.32 0.21
Dividends 1.81 1.63 0.38 Nil Nil Nil Nil Nil Nil Nil
Payout Ratio 28% 29% 6% Nil Nil Nil Nil Nil Nil Nil
Prices:High 119.75 82.16 100.72 60.96 46.67 30.56 28.61 28.99 13.31 10.78
Prices:Low 70.51 55.01 58.43 44.36 27.18 11.17 11.31 11.70 7.17 4.47
P/E Ratio:High 19 14 16 15 22 24 37 52 41 48
P/E Ratio:Low 11 10 9 11 13 9 15 21 22 20

Income Statement Analysis (Million U.S. $)

Revenue 182,795 170,910 156,508 108,249 65,225 42,905 32,479 24,006 19,315 13,931
Operating Income 60,449 55,756 58,518 35,604 19,412 12,474 6,748 4,726 2,645 1,829
Depreciation 7,946 6,757 3,277 1,814 1,027 734 473 317 225 179
Interest Expense 384 136 Nil Nil Nil Nil Nil Nil Nil Nil
Pretax Income 53,483 50,155 55,763 34,205 18,540 12,066 6,895 5,008 2,818 1,815
Effective Tax Rate 26.1% 26.2% 25.2% 24.2% 24.4% 31.8% 29.9% 30.2% 29.4% 26.4%
Net Income 39,510 37,037 41,733 25,922 14,013 8,235 4,834 3,496 1,989 1,335
S&P Capital IQ Core Earnings 39,643 37,037 41,614 25,851 14,013 8,235 4,834 3,496 1,989 1,259

Balance Sheet & Other Financial Data (Million U.S. $)

Cash 25,158 40,590 29,129 25,952 25,620 23,464 24,490 9,352 6,392 3,491
Current Assets 68,531 73,286 57,653 44,988 41,678 31,555 34,690 21,956 14,509 10,300
Total Assets 231,839 207,000 176,064 116,371 75,183 47,501 39,572 25,347 17,205 11,551
Current Liabilities 63,448 43,658 38,542 27,970 20,722 11,506 14,092 9,299 6,471 3,484
Long Term Debt 28,987 16,960 Nil Nil Nil Nil Nil Nil Nil Nil
Common Equity 111,547 123,549 118,210 76,615 47,791 31,640 21,030 14,532 9,984 7,466
Total Capital 140,534 140,509 118,210 76,615 47,791 31,640 21,705 15,151 10,365 7,466
Capital Expenditures 9,571 8,165 8,295 4,260 2,005 1,144 1,091 735 657 260
Cash Flow 47,456 43,794 45,010 27,736 15,040 8,969 5,307 3,813 2,214 1,514
Current Ratio 1.1 1.7 1.5 1.6 2.0 2.7 2.5 2.4 2.2 3.0
% Long Term Debt of Capitalization 20.6 12.1 Nil Nil Nil Nil Nil Nil Nil Nil
% Net Income of Revenue 21.6 21.7 26.7 24.0 21.5 19.2 14.9 14.6 10.3 9.6
% Return on Assets 18.0 19.3 28.5 27.1 21.7 19.7 14.9 16.4 13.9 13.6
% Return on Equity 33.6 30.6 42.8 41.7 37.1 30.5 27.2 28.5 22.8 21.3

Data as originally reported in Company reports.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under
Review.

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Stock Report | February 28, 2015 | NNM Symbol: AAPL

Apple Inc
Sector Outlook Industry Performance
S&P Capital IQ recommends overweighting the S&P pays a dividend yield of 1.5%, as compared with the GICS Sector: Information Technology
500 Information Technology sector. Year to date yield of 2.0% for the S&P 500.
through December 2, 2014, the S&P 500 Information Based on S&P 1500 Indexes
Technology Index, which represented 19.8% of the S&P Capital IQ's proprietary technical indicator for Five-Year market price performance through
S&P 500 Index, was up 19.3% in price, compared this sector currently shows a positive reading. In Feb 28, 2015
with an 11.8% gain for the S&P 500. In 2013, this researching the past market history of prices and
sector index rose 26.2%, versus a price advance of trading volume for each company, S&P Capital IQ's S&P 1500 Sector
29.6% for the 500. There are 13 sub-industry indices computer models apply special technical methods 160%
in this sector. Technology Hardware, Storage & and formulas to identify and project price trends for
Peripherals is the largest, representing 24.7% of the the sector.
sector's market value, while Electronic Equipment &
Instruments is the smallest, accounting for 0.12% of --S. Stovall 110%
the sector.

% Change
The cap-weighted average of this sector's
component company S&P Capital IQ STARS (Stock 60%

Appreciation Ranking System) is 3.4, as compared

with a cap-weighted average of 3.4 for the S&P 500.
The sub-industries within this sector that currently
show the highest average STARS are Internet 10%

Software & Services at 4.3, Semiconductors

Equipment at 4.1, and Communications Equipment at
3.7. Those with the lowest average STARS are Home
Entertainment Software at 2.7, and Data Processing -40%

& Outsourced Services and IT Consulting & Other

Services at 2.8 each. According to Capital IQ, the
sector is projected to record an 11.2%
year-over-year increase in operating earnings per -90%

share in 2015, as compared with the S&P 500's 2010 2011 2012 2013 2014 2015

estimated EPS growth of 8.8%. During 2014, this

NOTE: A sector chart appears when the sub-industry does
sector is expected to post an 8.0% advance in EPS, not have sufficient historical index data.
versus an increase of 7.1% for the S&P 500. The
sector's price-to-earnings ratio of 15.9X, based on All Sector & Sub-Industry information is based on the
Global Industry Classification Standard (GICS).
consensus 2015 operating EPS estimates, is below
the S&P 500's forward P/E of 16.2X. Capital IQ also
Past performance is not an indication of future performance
reports that the consensus long-term EPS growth and should not be relied upon as such.
estimate for this sector is 12.8% versus the S&P
500's 11.7%, giving the sector a P/E-to-projected
EPS growth rate (PEG) ratio of 1.2X, which is below
the broader market's PEG of 1.4X. Finally, this sector

Sector : Information TechnologyInformation Technology Peer Group*: Based on market capitalizations within GICS Sub-Industry
Stk.Mkt. Recent 52 Fair S&P Return on LTD to
Stock Cap. Stock Week Yield P/E Value Quality IQ Revenue Cap
Peer Group Symbol (Mil. $) Price($) High/Low($) Beta (%) Ratio Calc.($) Ranking %ile (%) (%)
Apple Inc AAPL 748,247 128.46 133.60/73.05 0.92 1.5 17 163.90 B+ 99 21.6 20.6
3D Systems DDD 3,349 30.47 77.58/27.00 2.14 Nil NM 35.80 B- 85 8.6 1.2
Blackberry Ltd BBRY 5,647 10.81 12.63/7.01 1.22 Nil NM NA B 21 NA 31.0
Canon Inc ADS CAJ 35,965 32.52 33.96/29.47 0.90 3.7 15 34.30 NR 90 7.1 Nil
EMC Corp EMC 58,622 28.94 30.92/24.92 1.27 1.6 22 35.30 B+ 98 12.4 18.8
FUJIFILM Holdings*ADR FUJIY 16,610 34.45 35.42/24.60 0.83 1.1 16 37.20 NR 90 4.2 11.7
Hewlett-Packard HPQ 63,899 34.84 41.10/28.75 1.52 1.8 13 35.00 B+ 78 4.5 35.0
Lexmark Intl'A' LXK 2,656 42.66 51.77/37.37 1.40 3.4 34 NA B 92 7.1 33.8
Logitech Intl LOGI 2,427 14.78 16.88/11.20 1.19 Nil 19 14.80 NR 61 3.6 NA
NCR Corp NCR 4,903 29.41 37.34/22.83 1.03 Nil 26 NA B- 49 7.4 64.5
NetApp Inc NTAP 12,047 38.65 43.75/33.34 1.48 1.7 20 46.50 B 95 10.1 20.8
SanDisk Corp SNDK 17,026 79.93 108.77/73.03 1.35 1.5 19 87.80 B- 91 15.2 14.0
Seagate Technology Plc STX 20,068 61.12 69.40/48.49 2.49 3.5 10 61.50 NR 91 11.4 58.1
Stratasys Ltd SSYS 3,159 62.06 130.83/51.55 1.33 Nil NM 86.20 NR 74 NA NA
Western Digital WDC 25,034 106.98 114.69/80.78 1.33 1.9 17 125.80 B 90 10.7 20.5

NA-Not Available NM-Not Meaningful NR-Not Rated. *For Peer Groups with more than 15 companies or stocks, selection of issues is based on market capitalization.

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Stock Report | February 28, 2015 | NNM Symbol: AAPL

Apple Inc
S&P Capital IQ Analyst Research Notes and other Company News
we expect to debut in early '15. There will be two sizes and three collections
(including Sport and 18-karat gold Edition offerings). It "requires an iPhone 5 or
January 28, 2015
later," and perhaps after setting up with an iPhone, some features/functionality
08:39 am ET ... S&P CAPITAL IQ REITERATES HOLD OPINION ON SHARES OF
will be available without a companion device, but we are not sure. We wonder
APPLE INC. (AAPL 109.14***): We raise our 12-month target by $15 to $125, on
about battery life (we are thinking about a day), and pricing beyond the indicated
revised relative P/E and P/E-to-growth analysis, based on our calendar year '15
starting point of $349. We were impressed, but do not necessarily see the Apple
EPS estimate. We also increase our EPS estimates for FY 15 (Sep.) to $8.53 from
Watch, at least initially, as a mass-market product. /S. Kessler
$7.71 and FY 16 to $8.94 from $8.52. AAPL posts Dec-Q EPS of $3.06 vs. $2.07, well
above our estimate of $2.52 and the Capital IQ consensus of $2.60. Revenues rose
30%, and were much higher than we expected, reflecting iPhone unit sales of 74.5 September 9, 2014
million and revenue growth of 57%, on strength from iPhone 6 and iPhone 6+. 06:03 pm ET ... UPDATE - S&P CAPITAL IQ REITERATES HOLD OPINION ON
However, iPad saw revenues fall 22% with lower ASPs. /S. Kessler SHARES OF APPLE INC. (AAPL 97.99***): Following AAPL's event from earlier
today, we have some further thoughts about what was announced. We believe
the iPhone 6 and iPhone 6 Plus will enable AAPL to solidify and potentially
October 21, 2014
strengthen its hold on the high-end smartphone user, especially as some
02:49 pm ET ... S&P CAPITAL IQ REITERATES HOLD OPINION ON SHARES OF
competitors seem weaker since the company announced the iPhone 5s and
APPLE INC. (AAPL 102.301***): We raise our 12-month target by $7 to $110, on
iPhone 5c about a year ago. We see Apple Pay as innovative and differentiated,
revised relative P/E and P/E-to-growth analysis. We also increase our EPS
but wonder about buy-in from retailers and consumers. Lastly, we wanted to
estimates for FY 15 (Sep.) to $7.71 from $7.11 and FY 16 to $8.52 from $8.19. AAPL
clarify that the Apple Watch will work without an iPhone, but full functionality
posts Sep-Q EPS of $1.42 vs. $1.18, above our estimate of $1.28 and the Capital IQ
would be limited. /S. Kessler
consensus of $1.31. Revenues rose 12% and were higher than expected, with
gains of 21% from iPhones and 18% from Macs. However, iPad revenues declined
again, falling 14%. Cash/investments fell sequentially to $155 billion, reflecting $17 September 9, 2014
billion in stock repurchases. The dividend yield is 1.8%. /J. Corridore 04:36 pm ET ... S&P CAPITAL IQ REITERATES HOLD OPINION ON SHARES OF
APPLE INC. (AAPL 97.99***): AAPL announces the iPhone 6 (4.7 inch screen), the
larger iPhone 6 Plus (5.5 inch screen), Apple Pay (for mobile point-of-sale and
October 16, 2014
Internet payments), and the highly anticipated Apple Watch. We believe the new
04:50 pm ET ... S&P CAPITAL IQ REITERATES HOLD OPINION ON SHARES OF
phones were largely expected, and note improvements as to the displays and
APPLE INC. (AAPL 96.26***): AAPL announces the iPad Air 2, which is thinner,
resolution, and faster and more energy-efficient performance. Apple Pay has
lighter and more powerful than its predecessors. It also offers faster connectivity,
considerable support from well-known partners, but we think it could take time to
a better display and cameras, and Touch ID technology. The company's new
gain traction. The Apple Watch's $349 price, planned early '15 release, and need
flagship tablet will be priced starting at $499, and become available for order
to work with an iPhone are not strong positives, in our view. /S. Kessler
tomorrow, Friday, October 17 across some 32 geographies with more to come by
the end of the month. AAPL also announced the iPad Mini 3 and new Mac
computers, and the availability today of the new Yosemite OS X. We did not note September 2, 2014
any important surprises, and continue to view AAPL as fully valued. /S. Kessler 01:26 pm ET ... S&P CAPITAL IQ REITERATES HOLD OPINION ON SHARES OF
APPLE INC. (AAPL 103.49***): Late last week, AAPL sent invitations to a media
event for September 9, indicating "Wish we could say more." We believe during
September 30, 2014
the event next week, AAPL will announce new iPhones, including at least one
09:24 am ET ... S&P CAPITAL IQ REITERATES HOLD OPINION ON SHARES OF
larger screen device. Additionally, consistent with recent unconfirmed reports
APPLE INC. (AAPL 100.11***): Per to an unconfirmed report from the Wall Street
from Recode and Bloomberg, respectively, we think the company could also
Journal, the iPhone 6 and iPhone 6 Plus will "go on sale in China" on October 17,
announce a wearable device and/or new mobile-payment functionality. AAPL
"after winning final approval from regulators who scrutinized the device[s"]
executives have publicly expressed optimism and excitement associated with the
security features." China is one of AAPL"s largest markets. Additionally, the
pending product line-up. However, we think the stock is fully valued. /S. Kessler
European Commission suggests that Ireland granted AAPL "unlawful" tax
advantages or "State aid," focusing on "91 to '07. AAPL has been dealing with
questions related to its domestic and international tax obligations for years, and
we note it had $165 billion in cash/investments as of June. /S. Kessler

September 23, 2014

09:07 am ET ... S&P CAPITAL IQ REITERATES HOLD OPINION ON SHARES OF
APPLE INC. (AAPL 101.06***): Yesterday AAPL announced that over 10 million
iPhone 6 and iPhone 6 Plus smartphones were sold since they were made
available on Friday, September 19. Last year over 9 million iPhone 5s and iPhone
5c devices were sold during the initial weekend. We also note that while last
year's launch included China, which accounted for 16% of Jun-Q revenues, this
year's introduction did not. We are not sure when the iPhone 6 and iPhone 6 Plus
will become available in China. We view the first weekend of sales as strong, but
believe much recent positive news is priced into the shares. /S. Kessler

September 12, 2014

11:08 am ET ... S&P CAPITAL IQ INITIATES BUY OPINION ON SHARES OF GT
ADVANCED TECHNOLOGIES (GTAT 13.1****): We begin analytical coverage on
shares of this sapphire/solar equipment provider with a Buy. We set our
operating EPS estimate at $0.05 for '14, $0.64 in '15, and $1.27 in '16. Our 12-month
target price of $18 is based on 14X our '16 estimate, near peers. We see potential
earnings leverage from an Apple (AAPL 101***) supply agreement, as GTAT
transitions to sapphire materials production. Despite concerns about the absence
of sapphire in the new iPhones (it is in the Apple watch), we see a recent
pullback providing an attractive entry. We expect higher solar related sales in '15.
/A. Zino-CFA

September 10, 2014

08:27 am ET ... S&P CAPITAL IQ REITERATES HOLD OPINION ON SHARES OF
APPLE INC. (AAPL 97.99***): We want to further address the Apple Watch, which

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Stock Report | February 28, 2015 | NNM Symbol: AAPL

Apple Inc
Analysts' Recommendations Wall Street Consensus Opinion

Monthly Average Trend Buy Buy/Hold Hold Weak Hold Sell No Opinion AAPL Trend BUY/HOLD
B BH H WH S

Wall Street Average Companies Offering Coverage

B
Over 30 firms follow this stock; not all firms are
BH
displayed.
H
Accountability Research Corporation
WH
Arete Research Services LLP
S
Argus Research Company
Number of Analysts Following Stock Atlantic Equities LLP
BMO Capital Markets Equity Research
60 BTIG, LLC
Barclays
40
Berenberg
20 BofA Merrill Lynch
CLSA
Canaccord Genuity
Stock Price ($)
Cantor Fitzgerald & Co.
160
Citigroup Inc
Cleveland Research Company
120
Cowen and Company, LLC
Credit Suisse
80
Daiwa Capital Markets America Inc.
Daiwa Securities Co. Ltd.
40
M A M J J A S O N D J F M A M J J A S O N D J F
Deutsche Bank
Erste Group Bank AG
2013 2014 2015
Evercore ISI
Exane BNP Paribas
Of the total 53 companies following AAPL, 51 analysts currently publish recommendations.
FBN Securities, Inc.
Gilford Securities
No. of % of Total 1 Mo. Prior 3 Mos. Prior Global Equities Research
Recommendations Goldman Sachs
Buy 23 45 0 25 Hamburger Sparkasse AG
Buy/Hold 14 27 0 15 Hilliard Lyons
Hold 11 22 0 11 JMP Securities
Weak Hold 0 0 0 0 JP Morgan
Sell 1 2 0 1
No Opinion 2 4 0 2
Total 51 100 0 54
Wall Street Consensus Estimates Wall Street Consensus vs. Performance

For fiscal year 2015, analysts estimate that AAPL

Estimates 2014 2015 2016 2014 Actual $6.45 will earn US$ 8.53. For fiscal year 2016, analysts
60 estimate that AAPL's earnings per share will
grow by 8% to US$ 9.21.
40

20

0 O N D J F M A M J J A S O N D J F

2013 2014 2015

Fiscal Years Avg Est. High Est. Low Est. # of Est. Est. P/E
2016 9.21 10.45 7.92 45 13.9
2015 8.53 8.53 8.53 1 15.1
2016 vs. 2015 8% 23% -7% 4400% -8%

A company's earnings outlook plays a major part in any investment decision. S&P Capital IQ organizes the earnings estimates of over 2,300
Wall Street analysts, and provides their consensus of earnings over the next two years, as well as how those earnings estimates have
changed over time. Note that the information provided in relation to consensus estimates is not intended to predict actual results and should
not be taken as a reliable indicator of future performance.

Redistribution or reproduction is prohibited without written permission.

Stock Report | February 28, 2015 | NNM Symbol: AAPL

Apple Inc

Glossary EBIT - Earnings Before Interest and Taxes

EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization
EPS - Earnings Per Share
S&P Capital IQ STARS EV - Enterprise Value
Since January 1, 1987, S&P Capital IQ Equity Research has ranked a universe of U.S. FCF - Free Cash Flow
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Depositary Shares) based on a given equity's potential for future performance. FY - Fiscal Year
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since June 30, 2002. Under proprietary STARS (STock Appreciation Ranking System), P/NAV - Price to Net Asset Value
S&P Capital IQ equity analysts rank equities according to their individual forecast of an PEG Ratio - P/E-to-Growth Ratio
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S&P 500® Index)), based on a 12-month time horizon. STARS was designed to meet ROCE - Return on Capital Employed
the needs of investors looking to put their investment decisions in perspective. Data ROE - Return on Equity
used to assist in determining the STARS ranking may be the result of the analyst's ROI - Return on Investment
own models as well as internal proprietary models resulting from dynamic data inputs. ROIC - Return on Invested Capital
ROA - Return on Assets
S&P Capital IQ Quality Ranking SG&A - Selling, General & Administrative Expenses
(also known as S&P Capital IQ Earnings & Dividend Rankings) - Growth and SOTP - Sum-of-The-Parts
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Capital IQ's earnings and dividend rankings for common stocks, which are designed to
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deemed desirable in establishing such rankings. The final score for each stock is origin).
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NR Not Ranked
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S&P Capital IQ earnings per share (EPS) estimates reflect analyst projections of future
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STARS Ranking system and definition:
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Total return is expected to outperform the total return of a relevant benchmark, by a
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Total return is expected to outperform the total return of a relevant benchmark over the
insurance settlements; in process research and development expenses; gains or
coming 12 months, with shares rising in price on an absolute basis.
losses on the extinguishment of debt; the cumulative effect of accounting changes;
and earnings related to operations that have been classified by the company as
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Total return is expected to closely approximate the total return of a relevant
discontinued. The inclusion of some items, such as stock option expense and
benchmark over the coming 12 months, with shares generally rising in price on an
recurring types of other charges, may vary, and depend on such factors as industry
absolute basis.
practice, analyst judgment, and the extent to which some types of data is disclosed by
companies.
★★★★★ 2-STARS (Sell):
Total return is expected to underperform the total return of a relevant benchmark over
the coming 12 months, and the share price not anticipated to show a gain.
S&P Capital IQ Core Earnings ★★★★★1-STAR (Strong Sell):
S&P Capital IQ Core Earnings is a uniform methodology for adjusting operating Total return is expected to underperform the total return of a relevant benchmark by a
earnings by focusing on a company's after-tax earnings generated from its principal wide margin over the coming 12 months, with shares falling in price on an absolute
businesses. Included in the S&P Capital IQ definition are employee stock option grant basis.
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from the definition are pension gains, impairment of goodwill charges, gains or losses
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Index, respectively.
insurance settlements.

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S&P Capital IQ Equity Research U.S. includes Standard & Poor's Investment Advisory
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Abbreviations Used in S&P Capital IQ Equity Research Reports

CAGR - Compound Annual Growth Rate
CAPEX - Capital Expenditures
CY - Calendar Year
DCF - Discounted Cash Flow
DDM - Dividend Discount Model
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Apple Inc

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Stock Report | February 28, 2015 | NNM Symbol: AAPL

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