Evercore Analyst Still Stoked for Apple Services Growth
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05 APRIL 2022 - Look for things to look better for the App Store soon. Apple 3.0 has a new note from Evercore analyst Amit Daryanani. According to his note:
App Store revenue growth was 8% in the month of March, which brings the growth rate to 7% for the Mar-qtr. While the rate of growth remains low, it was encouraging to see the growth rate move higher in March after 9 straight months of deceleration.
We’re coming into easier times, though. Remember the phenomenal growth seen by the App Store in 2020? And the warnings about the tough comparisons that that was setting up for 2021? Apple’s coming out of that year of tough App Store comparisons. That should lead to double-digit growth again, according to Daryanani.
But here’s the other thing: While the App Store is still a big deal for Apple’s Services segment, it’s not the end-all-be-all it once was. According to his note:
App Store revenue growth last quarter was ~13%, but growth for the overall services business came in at an impressive 24% (worth noting AAPL has called out Advertising as the top contributor to their services growth for 2 quarters in a row now).
With that in mind, AD-Rock thinks Apple Services can keep delivering “high-teens” growth even if App Store growth stays slow. Mr. Daryanani has an “Outperform” rating on Apple shares. His price target on the shares is $210.
