JPMorgan Says Apple's Service Business Should Grow Over Time; American Revenue Decline Is Consistent With Consumer Weakness

In a new report, JPMorgan analyst Rod Hall gives his take on Apple Inc. AAPL’s Q4 earnings report and what it means for the stock looking ahead. According to Hall, Apple’s services business could be a key to the company’s growth in the long-term.

While Apple reported a 4.0 percent decline in Americas revenue in Q4, Hall believes this decline is consistent with the broad U.S. consumer weakness that other companies have experienced as well.

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“Apple pointed out that both the US and Japan trended weaker than expected in FQ1 ad we believe this, combined with the ongoing weakness in other countries, is driving the lower revenue expectations,” he explained. Apple released revenue guidance that fell 7.0 percent below JPMorgan’s previous estimates.

Despite a 3.0 percent reduction in fiscal 2016 EPS estimates and a $4 cut to the firm’s $145 price target, JPMorgan maintains an Overweight rating on Apple.

Disclosure: the author holds no position in the stocks mentioned.