Market Overview

Morgan Stanley Bullish On Rising App Store Revenue, Raises Apple Price Target

Share:
Morgan Stanley Bullish On Rising App Store Revenue, Raises Apple Price Target

Data from Sensor Tower points to Apple Inc. (NASDAQ: AAPL) growing its App Store net revenue by 39% year-over-year in May, and this trend bodes well for the stock, according to Morgan Stanley.

The Apple Analyst

Katy Huberty maintained an Overweight rating on Apple and lifted the price target from $326 to $340.

The Apple Thesis

Apple's App Store performance in May could prove to be the strongest year-over-year growth seen since April 2017, Huberty said in a Wednesday note. (See her track record here.)

Since the start of the second calendar quarter, App Store net revenue is tracking higher by 35% year-over-year, and this is "meaningfully" higher than expectations for 18% growth, the analyst said. 

Even if the pace of growth slows down in June, total App Store sales growth could come in at 32% for the quarter, which translates to more than $500 million of Services revenue upside versus expectations, she said. 

Consumers are showing high levels of engagement with apps as part of a "new normal," and this trend will likely remain for the near-to-medium-term, Huberty said. Consumers will likely continue spending more time indoors, she said. 

Apple's net revenue per download fell year-over-year from February through April as consumers took advantage of free collaboration and communication apps, according to Morgan Stanley.

But the trend improved in May when net revenue per download inflected to a 12% year-over-year growth rate, Huberty said, adding that this is an "encouraging sign" and makes the case for a healthy app economy moving forward.

AAPL Price Action

Shares of Apple were trading 0.19% higher at $323.94 at the time of publication. 

Related Links:

Martin Scorsese's Next Movie Will Be Financed By Apple: Report

Apple Cuts iPhone Prices in China To Push Sales As Country Reopens Economy

Photo courtesy of Apple. 

Latest Ratings for AAPL

DateFirmActionFromTo
Jul 2020CascendMaintainsBuy
Jul 2020Raymond JamesReiteratesOutperform
Jun 2020WedbushMaintainsOutperform

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

 

Related Articles (AAPL)

View Comments and Join the Discussion!

Posted-In: App Store Apps Katy HubertyAnalyst Color Price Target Reiteration Analyst Ratings Tech Best of Benzinga

Latest Ratings

StockFirmActionPT
TYGB of A SecuritiesUpgrades
ZIONB of A SecuritiesMaintains39.0
RFB of A SecuritiesMaintains13.0
PNCB of A SecuritiesMaintains123.0
HBANB of A SecuritiesMaintains11.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com