On Monday, Evercore ISI reiterated its Outperform rating on Apple Inc. (NASDAQ:) stock, maintaining a price target of $250.00. The firm’s analysts observed that Apple’s App Store revenue increased by 13% in December, marking a slowdown from the 17% growth seen in November. However, the App Store’s performance for the December quarter, with a 15% growth rate, still exceeded Evercore ISI’s initial projections.
According to InvestingPro data, Apple maintains strong financial health with an overall score of “GOOD,” though current valuation metrics suggest the stock is trading above its Fair Value. The company’s total revenue reached $391.04B in the last twelve months, with analysts setting price targets ranging from $184 to $325.
Despite a slight decline at the quarter’s end, the App Store’s growth surpassed the company’s guided services growth of approximately 13% for the December quarter. This performance is expected to provide some upward potential for Apple’s services revenue. The App Store, alongside payments from Google (NASDAQ:), constitutes a significant portion of Apple’s Services business.
Analysts at Evercore ISI believe that, barring unforeseen slowdowns in the advertising or Google segments, the newer, faster-growing services should contribute to surpassing the current guidance for Apple’s services. With a market capitalization of $3.7 trillion and trading near its 52-week high, Apple continues to demonstrate its market dominance.
The recent strength in the App Store’s revenue is partly attributed to growth acceleration in China and Japan, fueled by weaker comparative figures from the previous year and the introduction of new gaming titles. In the European Union, despite new regulatory changes due to the Digital Markets Act (DMA), App Store revenues saw a 25% year-over-year increase in December.
This regional performance aligns with Apple’s overall revenue growth of 2.02% over the last twelve months, demonstrating the company’s ability to maintain growth despite market challenges.
For the entire year of 2024, the App Store’s revenues rose by 14% compared to the previous year, which is an acceleration from the 9% growth rate experienced in 2023. In summary, the App Store’s revenue performance for the December quarter was better than Evercore ISI’s expectations for low-teens growth and is likely to contribute to a higher than anticipated services revenue for the period.
In other recent news, Apple Inc. has experienced a series of significant developments. Despite a roughly flat total revenue for Q4 compared to the previous year, Citi analysts have maintained a positive stance on Apple, attributing this to strong year-over-year growth in Smart Consumer Electronics and a robust 15% year-over-year growth in App Store revenue.
In corporate news, Apple has officially appointed Kevan Parekh as its new Chief Financial Officer. Parekh’s annual salary has been increased to $1 million and he was awarded performance-based restricted stock units as part of his compensation package. Additionally, Apple has agreed to a cash settlement of $95 million in a proposed class action lawsuit alleging that the tech giant’s voice-activated assistant Siri violated user privacy.
In the realm of analyst ratings, Bernstein has maintained an Outperform rating on Apple’s stock, citing potential for growth. However, Apple’s current valuation is at a relative peak and there is a cautious outlook on the iPhone 16 cycle, which could potentially underperform expectations. Despite these developments, Apple’s financial health remains strong, with an impressive $391 billion in revenue and a 46.2% gross profit margin over the last twelve months.
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