With Apple at $134, analyst Amit Daryanani sticks with his (freshly drenched) $130 price target.
From a note to clients that landed on my desktop Tuesday:
All You Need to Know: App Store growth slowed modestly in August against a tough y/y comp. Our analysis suggests that App Store revenue grew 21% in August, below recent months where growth was around 30%. We estimate total App Store developer revenue grew to ~$4.2bn in August; up 21% Y/Y (vs. +29% in July, +31% in June).
The App Store was one of four services (also Music, Video and Cloud Services) that hit all-time records in the June-qtr and helped offset declines in Apple Care.
A key driver of the lower growth rate this month was China, where revenue was flat y/y after growing 9% in the prior month. China faced a tough comp as revenue was up 42% in the prior August period… Growth rates in both the US (+28%) and Japan remain high (+41%).
The fourth month of high growth in Japan is particularly encouraging because the country had been in the low single-digits for most of 2019 and the beginning of 2020. Despite the modest growth slowdown, the quarter-to-date growth rate still stands at +25%, above our Sept-qtr services revenue growth estimate of 16%.
Net/Net: The App Store has likely benefited from social distancing measures and economic stimulus and we expect the trend to sustain. That said, App Store is only ~35% of services and we see some headwinds in other product lines. We currently think App Store growth in the mid-20s should support our services growth estimate of ~16% in the Sept-qtr.
Maintains Outperform rating and $130 target.
My take: As the wheels of antitrust justice turn, the App Store slowly grows, generating cash with every tick of the clock.