Apple (AAPL) App Store May See a Tailwind From Coronavirus - Morgan Stanley

February 5, 2020 7:58 AM EST
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Morgan Stanley analyst Katy Huberty reiterated an Overweight rating and $368.00 price target on Apple (NASDAQ: AAPL) on the belief that actions taken to limit the spread of Coronavirus could actually be a tailwind to App Store results in China.

The analyst stated "While much of the investor focus on Coronavirus with respect to Apple has been on the potential negative impact the outbreak may have on the company's hardware sales in China (see our postearnings commentary here), we believe the App Store could possibly experience
a tailwind from the actions taken to limit the spread of Coronavirus, as millions of Chinese consumers are spending more time at home and seeking alternative means of entertainment. Just last week Tencent noted they are expanding server capacity to meet demand for gamers attempting to play Game for Peace, after a surge of players during CNY overwhelmed the company's servers. January 2020 App Store data (sourced from Sensor Tower) points to early signs this may indeed be the case, as total Apple App Store net revenue grew 22.5% Y/Y in the month of January, a ~6 point acceleration from December 2019 growth of 16.1% Y/Y and 5 points higher than our March 2020 quarter App Store forecast of +17.5% Y/Y".

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $321.97 yesterday.

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Morgan Stanley, Katy Huberty