Why Apple's (AAPL) Services Upside Is An Illusion - Nomura

Nomura/Instinet analyst, Jeffrey Kvaal, reiterated his Neutral rating on shares of Apple (NASDAQ: AAPL) after the company announced record F1Q Services revenue that easily exceeded consensus but was offset by an uninspiring account of its holiday week Services revenue growth. This was followed by the company restating FY18 Services revenues for ASC 606 which shows that Apple missed in Services too.

The analyst stated "The new ASC 606 standard required Apple to reclassify $2.6bn in 2018 revenue (from Apple Maps, Siri, and free iCloud) from Products to Services. This adds $620mn to F1Q19 and lowers the Services growth rate to 18%. This is a miss; consensus had expected 24% growth".

"We retain our view that Services growth is in part dependent on now wobbling iPhone unit volumes," the analyst added.

No change to the price target of $175.

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 $152.88 yesterday.

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