Evercore ISI on Apple (AAPL): 'EVR Monthly App Store Update: No Sign of Impact From Epic Ruling...Yet'
Evercore ISI analyst Amit Daryanani reiterated an Outperform rating and $250.00 price target on Apple (NASDAQ: AAPL).
The analyst comments "ALL YOU NEED TO KNOW: App Store revenue grew +13% in May, a slight step up vs the 12% growth rate in April. Critically, revenue from the US market was up 10%, the highest growth rate since January. Investors have been understandably concerned since the April 30th ruling that Apple must allow developers to steer users to non-Apple payment options. We continue to believe that many developers will choose to continue using Apple’s in app payments, at least in the short term. The App Store data for May seems to support this thesis and, if nothing else, shows developers will take things slowly and cautiously rather than all rushing for the App Store exits. We estimate the US App Store generates 2% of company revenue and 6% of EPS. Investors have been concerned that this will quickly go to $0 and Apple’s decision to not provide a Services growth guide for the Jun-qtr has only added to these concerns. The June data in a month should give us a better idea of how the Epic ruling will impact things, given developers will have had more time to digest the ruling and complete the cost/benefit analysis of moving off the App Store. If June data shows no deceleration, then we should see Services growth stay in the double digits. For more details on the Services business and the headwinds it is facing, see our recent DEEP DIVE. Net/net: App Store data not showing an impact from Epic ruling although May was likely too soon to see a material impact and June data will be the real test. We would also add that Sensor Tower data is estimated and it is difficult to confirm its historical accuracy given Apple does not report App Store revenue. Maintain Outperform and $250 target."
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Shares of Apple closed at $201.70 yesterday.