On Tuesday, Evercore ISI maintained its positive stance on Apple Inc. (NASDAQ:AAPL), reiterating an Outperform rating and a $220.00 stock price target on the tech giant's shares. The firm's confidence is bolstered by the App Store's revenue growth of 13% in March, aligning with the overall quarterly growth rate.
This performance suggests potential upside to Apple's forecasted 11% Services growth for the March quarter.
While the App Store's growth in March represents a slowdown from the previous quarter's 18%, it was not as significant as some had anticipated. There were concerns that growth could dip into single digits due to tougher year-over-year comparisons. However, the robust March figures have increased Evercore ISI's confidence that Apple can sustain double-digit growth in its App Store revenue.
The App Store's success is partly attributed to the gaming category, which comprises 52% of its revenue. Gaming revenue rose by 8% in March, although it marked a decrease from February's 14% and a turnaround from January's 1% decline. Meanwhile, all other App Store categories experienced double-digit increases, with Music leading the pack.
Geographically, China's App Store growth slowed to 7% in March, down from 10% in February and a 5% contraction in January. The United States and Japan also witnessed modest decelerations in growth.
Despite these slight slowdowns, the overall performance exceeded expectations and has reinforced Evercore ISI's outlook that Apple's Services division is on track to meet or surpass its revenue growth target for the March quarter and retain momentum into the June quarter. The firm has reiterated its Outperform rating and $220 price target for Apple's stock.
InvestingPro Insights
Adding to the positive outlook from Evercore ISI, InvestingPro data shows Apple Inc. (NASDAQ:AAPL) with a robust market capitalization of $2.61 trillion, reflecting its significant presence in the market.
The company's commitment to shareholder returns is evident through its consistent dividend growth, having raised its dividend for 12 consecutive years. This is a testament to Apple's financial stability and its ability to generate and allocate cash effectively.
InvestingPro Tips highlight Apple's strategic share buybacks and its status as a prominent player in the Technology Hardware, Storage & Peripherals industry. These factors contribute to the company's low price volatility, making it a potentially attractive option for investors seeking stability in their portfolios.
Moreover, Apple's cash flows are strong enough to sufficiently cover interest payments, underscoring the company's financial health.
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