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Apple maintains $250 target amid App Store growth

Published 11/06/2024, 04:54 AM
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On Tuesday, Evercore ISI maintained a positive outlook on Apple Inc. (NASDAQ:AAPL), reiterating its Outperform rating and a $250.00 price target for the tech giant's shares. The firm's assessment follows a notable increase in App Store revenue, which saw a 15% rise in October, slightly up from the 14% growth observed in September.

The analyst highlighted that Apple's guidance for service growth is around 13% for the December quarter. The recent performance of the App Store, if sustained, is expected to contribute to potential upside for the company. The teen growth rate of the App Store is seen as a key factor in enabling Apple to meet its services revenue guidance.

According to the analyst, the App Store's growth has been bolstered by more stable revenue increases in China and Japan, attributed in part to the launch of new gaming titles. Remarkably, despite new regulations from the EU Digital Markets Act, the European Union's App Store revenues surged by 32% year-over-year in September.

The App Store, along with Google (NASDAQ:GOOGL) payments, are considered major elements of Apple's Services business. The report suggests that as long as there are no unexpected downturns in these areas, the newer, faster-growing services should offer a modest upside to Apple's current services revenue forecasts.

The analyst concluded that Apple has had a strong start to the December quarter, with continued robustness in the major markets of China, Japan, and the EU, as well as from gaming and entertainment applications. The firm's analyst emphasized the sustained momentum, maintaining the Outperform rating and the $250 price target, despite acknowledging that comparisons may become more challenging as the calendar year progresses, which could potentially lead to a slowdown. However, no such deceleration has been observed yet.

In other recent news, Apple Inc. has been fined $36,889 by a Russian court over two podcasts, marking another instance of Western tech firms facing regulatory pressure in Russia. On a brighter note, BofA Securities has reiterated a Buy rating on Apple, with a steady price target of $256, highlighting strong fundamentals and potential resilience against regulatory and tariff-related challenges.

In the semiconductor sector, GlobalFoundries (NASDAQ:GFS) has announced an upbeat Q4 revenue forecast surpassing Wall Street's expectations, attributing this to a rebound in smartphone demand. The company projects its Q4 revenue to range between $1.80 billion and $1.85 billion, slightly exceeding analysts' estimates.

In the music industry, Believe, a French digital music company, is embroiled in a $500M U.S. copyright case with Universal Music Group (AS:UMG). The lawsuit accuses Believe of distributing unauthorized copies of copyrighted recordings, with UMG seeking damages of no less than $500 million.

In the space technology sector, BMO Capital Markets has upgraded MDA Space Ltd to Outperform following Apple's $1.5 billion investment in Globalstar (NYSE:GSAT) for a new satellite constellation project. MDA, as the prime contractor for Globalstar's latest satellite batch, is expected to significantly benefit from this development.

InvestingPro Insights

Apple's strong performance in its App Store revenue aligns with several key metrics and insights from InvestingPro. The company's market cap stands at an impressive $3.37 trillion, reflecting its dominant position in the tech industry. Apple's revenue for the last twelve months reached $391.04 billion, with a modest growth of 2.02%, supporting the analyst's positive outlook on the company's financial health.

InvestingPro Tips highlight Apple's consistent dividend growth, having raised its dividend for 13 consecutive years. This demonstrates the company's commitment to shareholder returns, which could be attractive to long-term investors. Additionally, Apple is noted for generally trading with low price volatility, which may provide some stability for investors in the current market conditions.

It's worth noting that Apple is trading near its 52-week high, with a price-to-earnings ratio of 36.54. This high valuation multiple suggests that investors have strong confidence in Apple's future growth prospects, including its services segment, which the App Store revenue growth supports.

For readers interested in a more comprehensive analysis, InvestingPro offers 13 additional tips that could provide further insights into Apple's financial position and market performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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