By Sam Boughedda
Apple's (NASDAQ:AAPL) App Store is trending "flattish" in the quarter-to-date, UBS analysts said on Wednesday.
The analysts, who have a Buy rating and $180 price target on the stock, told investors in a note that despite the flattish trend, the "comps ease significantly over the next three quarters."
"Two months into the March quarter, we estimate Apple's App store revenue growth is trending flattish, up just ~31 bps YoY (Sensor Tower), a modest improvement relative to a ~68 bps YoY decline in Q4:22," the analysts said.
Even so, they explained that while the sequential improvement on a quarter-to-date basis is modest, growth in the U.S. continues to outpace the rest of the world, given the supply chain disruptions last year.
"In the December quarter, we estimate App store growth in the U.S. was up ~6.7% vs a 4.0% decline in ROW. We believe the softness late last year in ROW reflected tough YoY comps, 600 bps of FX, and the well-documented supply disruptions that resulted in weaker iPhone sell-through and sell-in in the December quarter," they added.
"App store comps ease each quarter in CY23, providing a tailwind for App store and Services revenue the balance of CY23 offsetting broader economic headwinds. As such, we forecast Services growth of 5.4% (Visible Alpha Consensus 5.9%) in the March quarter before accelerating to 6.4%, 7.4%, and 8.3% YoY growth over the subsequent three quarters (June, Sept, and Dec)."