Apple Inc (NASDAQ:AAPL, ETR:APC)'s App Store saw a “solid” month in March, according to analysts at UBS who believe this supports their Services revenue estimate for the quarter.
The analysts wrote in a note to clients that their analysis of Apple’s App Store suggests revenue in March grew 13% year-over-year, up from 11% growth in February.
“Solid App Store results in the month of March bring the quarter to 11.6% in line with our 11.6% growth Services estimate [$23.3 billion],” they wrote, noting this was in line with the Wall Street consensus.
Apple management, on their last earnings call, guided Services revenue growth at a similar double-digit growth rate in the March quarter to that of the December 2023 quarter, which was 11.3% growth year-over-year.
In terms of FX headwinds, the analysts estimate a headwind of approximately 125 to 150 basis points in the March quarter, modestly better than Apple’s guidance of 2 points.
However, the bank’s analysts noted that while the March data was encouraging, they cautioned that the June 2023 comparison is almost 500 basis points more difficult on a year-over-year basis relative to March.
“In addition, in the September 2023 quarter last year, we estimate App Store revenue was up about 12%, an even more challenging comparison and a key reason we forecast Services revenue growth to decelerate to about 10% in the June and September quarters,” they wrote.
The analysts gave the stock a ‘Neutral’ rating and a $190 price target.
Apple shares closed at $168.82 on Thursday.