According to the latest report, Apple’s App Store had its fastest growth rate in several months in September, which exceeded the investment bank Morgan Stanley’s net income forecast. It also means the company’s services in the fourth quarter. The results are strong.
In a note to investors seen by AppleInsider, Morgan Stanley analyst Katy Huberty cited Sensor Tower data. Data show that in September App Store net income increased by 16.1% year-on-year. This is 4 percentage points higher than her forecast and 4 percentage points faster than the 12% year-on-year growth in July and August.
Almost all App Store’s largest market areas have accelerated growth in September. Importantly, despite China’s new regulations restricting the time children spend playing games, China’s net gaming revenue is still accelerating growth.
Huberty wrote: September’s broad strength helped drive the historical record of net revenue per download of $0.83 per download and saved the App Store in the September quarter that was weaker than expected at the beginning.
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Sensor Tower’s data shows that the September quarter’s performance was 30 basis points higher than Huberty’s service expectations. It is also 110 basis points higher than Huberty’s September App Store forecast.
Despite the strong performance, Huberty currently maintains her forecast for the App Store and services unchanged. However, the additional 30 basis points will drive its service forecast for the September quarter to $18.8 billion-approximately 2.3% higher than consensus expectations.
The analyst reminded that there are several unknowns about the recent legal announcement, including Apple’s development of litigation solutions and any appeals against Epic Games v. Apple. She expects that any decision or ruling will not take effect until early December, which means that the App Store will not see the impact until the end of 2021 or early 2022 at the earliest.
Huberty maintains her 12-month Apple target price of $168, which is a comprehensive forecast based on 5.8 times the enterprise value and sales (EV/Sales) of Apple’s product business and 11.6 times the EV/Sales multiple of Apple’s services. This makes the implied EV/Sales target multiple in 2022 of 7 times and a target price-earnings ratio of 30 times.