Evercore ISI has reaffirmed its Outperform rating on Apple Inc., citing the company’s broader services ecosystem despite ongoing weakness in App Store revenues.
The analyst maintained a $365 price target on the stock, which was trading near $325 at the time of the note. App Store revenues declined 1% year-over-year in August, marking the sixth consecutive month of deceleration and the first annual decline since November 2022. The gaming segment led the downturn, with revenues falling approximately 10% year-over-year, compared with an 8% drop in July. Excluding gaming, App Store revenues grew roughly 8%.
Growth varied across categories, with productivity apps leading at 40% year-over-year, followed by music at 18% and photo & video at 9%. Social networking and entertainment categories showed minimal or no growth. Regionally, U.S. App Store revenues fell 10% year-over-year for the sixth straight month, while China posted an 8% increase and Japan saw a 4% decline.
Evercore ISI noted that sustained App Store weakness could complicate efforts to achieve double-digit growth in Apple’s Services segment, though the company has offset softer App Store trends with stronger performance in other services. The firm’s rating contrasts with neutral views from DA Davidson and Rosenblatt, which have price targets of $270 and $303, respectively.
Apple’s shares have gained 42% over the past year, trading well above the broader market despite the App Store’s recent challenges. InvestingPro data indicates the stock is among the most overvalued in the market relative to its fair value estimate.
The analyst commentary follows Apple’s leadership transition, with John Ternus assuming the CEO role in September after Tim Cook’s departure.
