UBS remains cautious on sustainability of Apple’s App Store growth

UBS says the firm’s analysis of Apple’s (AAPL) App Store data indicates that global revenue grew 13% on a reported basis but 13.5% on a FX neutral basis as currency was a 50 bps drag in the month. While December decelerated about 350 bps month-over-month, the December comp vs November was unchanged. For the December quarter, Apple’s App Store “reported” revenue increased 15% but on an FXN neutral basis, UBS estimates about 13.3% growth. In the month of December, demand was balanced with the U.S. up about 12%, while ROW was up 13%. However, on a month-over-month basis, December grew 5%, slightly softer than seasonality due to November’s strength. The firm remains cautious on the sustainability of App Store growth against low-to-mid teens comps going forward, especially as iPhone demand has been muted. UBS has a Neutral rating on the shares with a price target of $236.