Morgan Stanley cuts AAPL target to $185 on China App Store woes

New research from investment bank Morgan Stanley says that global App Store growth has been offset by declining sales in China, and has cut its Apple stock price target as a result.

Following previous Morgan Stanley research that said Chinese users are buying fewer apps, the company says the decline has been significant. Except for China, Apple's ten largest markets all saw rises — with some, including the US, showing 9% growth or more YoY.

"[We] estimate App Store [overall] net revenue growth decelerated to +2.5% Y/Y in the month of June," says Morgan Stanley in a note to investors seen by AppleInsider, "a 1.5 point deceleration from 4% Y/Y growth in the month of May."

Morgan Stanley estimates that "App Store net revenue growth in China inflected to 6% Y/Y declines in the month of June [2022]." That compares to a 3% YoY growth in May 2022.

Reportedly, gaming was "the primary culprit," as it saw a decline of 3.4% YoY in June, following a 0.8% decline in May. Together, all other App Store categories showed an 11% growth in June, approximately the same as in May.

The decline may follow China's limiting of its issuing of licences to gaming companies. Also, recent restrictions have imposed limits on children's time playing games.

Morgan Stanley has consequently revised its estimate of Apple's June quarter App Store net revenue. The bank now estimate revenues of $6.5 billion, which is around $67 million lower than previous forecasts.

Katy Huberty of Morgan Stanley previously lowered her Apple price target to $195 from $210 because of tough economic conditions in the June quarter, but said Apple still remains a top pick for 2022. In this new note, the bank cuts the price target still further to $185.

Apple is due to announce its next quarterly earnings on July 28.

7 Comments

jas99 167 comments · 11 Years

About 2 years ago

I’ll believe it when I see it.

In other words, I won’t.

sconosciuto 287 comments · 4 Years

Analyst price targets are kinda meaningless ("financial virtue signaling") but it gets them press.

The main point is, how is Apple going to do in this difficult economy? They will do just fine. I predict Apple will surprise to the upside in 3 weeks. It has proven over and over again how resilient it is in the face of economic difficulties, supply chain disruptions, chip shortages, labor difficulties, Covid lockdowns, you name it.

A $185 price target is pretty good, $5 above the high it hit earlier this year which I thought a bit rich. If it gets back to $185 this year, that's a huge win. I'm sure most AI readers (if not all) are familiar with how frothy AAPL can get when investor sentiment is bullish. $200 is not out-of-the-question if that happens.

TightLines 20 comments · 2 Years

sconosciuto said:

Analyst price targets are kinda meaningless ("financial virtue signaling") but it gets them press.

The main point is, how is Apple going to do in this difficult economy? They will do just fine. I predict Apple will surprise to the upside in 3 weeks. It has proven over and over again how resilient it is in the face of economic difficulties, supply chain disruptions, chip shortages, labor difficulties, Covid lockdowns, you name it.

A $185 price target is pretty good, $5 above the high it hit earlier this year which I thought a bit rich. If it gets back to $185 this year, that's a huge win. I'm sure most AI readers (if not all) are familiar with how frothy AAPL can get when investor sentiment is bullish. $200 is not out-of-the-question if that happens.

Its all just propaganda in effort to recruit the next greater fool - all using massively over priced gambling. Apple’s reported value (in the trillions) is larger than the GDP of most countries in the world. But let one global impacting incident happen and it can become essentially worthless in the blink of an eye… like maybe a Carrington event type of thing. - but that same event won’t destroy the natural resources of the county Apple is valued more than…

Again - a fools casino… where the next greater fools gather to try and swindle each other out of money… kinda like that latest fad everyone who is purportedly smart (like J.P. Morgan) got involved in - what did they call that stuff? Oh yeah… it was crypto BitCoin… yeah, thats it… how did that work out for all those “smart economic people”?

danox 3364 comments · 11 Years

TightLines said:

sconosciuto said:

Analyst price targets are kinda meaningless ("financial virtue signaling") but it gets them press.

The main point is, how is Apple going to do in this difficult economy? They will do just fine. I predict Apple will surprise to the upside in 3 weeks. It has proven over and over again how resilient it is in the face of economic difficulties, supply chain disruptions, chip shortages, labor difficulties, Covid lockdowns, you name it.

A $185 price target is pretty good, $5 above the high it hit earlier this year which I thought a bit rich. If it gets back to $185 this year, that's a huge win. I'm sure most AI readers (if not all) are familiar with how frothy AAPL can get when investor sentiment is bullish. $200 is not out-of-the-question if that happens.

Its all just propaganda in effort to recruit the next greater fool - all using massively over priced gambling. Apple’s reported value (in the trillions) is larger than the GDP of most countries in the world. But let one global impacting incident happen and it can become essentially worthless in the blink of an eye… like maybe a Carrington event type of thing. - but that same event won’t destroy the natural resources of the county Apple is valued more than…

Again - a fools casino… where the next greater fools gather to try and swindle each other out of money… kinda like that latest fad everyone who is purportedly smart (like J.P. Morgan) got involved in - what did they call that stuff? Oh yeah… it was crypto BitCoin… yeah, thats it… how did that work out for all those “smart economic people”?

So you missed the Boat? And are sitting on the sidelines driving for Uber….

FileMakerFeller 1561 comments · 6 Years

danox said:

TightLines said:

sconosciuto said:

Analyst price targets are kinda meaningless ("financial virtue signaling") but it gets them press.

The main point is, how is Apple going to do in this difficult economy? They will do just fine. I predict Apple will surprise to the upside in 3 weeks. It has proven over and over again how resilient it is in the face of economic difficulties, supply chain disruptions, chip shortages, labor difficulties, Covid lockdowns, you name it.

A $185 price target is pretty good, $5 above the high it hit earlier this year which I thought a bit rich. If it gets back to $185 this year, that's a huge win. I'm sure most AI readers (if not all) are familiar with how frothy AAPL can get when investor sentiment is bullish. $200 is not out-of-the-question if that happens.

Its all just propaganda in effort to recruit the next greater fool - all using massively over priced gambling. Apple’s reported value (in the trillions) is larger than the GDP of most countries in the world. But let one global impacting incident happen and it can become essentially worthless in the blink of an eye… like maybe a Carrington event type of thing. - but that same event won’t destroy the natural resources of the county Apple is valued more than…

Again - a fools casino… where the next greater fools gather to try and swindle each other out of money… kinda like that latest fad everyone who is purportedly smart (like J.P. Morgan) got involved in - what did they call that stuff? Oh yeah… it was crypto BitCoin… yeah, thats it… how did that work out for all those “smart economic people”?

So you missed the Boat? And are sitting on the sidelines driving for Uber….

When the consequences of failure are so severe and the odds of success are so small, it's better to sit on the sidelines than get on the field - especially when you don't understand the game.