Analyst Says Apple's App Store Spending Is Likely To Slow In 2019

Apple Inc. AAPL has stumbled out of the gates in 2019, and the latest date from App Annie suggests negative commentary from analysts about an Apple slowdown may be right on the money.

App Annie Projections

App Annie is projecting global app store spending will surpass $120 billion in 2019, up from $101 billion in 2018. The red flag, however, is the 18.8 percent projected growth rate, well below the roughly 32 percent average growth rate over the past two years.

“We expect App Store spending to continue to slow in 2019 driven in part by China games,” Macquarie said Thursday. They said Alphabet, Inc. GOOG GOOGL app store Google Play will be mostly immune from the China weakness.

Macquarie downgraded Apple from Buy to Neutral earlier this month after Apple lowered its first-quarter guidance. On Thursday, Macquarie reiterated its $149 price target.

Baird’s Take

Baird analyst William Power also issued cautious commentary on Apple ahead of its fiscal Q1 earnings report.

Power said full-year 2019 earnings expectations may still be too high given the difficult environment. He said the seasonal Q2 decline in iPhone sales could be deeper than usual this year. Consensus estimates are calling for about a 37.3 percent sequential decline in iPhone sales in fiscal Q2, but Power said Baird models are suggesting an even softer number.

“We remain positive long-term on AAPL's ecosystem benefits, impressive services growth and strong cash flow, but we would be more cautious near-term until estimates are more fully reset,” Power wrote in a note.

Power reiterated his Outperform rating and $185 price target for Apple.

Price Action

Apple stock traded down about 1 percent Thursday to $152.33. The company is expected to report fiscal Q1 earnings Jan. 29 after the market close.

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