Apple Inc (NASDAQ:AAPL) shares have taken a beating prior to now couple of days after Financial institution of America downgraded the inventory final week. On Monday, Morgan Stanley analyst Erik Woodring mentioned the most recent month-to-month App Retailer income knowledge is not precisely the excellent news Apple traders have been hoping for.

The Numbers: App Retailer income dropped 5% year-over-year in September, in keeping with Sensor Tower. For the complete third quarter, App Retailer income was down 2% year-over-year.

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Why It is Essential: Woodring mentioned slowing progress within the U.S. and China coupled with persistent weak spot in China has dragged down App Retailer gross sales in current months. He mentioned the delicate App Retailer gross sales will weigh on Apple’s general Providers phase progress, which he’s now projecting will likely be up simply 8% within the third quarter in comparison with consensus estimates of 11%.

“We consider the current App Retailer outcomes clarify that the worldwide shopper has considerably de-emphasized App Retailer spending within the near-term as discretionary earnings is reallocated to areas of pent-up demand,” Woodring mentioned.

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Woodring mentioned he would not be stunned to see App Retailer gross sales progress enhance within the fourth quarter given there will likely be an additional promoting week on the calendar, however the debate over the longer-term trajectory of App Retailer progress will probably proceed for a while.

Financial institution of America downgraded Apple from Purchase to Impartial final Thursday, triggering a pointy sell-off in tech shares. Within the downgrade word, BofA analyst Wamsi Mohan mentioned he expects “weaker shopper demand” will immediate analysts to chop their Apple earnings estimates in coming quarters.

Whereas a decline in App Retailer gross sales is definitely price monitoring for Apple traders, Woodring stays bullish on Apple. Morgan Stanley has an Obese ranking and a $180 value goal for the inventory.

Benzinga’s Take: Apple is definitely not the expansion inventory it as soon as was, however it stays one of many largest and finest money cow blue chip investments on the earth. Apple shares commerce at simply 21.3 occasions ahead earnings, and the corporate reported $19.4 billion in web earnings in the latest quarter.

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