Slowing App Store growth could hit Apple in the near-term, Morgan Stanley says

Apple App Store is showing signs of slowing growth, which could hurt the stock in the near future, Morgan Stanley said. “While we are bullish on the longer-term App Store and Services outlook, a deceleration in App Store growth (and monetization) could be a near-term headwind to results,” wrote analyst Katy Huberty in a note to clients Friday. May App Store revenue growth slowed to 4% year over year compared with 8% growth in April. The bank expects June revenue growth to come in below forecasts but bounce back thereafter. Many technology and goods companies have taken a hit in recent months as consumers trim spending. The deceleration likely indicates a dropdown in pandemic-focused consumer purchasing, Huberty wrote. Still, Apple is “more resilient at all stages of the economic cycle,” positioning it better than some of its peers, she said. “With the health of the consumer and the potential shifting nature of consumer spending patterns a key debate entering the summer months, an acceleration in App Store growth could help to dispel the bear concern of a more permanent App Store slowdown,” she wrote. Shares of Apple have dipped 14.8% this year. Based on Morgan Stanley’s $195 price target, they could offer a 29% return from Thursday’s close. — CNBC’s Michael Bloom contributed reporting