Raymond James analyst Chris Caso took a cautious stance on Apple Inc.’s AAPL, +0.01% services business Thursday, writing that the fast-growing segment is linked to device sales, which have been slowing. He said that the company’s AppleCare insurance product has been “underestimated” by Wall Street, but he thinks that AppleCare “underscores what we think is Apple’s fundamental problem.” Caso refers to his belief that “most of Apple’s revenue is tied to device sales, and growth has stagnated due to rising prices, and demand hasn’t been as elastic as hoped.” He is cautious about App Store growth as well, as he thinks in-app sales will become a bigger portion of the App Store’s revenue as device sales continue to slow. Apple takes a smaller cut of in-app purchases than it does of app sales, Caso wrote. Apple stock is up 0.3% in premarket trading Thursday and up 31% over the past 12 months. The Dow Jones Industrial Average DJIA, +0.29% has risen 18% in that time.
AppleCare has been 'underestimated' but highlights Apple's reliance on device sales, says analyst
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