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Katy Huberty says Mr. Market is way too hung up on unit sales.

From a note to clients that landed on my desk Thursday:

The 8.5% decline in Apple shares following Lumentum’s and Qorvo’s negative pre-announcements this week suggests investors remain narrowly focused on units, despite the increasing value of Apple Services.

As highlighted in our Insight note last week, our detailed analysis of Apple Services gives us confidence in long-term growth and valuation upside as Services becomes a key growth driver. As the smartphone market matures, Services takes the growth baton from Devices which ultimately results in more stable growth and higher margins at Apple (Exhibit 1).

Additionally, normalized Services revenue growth accelerated to 26% Y/Y in FY18 despite iPhone units down 6% in the two years leading up to FY18, which suggests unit sales and installed base growth and/or user engagement are not as tied as investors may think. While investors generally support our Services thesis, news flow around units is creating volatility and a buying opportunity while the investor base is still in the process of transitioning away from units.

Maintains Overweight rating and $253 price target. 

Cue Exhibit 1:

My take: Look familiar? Look oddly different? Below I’ve copied a bar graph Guggenheim’s Robert Cihra put out with his Apple downgrade just yesterday. One’s looking at EPS, of course, and the other at Revenue Growth, but I can’t tell if they’re looking at the same company!

See also: Guggenheim downgrades Apple, drops $245 price target