“‘I’m raising my price target on Apple,’ Jim Cramer told the viewers of his ‘Mad Money’ TV show Tuesday,” Scott Rutt reports for TheStreet.com. “He said that his $200 price target on the company no longer applies if a new accounting change goes into affect.”
“At issue are the Financial Services Accounting Board, or FASB, rules regarding how Apple can recognize revenue from its popular iPhone and less popular AppleTV products. Current rules force Apple to recognize this revenue over a 24-month period, meaning that sales today cannot be fully recognized for a full two years,” Rutt reports.
Rutt reports, “Cramer said if Apple is allowed to recognize all of its true earnings, those earnings will skyrocket from an estimated $9 a share in 2011 to $12 a share. Given these new earnings, Cramer said his new price target for the company is now $264 a share.”
Full article here.
Noon Gaap adds 35% to perceived value even when you’re a paid analist who skims the numbers
Every analyst and their uncle are raising their targets way above $200. Before, many of the analysts were raising their so-called targets at about the same AAPL already hit those numbers, and that was good because their expectations were not crazily high. The contrarian in me is getting a bit alarmed. Once AAPL reaches around $200 may be a good time to sell some shares.
its time for Cramer and the analysts to pump the stock.
Is a correction on the way? (OK, I’m just sore I didn’t buy during the GFC-fuelled slump)
Why would any analyst that is worth following raise their value of Apple based on an accounting change? This isn’t new revenue Apple is getting, or reduced expenditures. And it’s not like Apple has been keeping this deferred revenue a secret, as they’ve been publishing the GAAP (which has deferred earnings) and non-GAAP (which doesn’t defer the earnings) reports for a while.
The only analysts who will change their numbers are the ones who just blindly use Apple’s GAAP numbers in their spreadsheets without doing even the faintest amount of actual analysis (like say, reading Apple’s SEC reports).
This accounting change is really only helpful to identify the idiot analysts, as they are the only ones who will change their valuations based on this change.
that puts Apple’s projected market cap at 230 billion. Neat.
@ken1w… are you saying that you think AAPL is overpriced at $200? Or are you saying that you don’t think Apple will be as dominant in the tech field in 2, 5, or even 10 years? Or are you saying that you are planning on retiring when AAPL reaches $200 and you’d prefer to have your stock cashed out for the safety factor? Only the last reason would seem a valid reason to sell when it reaches $200.
As far as I can see, there is no end in sight for Apple’s dominance in their sector. No other company has been able to match their growth. I personally will be buying more AAPL stock on a regular basis until they prove to me that they can no longer innovate with their products!!
dave:
and the idiot analysts get read by idiot herds that follow their idiot valuations and become idiot traders (not investors) that don’t take into account the true numbers but don hesitate to constantly refer and act on statistical values…so they do sway the stock prices in the short term…but in the end value is value and Apple is value
Brilliant MDN; when it suits your needs you trudge out the most discredited media whores….but if someone dare criticize our fruit company, tyou start attacking like crazy…what no tea parties tonight? I’ve said this before, grow up or work for Fox News. Pathetic.
@ …Aaaaand down the stretch they come!!!
No. Apple’s long-term future is bright. But some people confuse a good “investment” with a good “company.” And there is no problem with a buy and hold forever (until retirement) strategy, but it is also fine to buy and then decide on opportune times to sell (so you can buy again later – hopefully at a lower price – or buy something else).
Apple at under $100 was a great investment. I bought some then, and that was only about six months ago. I did not time it perfectly because it did dip below $80, but if Apple goes to $200, I’ve more than double my investment in six months.
Yet very few analysts were targeting $200+ back then, were they? The typical investors, who follow the typical analysts, did not care. That meant only people (individual investors like me) who understood Apple fairly well were buying AAPL. Therefore, there was a lot of upside potential.
Now, most analysts are predicting these much higher than $200 price targets. That means more and more typical investors are buying AAPL, because they are still following these same analysts who mostly did not care about AAPL six months ago when it really was a great investment. That means the upside potential (near term) is much lower, and it will start making me nervous when AAPL gets to around $200.
Any bit of bad news (real or imagined or rumored) could set off these recent “fair-weather” AAPL investors to sell. Bad news in the general stock market will make AAPL fall more than average, because it has risen more than average. Microsoft is not a “great company” compared to Apple, but MSFT may be a better investment at $25 compared AAPL at $200.
My prediction for a while now is that Apple will surpass Microsoft in market cap sometime in 2012, but if Cramer’s wild-assed guess holds true then it may come a year early.
@dave, it’s because analysts have to price the stock within the market. Their estimates are not just based on the numbers, but also the perception of the market. Thexsame way analysts will predict a bump after a split (even though a split dosen’t actually change anything on paper).
Most of us here have probably observed that the market has not properly reflected the stunning revenue, profit and cashflow of the iPhone. Here it comes. Too bad “the market” can’t trust their own eyes — someone has to hit them over the head with it.
Before anyone starts buying Apple based on Cramer’s recommendation, you should watch his explanation of how to manipulate the market and Apple stock.
I wouldn’t trust this guy as far as Jon Stewart can throw him.
On what basis does MSFT look like a better investment at $25 than AAPL at $200?
http://finance.yahoo.com/q/bc?t=5y&s=MSFT&l=on&z=m&q=l&c=aapl
Speaking of passing MS, since MS has 10x more shares than Apple, it’s fairly easy to keep track of who is ahead. MS’s current price is about $25. All Apple needs to do is hit $250, and it will pass MS’s market cap. Given the recent spate of price targets in the $250 range, it is no longer inconceivable that Apple could pass MS in a year or so. In fact, if you use Google’s stock screener, Apple is now the 7th largest company in America, by market cap. That’s crazy!
The largest are:
Exxon at $336B
MS at $223B
WalMart at $193B
GE at $178B
JPMorgan at $175B
J&J;at $165B
then Apple at $163B
The market is reacting to Cramer: up $7.30 and now $6 and change.
Oh FRACK Jim Cramer. I am so tired of him manipulating Apple stock prices. Some insert a glue gun down his throat and make him STFU please.
Anonymous© sez: “WalMart at $193B”.
Shame about that. Future kids will look back on this loony era and wonder WTF we were thinking of. A country run by Paris Hilton drones.
Not to pat myself on the back, but this is what I wrote here on MDN’s Opinion page back in October of last year, when Apple was trading about $90 lower:
http://macdailynews.com/index.php/weblog/comments/18882/opinion/
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If you are a fundamental investor and not a technical trader. If you have a long time horizon, at least a year, then Steve has just done you a huge favor. He’s let you peek into the crystal ball into the future of Apple’s earnings.
Right now, Apple reports $1.26 a share in earnings, this past quarter, but in the near future, in about a year, those GAAP numbers will approach the current non-GAAP numbers of $2.69 a share, and exceed them. Analysts and investors will look up and be surprised. You won’t be, because Steve just gave you a peek into his crystal ball.
Apple has become a free-cash flow machine, on par with the biggest companies in the world. That’s what Steve wants you to know.
Well, I wanted to end there, but I can’t help myself. Take a look at what Apple itself said in a press release:
Management believes that these non-GAAP financial measures, when taken together with the corresponding consolidated GAAP measures and related segment information, provide incremental insight into the underlying factors and trends affecting both the Company’s performance and its cash generating potential. Management believes these non-GAAP measures increase the transparency of the Company’s current results and enable investors to more fully understand trends in its current and future performance.
That’s Steve talking to you, the investor. Take a look at the non-GAAP numbers. That’s Apple’s TRUE performance this past quarter. The rest of the market will know that in a year’s time. You know it now.
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So, alot of that has come to pass. No, non-GAAP is still chasing GAAP numbers, but it seems that the secret of Apple’s real earnings are finally hitting the mainstream.
I hope some of you were able to take advantage of Apple’s huge runup in price from last October’s $96 shareprice.
@ Zuno the Clown
> On what basis does MSFT look like a better investment at $25 than AAPL at $200?
On a short-term basis. On a long-term basis, AAPL even at $200 is probably better than MSFT at $25. But as you can see from today’s big advance in AAPL, “everyone” is now expecting AAPL to go way above $200 and they are buying.
MSFT, on the other hand, has been mostly flat for years and relatively few people expect any change. But Windows 7, despite all the fun we all poke at it on MDN, is probably Microsoft’s next “good enough” version of Windows, and it will finally displace Windows XP as the dominant version of Windows over the next two years or so. That’s a ton of Windows licenses, most of them “sold” when users and businesses with aging XP machines replace them with new machines that have Windows 7 by default. This may be a great opportunity for Apple as well (to capture some of those customers), but Apple is not going to suddenly have 20% market share overnight.
So I think there is good probability of good news from Microsoft (over the next one or two years) with relatively few people expecting it right now. To me, that is a buying opportunity. On the other hand, “everyone” seems to be expecting AAPL to head for the moon right now. To me, that is a selling opportunity.