“New accounting rules are expected to push Apple’s stock even higher, as Wall Street still underestimates the profitability of the iPhone, a new report has concluded,” Neil Hughes reports for AppleInsider.
“Last week, the Financial Accounting Standards Board approved a change to the revenue reporting methods in the generally accepted accounting principles (GAAP). Under the old rules, Apple was required to spread its profits from the sale of each iPhone over the term of the carrier contract for the device, typically two years,” Hughes reports.
“In a new note to investors, Yair Reiner of Oppenheimer said that despite all of the publicity of under-reported iPhone revenue, the market still doesn’t fully realize, and that will take time. The company has reiterated its outperform rating for AAPL stock and has increased its price target to $210 per share,” Hughes reports.
“‘Incredibly, despite all the ink spilled over iPhone accounting, we think the Street continues to highly underestimate Apple’s GAAP earnings,’ Reiner said. ‘We grant this will likely become a moot point within six months, as Apple incorporates new FASB accounting rules and recognizes more iPhone sales at time of sale. But until then, Apple’s EPS will continue to surprise to the upside, even if revenue comes merely in line with Street expectations,'” Hughes reports.
Full article here.
MacDailyNews Take: What’s really incredible if that anybody can walk in off the street and become an “analyst” – and, seemingly, they often do. As far as we can tell, a high school diploma isn’t even required; all that’s required is having someone call you an “analyst.” Some of them are even self-monikered. Today, literally anybody can become an “analyst” and begin spouting whatever “analysis” they desire, and for whatever reason. This must be why the “analysts” are continually “surprised” by Apple, quarter after quarter, year after year, and still cannot get a handle on what’s happening with the company.
Here’s a wild suggestion: How about requiring some minimum accreditation in order for someone to become a so-called “analyst” of companies, so that, at the very least, we can be assured that these people understand the basics, like the difference between GAAP and non-GAAP earnings and are accounting for said differences in their so-called “analysis?” Shouldn’t we be able to hold Wall Street “analysts” to some minimum standards? When they fail to meet such standards, they get Enderle-ized and forced to become mere “pundits.” That way we know who to ignore most. TV meteorologists — another job where being popular totally and completely outweighs being able to provide accurate predictions — have to meet more requirements than Wall Street “analysts.”
Logic break has ended: We now return you to the world of Wall Street.