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AAPL Stock: 105.22 ( + 0.39 )

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Analyst raises Apple price target to $235

updated 09:55 am EDT, Thu September 24, 2009

Cites new accounting rules

Piper Jaffray analyst Gene Munster has raised his price target for Apple stock from $186 to $235, basing the decision on newly-adopted GAAP accounting rules. While the change has been anticipated since earlier this month, Munster points out new details, such as discrepancies between accounting requirements and the flow of real iPhone revenue. While 90 percent of an iPhone's value is said to be generated at the time of sale, Apple was previously limited to recognizing 12.5 percent of each sale in its GAAP ledgers.

The new rules will allow case-specific revenue recognition, more accurately reflecting the iPhone's value. Munster cautions that reported earnings will still not mirror those seen in non-GAAP accounting, although the difference should now be closer to 5 percent, rather than 35 percent. It is believed that Apple will adopt the new accounting rules for its next financial quarter, rather than waiting until the mandatory deadline of December 2010.

Munster has also produced adjusted estimates for Apple's FY09 and FY10 EPS performance. The FY09 figure has been pushed from $5.71 to $8.21, while the FY10 prediction is being raised from $6 to $8.90. Each number is based mainly on the impact of the new accounting.




by MacNN Staff

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Comments

  1. climacs

    Joined: Dec 1969

    0

    hmmm

    it will certainly be interesting to see if the predictions come through. Can it really be true that iPhone revenue has been sorely underestimated, or is this simply an accounting trick?

    We're going to find out...

  1. testudo

    Joined: Dec 1969

    0

    so...

    We know what this means! Gene Munster just bought a boatload of apple stock and wants to get that price moving!

    And bear in mind Apple has always announced their 'official' earnings as well as the non-subscribed earnings. So analysts (and us) have seen what their revenue numbers actually are, as opposed to just what they state in their 10-Qs and all.

  1. nowwhatareyoulookingat

    Joined: Dec 1969

    0

    idiot analyst #1

    Hello...this is just an accounting change. NOTHING has actually changed to value Apple either more or less than this morning.

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