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Analyst raises Apple price target to $235
Thursday, September 24, 2009 @ 9:55am
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.
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    Reader reaction
    Found 3 comments
    hmmm 264524 9/24/09, 10:18 am EDT
    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...
    Comment posted by: climacs
    so... 264531 9/24/09, 2:50 pm EDT
    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.
    Comment posted by: testudo
    idiot analyst #1 264581 9/24/09, 11:48 pm EDT
    Hello...this is just an accounting change. NOTHING has actually changed to value Apple either more or less than this morning.
    Comment posted by: nowwhatareyoulookingat
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