Cramer Reports AAPL price per share to be $264 by 2011

[BrownManUPS]

CNBC Mad Money's Jim Cramer originally said that Apple was going to have a nice increase over the next few years to $200. The market did close at $175 a share, so 14% would be okay, but Jim Cramer says it will be even bigger, as much as a 50% by 2011. This is mainly due to an old accounting standard which doesn't recognize all the earnings due to iPhone earnings and other earnings, which will likely change within the next few weeks.

Kramer believes that iPhone and other accessory earnings are not accounted for currently, which hedge funds use to account their stock prices. Apple still shows the earnings on the cash flow statement, but the first call earnings estimate doesn't include iPhone sales, causing the misconception in share price. From the website:

Right now regulators demand that smartphone sales be recognized over a two-year time period. So Apple books only about one-eighth of its iPhone revenues and profits in the quarter in which they’re earned. But the Financial Standards Accounting Board could soon change the rule, allowing companies to report everything at once. That would dramatically magnify the iPhone’s impact on Apple earnings, Cramer said, perhaps “as soon as next quarter.”

As a result, Cramer expects Apple’s 2011 earnings per share to climb 50% to $12, up from the present $8 estimate. This seemingly expensive stock, trading at 22 times earnings, would then look “dirt cheap,” he said, “the money will pour in,” and investors will take AAPL right back up to the 22 price-to-earnings multiple. Hence, Cramer’s price target: $12 of EPS in 2011 times 22 equals $264.

 

[rdowns]

APPLE has been up as much as $7.12 today. Several other upgrades to their stock happened within the last few days. Great time to be a stockholder.

Prays that the Chinese gobble up iPhones.