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NEW YORK (
TheStreet) -- "I'm raising my price target on
Apple(AAPL - Get Report)," Jim Cramer told the viewers of his "Mad Money" TV show Tuesday.
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.
This rule is antiquated and just plain dumb, said Cramer, as it treats Apple differently just because it makes a smarter phone with better software. Meanwhile, rivals like
Nokia(NOK - Get Report), which apparently make "less-smart" phones, are immune to the rule, he said.
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.
But wait a minute, doesn't everyone on Wall Street know about these changes? Cramer said surprisingly, no. He said most money managers simply look at the "first call" estimates, and have not taken the time to dissect what this rule means for Apple's earnings. He said FASB is expected to revise these rules in the next few weeks.
Cramer said now is the time get in on the stock before Wall Street catches on.