Jim Cramer Says Apple (AAPL) Will Skyrocket 50%

CNBC’s Mad Money Jim Cramer has raised his price target for Apple (NASDAQ: AAPL) to an amazing $264, saying that because of a new accounting standard Apple (AAPL) will increase its earnings per share 40%.

Cramer added that estimates for Apple’s (AAPL) 2010 and 2011 earnings per share will skyrocket 35%-50%. This increase in earnings per share will lower the P/E ratio and investors will, in his opinion, start to think that this stock is cheap. Cramer’s calculation is based on his expectation that Apple’s (AAPL) earnings per share will reach $12 and since its P/E will be raised again to 22, the stock will trade at $264 (12X22).

He explains that when Apple (AAPL) makes a sale it is forced to recognize its sales over two years period. The reason for that is, in Cramer’s words, this accounting standard that discriminates against smart phone makers and forces them to recognize only one eight of each sold phone. He expects that FASB could change this rule in next two weeks and that market will react immediately.

Although the effects from sales can be seen in Apple’s (AAPL) cash flow, he says that money managers don’t look at these numbers as much as they look at earnings per share.