Tuesday, August 18, 2009

Thirty-nine dollars, versus seventeen pennies (AAPL, PALM, RIMM)

AlphaNinja - RBC Capital put out a note this morning claiming that smartphones (Iphone, Blackberry, Pre) are the wave of the future in both phones and mini-PC's. That's all well and good, and I have no issue with the thought process and rationale.

The part I find strange is the analyst's price target adjustments in relation to the earnings estimate increases.

-Apple(AAPL) target goes to $250 from $190, earnings per share to 7.23 from 7.00

-PALM (PALM)target goes to $25 from $18, while earnings per share estimate up to $0.25 from $.08

-Research in Motion (RIMM) target to $150 from $100, earnings upped to $4.26 from $4.16

RBC could be right, and the market may be willing to "pay up" (pay more per dollar of earnings) with this new paradigm shift. But it's an example of the arbitrariness(new word?) of Wall Street price targets when Monday morning an analyst says RIMM is worth $100, and Tuesday it's $150.

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