International Business Machines Corp. (NYSE: IBM) is scheduled to report its fourth-quarter financial results after the markets close Tuesday. The consensus estimates from Thomson Reuters call for $4.81 in earnings per share (EPS) on revenue of $22.04 billion. In the same period of the previous year, it posted EPS of $5.81 and $24.11 billion in revenue.
This is one of the most disliked technology stocks and one of the most disliked Dow Jones Industrial Average stocks. Value investors think IBM is cheap, and Warren Buffett has kept piling in bad cash after bad cash to build his IBM stake higher. One problem is that IBM’s woes seem to persist, whether we have good times or bad times. Credit Suisse offers a friendly reminder that investors need to be very cautious when it comes to Big Blue.
Credit Suisse’s Kulbinder Garcha has been and continues to be the most negative on IBM of all large brokerage firms. Garcha has an Underperform rating and a price target of $125.00. His view is that IBM remains a value trap and that the fourth-quarter earnings report will show that IBM is still in a multiyear painful turnaround.
Big Blue also was reiterated as Underperform at Jefferies, and the price target was cut to $110.00 from $125.00. What stands out here is that Jefferies now has the most negative price target, even lower than the prior $125 target Credit Suisse has on IBM. This is far lower than the bullish and bearish outlook for IBM in 2016.
A few other analysts weighed in on IBM prior to the release of its earnings report:
- Barclays reiterated a Sell rating with a $146 price target.
- RBC Capital has a Sector Perform rating and lowered its price target to $145 from $150.
- Stifel reiterated a Buy rating but lowered its price target to $155 from $160.
So far in 2016, IBM has outperformed the market, with the stock down only 5.5%. However, over the past 52 weeks the stock is down over 13%.
Shares of Big Blue were trading at $130.72 on Tuesday, with a consensus analyst price target of $147.35 and a 52-week trading range of $128.87 to $176.30.
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