What to Expect From IBM Earnings

October 17, 2016 by Chris Lange

International Business Machines Corp. (NYSE: IBM) is set to report its third-quarter financial results after the markets close on Monday. This company’s earnings have been more or less a story of the top line and the bottom line. While CEO Rometty has kept the bottom line strong over the past few years, the top line has been sinking in this time, leading to some fallout among investors from growth concerns.

The consensus estimates from Thomson Reuters are $3.24 in earnings per share (EPS) and $19.00 billion in revenue. The same period from last year reportedly had EPS of $3.34 and $19.28 billion in revenue.

Big Blue is ranked as the sixth most valuable among all measured for the Interbrand Best Global Brands 2016. Of the 100 brands measured, IBM’s value fell the most. The failure of IBM’s turnaround continues to smother the business. IBM’s shares are roughly off 17% in the past two years, against a 9% improvement in the S&P 500. IBM’s revenue in 2011 was $106.9 billion. In 2015, the figure fell to $81.7 billion.

IBM continues to promise an improvement in its results. It has placed bets on cloud computing and artificial intelligence products and services. However, there is no evidence that these strategies are working well.

Ahead of the earnings report, a few analysts weighed in on IBM:

  • Cantor Fitzgerald has a Hold rating with a $162 price target.
  • Goldman Sachs reiterated a Neutral rating with a $147 price target.
  • Credit Suisse reiterated an Underperform rating with a $110 price target.
  • Sanford Bernstein reiterated a Market Perform rating with a $140 price target.
  • Barclays reiterated an Underweight rating.
  • Oppenheimer has a Market Perform rating.

So far in 2016, IBM has outperformed the broad markets, with the stock up about 15%. Over the past 52 weeks, the stock is only up about 7%.

Shares were last seen at $154.87, with a consensus analyst price target of $154.12 and a 52-week trading range of $116.90 to $165.00.

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