International Business Machines Corp. (NYSE: IBM) is set to report its most recent quarterly results after the closing bell on Tuesday. Consensus estimates are calling for $4.68 in earnings per share (EPS) and $21.64 billion in revenue. The fourth quarter of last year reportedly had $4.87 in EPS and $21.76 billion in revenue.
This is a company that just can’t seem to get it right. IBM has stagnated during a great economy, so one can only imagine how bad things would be in a bad economy. It is valued at barely 10 times expected earnings, and the company could see its stock surge if it would just announce a CEO transition.
IBM has not even been rewarded by shareholders for making its largest-ever acquisition of RedHat. Then again, its legacy IT-consulting business has the same decline that has been seen in cigarette sales over time, and its newer growth initiatives just cannot grow fast enough to evade an overall image of stagnation.
This company continues to be the least successful of the big tech companies. It’s most recent quarter was not helpful either. Its foray into cloud computing has left it in the second tier as the sector roars forward. Revenue dipped another 3.9% in the most recent quarter to $18 billion. Earnings dropped 36% to $1.87 per share. IBM’s multiyear slide continues. Its share price improvement trails the Dow Jones industrial average this year and is well short of Microsoft and Apple.
Excluding Tuesday’s Move, IBM stock had underperformed the broad markets with about 13% gain in the past 52 weeks. In the past quarter alone, the stock was up just 3%.
Here’s what analysts were saying about IBM ahead of the report:
- Morgan Stanley has an Equal Weight rating and a $155 price target.
- Evercore ISI has an In Line rating with a $145 price target.
- UBS’s Neutral rating comes with a $140 target price.
- Wells Fargo rates it as Market Perform with a $140 price target.
- BMO Capital Markets has a Market Perform rating and a $152 price target.
IBM stock was down 0.5% at $137.68 a share on Tuesday, in a 52-week range of $121.54 to $152.95. The consensus price target is $146.89.
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