IBM Stock Jumps 9% on Strong Q4 Results
IBM's (NYSE:IBM) shares saw a significant rise of over 9% on Thursday following the announcement of its Q4 earnings, which exceeded analysts' expectations for both earnings per share (EPS) and revenue.
The technology and consulting giant reported a Q4 EPS of $3.87, surpassing the Street estimate of $3.77. Its revenue for the quarter was reported at $17.38 billion, exceeding the analysts' prediction of $17.23 billion.
Breaking down the revenue, IBM's software segment contributed $7.51 billion, a 3.1% increase year-over-year, but slightly below Wall Street's expectations of $7.69 billion. The consulting segment brought in $5.05 billion, marking a 5.8% rise from the previous year and narrowly missing the expected $5.11 billion.
The company's infrastructure revenue was notably strong at $4.6 billion, a 2.7% year-over-year increase and higher than the anticipated $4.35 billion.
IBM forecasts a free cash flow of $12 billion for the entire fiscal year, which is higher than the analyst estimate of $10.92 billion. Furthermore, IBM anticipates its revenue to grow by approximately 4-6% in 2024, surpassing the Wall Street projection of about 3%.
| Symbol | Price | %chg |
|---|---|---|
| DCII.JK | 40000 | 0 |
| TCS.NS | 4553.75 | 0 |
| TCS.BO | 4551.85 | 0 |
| 018260.KS | 150700 | 0 |
IBM’s Buy Rating Maintained at BofA
BofA Securities analysts reaffirmed their Buy rating and a $209 price target for IBM (NYSE:IBM) stock. The analysts attended IBM's Think 2024 event in Boston, where the company announced the release of its Granite model family into open source. The analysts noted that while large language models (LLMs) can be costly to train and operate, IBM is adopting a more pragmatic approach with smaller, more enterprise-friendly models, particularly for inferencing.
BofA reiterated the Buy rating, highlighting IBM's ongoing turnaround, revenue growth, and free cash flow improvements. They also emphasized IBM's defensive portfolio, attractive dividend yield, and underappreciated AI portfolio, which has a cumulative business value exceeding $1 billion.
BMO Capital Sees Steady Upside For IBM
BMO Capital analysts maintained their Market Perform rating and a $210 price target for IBM (NYSE:IBM), suggesting that for both IBM Consulting and Software segments, the current and consensus estimates for 2024 are achievable but unlikely to exceed expectations, with detailed analysis provided within their report.
Additionally, the sum of the parts valuation approach was applied, indicating that IBM's present valuation multiple is fair. Although IBM's operational performance and outlook have shown improvement compared to its past performance, the analyst sees limited potential for stock price appreciation from its current levels.
IBM Started With Hold Rating at Jefferies
Jefferies analysts initiated coverage of IBM (NYSE:IBM) with a Hold rating and a price target of $180 per share. In their note issued on Friday, the analysts acknowledged IBM's progress in software but see no major breakout potential.
The analysts pointed out their appreciation for IBM's strategic shifts to reorient itself towards a software-centric model. This transformation includes significant steps like the acquisition of Red Hat, the spinoff of Kyndryl, and investments in AI and software go-to-market strategies. Furthermore, Jefferies views IBM as an "under-the-radar AI player," with greater potential in consulting than in software.
The analysts highlighted IBM's Watsonx platform, which provides substantial exposure to general AI workloads. However, Jefferies sees a more immediate AI opportunity in IBM's strategic consulting division. This is because most clients are still in the early stages of implementing general AI strategies and require guidance on effectively utilizing these technologies.
Despite these positive aspects, Jefferies noted that IBM's revenue growth is trailing behind its software industry peers, and it operates with lower margins. The analysts suggest that while IBM's stock might see incremental gains, significant upside is limited unless there's a considerable acceleration in its software segment.
IBM Shares Gain 5% Following Q3 Results
Shares of International Business Machines (NYSE:IBM) increased by nearly 5% yesterday after the company beat Q3 profit expectations and maintained its guidance.
IBM posted an adjusted EPS of $2.20 on revenue of $14.75 billion, slightly surpassing analyst predictions of $2.12 EPS on $14.73 billion revenue. Software revenue, encompassing its AI platform, grew 8%, consulting revenue went up by 6%, while infrastructure revenue declined by 2%.
The tech giant confirmed its projected 3-5% revenue growth on a constant currency basis and maintained its 2023 free cash flow forecast of around $10.5 billion.
IBM Shares Gain 5% Following Q3 Results
Shares of International Business Machines (NYSE:IBM) increased by nearly 5% yesterday after the company beat Q3 profit expectations and maintained its guidance.
IBM posted an adjusted EPS of $2.20 on revenue of $14.75 billion, slightly surpassing analyst predictions of $2.12 EPS on $14.73 billion revenue. Software revenue, encompassing its AI platform, grew 8%, consulting revenue went up by 6%, while infrastructure revenue declined by 2%.
The tech giant confirmed its projected 3-5% revenue growth on a constant currency basis and maintained its 2023 free cash flow forecast of around $10.5 billion.
IBM Stock Gains 3% Following Q2 Earnings Report
IBM (NYSE:IBM) shares rose more than 3% intra-day today after the company reported its Q2 earnings results, with EPS of $2.18 coming in better than the Street estimate of $2.02. However, revenue of $15.5 billion came in worse than the consensus estimate of $15.58 billion.
The company provided its fiscal 2023 outlook, expecting revenues to grow in the range of 3-5%.
BofA Securities analysts reaffirmed their Buy rating on IBM and raised their price target to $160.00 from $152.00, stating that they believe the positive momentum in IBM's business, including revenue growth and improvement in free cash flow, will persist. The analysts highlighted that IBM possesses a defensive portfolio, an appealing dividend yield, and an AI portfolio that is not fully recognized or valued by the market.
