IBM (IBM): More Mixed Results, Cutting PT - Wells Fargo

October 18, 2016 8:30 AM EDT
Get Alerts IBM Hot Sheet
Price: $150.88 +0.21%

Rating Summary:
    9 Buy, 22 Hold, 4 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 11 | Down: 23 | New: 30
Trade IBM Now!
Join SI Premium – FREE

Get the Pulse of the Market with's Pulse Picks. Get your Free Trial here.

Wells Fargo analyst, Maynard Um, reiterated his Market Perform rating on shares of IBM (NYSE: IBM) but cut his valuation range to $150 - $160 from $155 to $165 after Q3 results showed another quarter of puts and takes.

The analyst liked:
1) strategic imperatives y/y growth accelerated from prior quarter to 15% at cc driven by cloud (up 42%), mobile (up 19%), analytics (up 14%) and security (up 11%), while social was down 21%

2) Q3 EPS was slightly ahead of our and consensus est. due to lower taxes

3) solutions software revs increased 8% in cc led by analytics (similar benefit from acquisitions as in prior qtr)

4) reiterated FY16 EPS (at least $13.50) and FCF guide (high-end of $11-12B)

5) technology services and cloud platforms (TS&CP) continued to see rev growth driven by integration software (up 4%) and infrastructure services (up 2%) partially offset by support services (down 1%)

Negatives included:
1) gross margins were impacted across segments due to continued investments to accelerate transformation

2) excl. the tax benefit, EPS would have been below our/Street estimate

3) intellectual property licensing agreements benefitted the quarter

4) systems hardware sales were below expectations (system z product cycle is in its 7th quarter, storage hardware impacted by shift to software-defined and weak Power systems sales and pricing pressure impacted margins)

5) cognitive solutions gross margins were down and below expectations due to mix shift to software-as-a-services and investments, and 6) GBS consulting remains under pressure (down 5% at cc) due to wind-down of large projects

For an analyst ratings summary and ratings history on IBM click here. For more ratings news on IBM click here.

Shares of IBM closed at $154.77 yesterday.

Serious News for Serious Traders! Try Premium Free!

You May Also Be Interested In

Related Categories

Analyst Comments, Analyst EPS Change, Analyst PT Change, Earnings

Related Entities

Wells Fargo

Add Your Comment