IBM (IBM) Kicks Off Tech Earnings On A Positive Note, Beating by 6% and Gapping up 4%

July 20, 2021 7:46 AM EDT
Get Alerts IBM Hot Sheet
Price: $141.34 +0.45%

Rating Summary:
    12 Buy, 23 Hold, 4 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 18 | Down: 12 | New: 23
Trade Now! 
Join SI Premium – FREE

News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.

IBM (NYSE: IBM) has been notoriously volatile from one quarter to another but offers hope that strong earnings reports can stop the recent tape bleed. EPS of $2.33 beat consensus of $2.20 by 6% and guidance for a 5% q/q revenue decline in 3Q comes in slightly ahead of consensus. Upside came from GBS which rose 7.3% in constant currency, well above last quarter's flat growth. This was enough for investors to bid up shares 4% in the premarket with shares looking to open near $143.

Price targets are coming up as well with BofA's Wamsi Mohan moving to $176 from $175, confident in mid-single digit growth for 5 reasons:

1) IBM has delivered on the goals set so far under CEO Krishna including a return to GBS growth to pre-pandemic levels
2) Improving Software performance at constant currency in 3Q
3) re-acceleration in Red Hat revs
4) Timing of Systems uptick driven by a potential new Mainframe Cycle in C22
5) M&A starting to contribute more materially towards growth

Equal-weight-rated analyst Morgan Stanley's Katy Huberty, on the other hand, raised her PT 8% to $164 from $152 on the belief that investments in Cloud & Cognitive Software are beginning to pay off, and when combined with an improving demand environment, could lead to her $205 bull case price target. She stated "2Q21 results demonstrate improving execution & strengthening demand environment. Investments are driving stronger GBS and Cloud & Cognitive Software growth, which builds confidence in IBM's ability to reach sustainable mid-single digit revenue growth but limits short-term EPS upside."

Serious News for Serious Traders! Try Premium Free!

You May Also Be Interested In

Related Categories

Analyst Comments, Analyst EPS View, Hot Comments

Related Entities

Morgan Stanley, Earnings, Katy Huberty