Cantor Fitzgerald believe that International Business Machines (IBM) will face severe scrutiny from investors given its “severely underperforming stock price” since Ginni Rometty took over as CEO

International Business Machines (IBM) will be facing a tough crowd during its investor briefing in New York City on February 26, according to analysts Cantor Fitzgerald.

In a note to investors, Brian White and Isabel Zhu, analysts at Cantor Fitzgerald believe that IBM’s value investors will be looking for signs that the worst is over for the company during the upcoming briefing.

International Business Machines (IBM): Is The Worst Over?
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The analysts noted that the stock price of IBM lagged 26% compared with the performance of the S&P 500 in 2014. It was the third consecutive year of underperformance by the company.

According to White and Zhu, the upcoming briefing will be the most important investor-related meeting for IBM Chairman and CEO Ginni Rometty in her career at the company.

They believed that the company will face “severe scrutiny from investors” given its disappointing fundamental performance and severely underperforming stock price since she took over as CEO last January 2012.

International Business Machines expected to discuss cloud, Watson, investment partnerships

White and Zhu believe that it is necessary for IBM to emphasize that it is now positioned to benefit from key secular trends in the areas of big data, cloud computing and mobility.

The analysts think the IBM’s cloud discussion will be very important during the upcoming event. According to White and Zhu, the market believes that the growth of cloud have a major negative impact on the services and software business of IBM.

During the investor briefing, White and Zhu expect IBM to focus on its position across key strategic imperatives such as cloud, big data analytics, mobility, social and security.

The analysts noted that the company’s strategic imperatives climbed 16% year-over-year to $25 billion, which accounts for 27% of its sales last year. IBM’s cloud revenue increased 60% to $7 billion in 2014.

In addition, White and Zhu also expect IBM to highlight Watson as part of its analytics discussion. They also expect the company to provide updates regarding its investment partnerships with Apple and other companies.

Expected longer-term outlook for International Business Machines

Furthermore, the analysts expect International Business Machines to provide a longer-term outlook of low-single digit revenue growth and high-single digit operating EPS growth.

White and Zhu noted that IBM’s EPS increased 11% annually over the past five years and 14% per year over the past decade. Since 2002, the company recorded its first EPS decline in 2014 amid a touch business environment.

White and Zhu also think that the 2015 will remain a transitional year for the tech giant. They believe that IBM will return to EPS growth in 2016 (a modest increase of 4%).