International Business Machines Corp. (IBM) Only Upside: White

International Business Machines Corp. (IBM) Only Upside: White

Cantor Fitzgerald analyst Brian J. White reitirates his Buy rating for International Business Machines Corp. (NYSE:IBM), predicting that the sales decline for the ailing company has bottomed out, meaning it can only do better from here.

Last night, International Business Machines Corp. (NYSE:IBM) reported 4Q:13 results that exceeded our projections, and the company provided what we consider a palatable 2014 EPS outlook, while maintaining its 2015 EPS projection. Although IBM warned of weak EPS performance in 1Q:14, this softness versus our estimate is driven by a restructuring charge that most tech companies would exclude from operating performance. Based on current estimates, our model now suggests that International Business Machines Corp. (NYSE:IBM)’s sales cycle bottomed in 4Q:13, and we are projecting the operating profit cycle to trough in 1Q:14, providing us with a view that the worst is over for International Business Machines Corp. (NYSE:IBM) in the intermediate term. As such, we reiterate our BUY rating and $220.00 price target.

Deprival Super-Reaction Syndrome And Value Investing

Howard Marks oaktree capital value investing value investors valuation metrics famous investors PE ratio PB ratio EV/EBITDA PEG ratioDeprival Super-Reaction Syndrome And Investing. Part four of a short series on Charlie Munger’s Human Misjudgment Revisited. Charlie Munger On Avoiding Anchoring Bias Charlie Munger On The Power Of Prices The Munger Series - Learning . . . SORRY! This content is exclusively for paying members. SIGN UP HERE If you are subscribed and having an Read More

IBM Delivers Sales Upside On Our Estimate

International Business Machines Corp. (NYSE:IBM) reported 4Q:13 sales of $27.7 billion that beat our revenue estimate of $27.0 billion (Street was at $28.3 billion), while pro forma EPS of $6.13 exceeded our $5.83 projection (Street was at $5.99) with the benefit of a lower tax rate. This print represents a 17% sequential sales increase and is better than the six-year average growth of 15%

Software and Systems & Technology Outperform in 4Q:13

During 4Q:13, Services backlog was up 5% YoY in constant currency (up 2% reported) to $143 billion. International Business Machines Corp. (NYSE:IBM) delivered upside in the Systems & Technology segment relative to our estimate (albeit a very challenged business) with sales growing by 31% QoQ (vs. our up 25% estimate) and Software increasing by 40% (vs. our up 34% estimate), while the Services sales grew by by 4% QoQ and slightly ahead of our up 3% projection.

A Solid $18.00 EPS Outlook for 2014 and $20.00 Reiterated in 2015

International Business Machines Corp. (NYSE:IBM) indicated that it feels confident in delivering at least $20.00 in operating EPS in 2015 and provided a 2014 operating EPS guidance of at least $18.00. Looking into 1Q:14, we are maintaining our revenue forecast at $23.1 billion (Street is at $23.3 billion) but are cutting our pro forma EPS estimate to $2.53 from $3.32 (Street is at $3.28) to reflect a restructure charge of approximately $1 billion. For 2014, we are slightly raising our pro forma EPS estimate to $18.03 from $17.88.


Our $220.00 price target is based on just over 12x our CY:14 pro forma EPS estimate. Over the past six calendar years, International Business Machines Corp. (NYSE:IBM) has grown EPS by 15% per annum versus approximately 4% growth for the S&P 500 Index.

No posts to display