Ibm Stock Analysis
April 22, 2013
International Business Machines Corp.
SUMMARY
Current Recommendation Prior Recommendation Date of Last Change Current Price (04/19/13) Target Price
(IBM-NYSE)
NEUTRAL
Outperform 10/08/2009 $190.00 $200.00
IBM reported a dismal first quarter missing the Zacks Consensus Estimate on both lines. Revenue growth was particularly weak, due to execution problem and lackluster demand. We believe that sluggish IT spending remains the major headwind in the near term. Additionally, increasing competition in the hardware segment is another significant concern going forward. IBM continues to expand its Power systems into the Linux market. The company is also focusing on further developing its flash technology and storage business. However, we believe that these initiatives will take some time to boost hardware top-line growth. Nonetheless, we believe that strong backlog, improving outsourcing signings and new contract wins will boost the top line and profitability going forward. We maintain our Neutral recommendation and set a price target of $200.00.
Risk Level * Type of Stock Industry Zacks Industry Rank * Low, Large-Growth Comp-Integt Sys 47 out of 267
SUMMARY DATA 52-Week High 52-Week Low One-Year Return (%) Beta Average Daily Volume (sh) Shares Outstanding (mil) Market Capitalization ($mil) Short Interest Ratio (days) Institutional Ownership (%) Insider Ownership (%) Annual Cash Dividend Dividend Yield (%) 5-Yr. Historical Growth Rates Sales (%) Earnings Per Share (%) Dividend (%) P/E using TTM EPS P/E using 2013 Estimate P/E using 2014 Estimate Zacks Rank *: Short Term 1 3 months outlook
* Definition / Disclosure on last page
$215.80 $183.09 -3.02 0.69 3,987,050 1,115 $211,757 4.13 59 N/A $3.40 1.79
ZACKS CONSENSUS ESTIMATES
Revenue Estimates
(In millions of $)
Q1 (Mar)
Q2 (Jun) 26,666 A 25,783 A 25,306 E
Q3 (Sep) 26,157 A 24,747 A 25,108 E
Q4 (Dec) 29,486 A 29,304 A 29,729 E
Year (Dec) 106,916 A 104,507 A 103,551 E
International Business Machines Corp.
SUMMARY
Current Recommendation Prior Recommendation Date of Last Change Current Price (04/19/13) Target Price
(IBM-NYSE)
NEUTRAL
Outperform 10/08/2009 $190.00 $200.00
IBM reported a dismal first quarter missing the Zacks Consensus Estimate on both lines. Revenue growth was particularly weak, due to execution problem and lackluster demand. We believe that sluggish IT spending remains the major headwind in the near term. Additionally, increasing competition in the hardware segment is another significant concern going forward. IBM continues to expand its Power systems into the Linux market. The company is also focusing on further developing its flash technology and storage business. However, we believe that these initiatives will take some time to boost hardware top-line growth. Nonetheless, we believe that strong backlog, improving outsourcing signings and new contract wins will boost the top line and profitability going forward. We maintain our Neutral recommendation and set a price target of $200.00.
Risk Level * Type of Stock Industry Zacks Industry Rank * Low, Large-Growth Comp-Integt Sys 47 out of 267
SUMMARY DATA 52-Week High 52-Week Low One-Year Return (%) Beta Average Daily Volume (sh) Shares Outstanding (mil) Market Capitalization ($mil) Short Interest Ratio (days) Institutional Ownership (%) Insider Ownership (%) Annual Cash Dividend Dividend Yield (%) 5-Yr. Historical Growth Rates Sales (%) Earnings Per Share (%) Dividend (%) P/E using TTM EPS P/E using 2013 Estimate P/E using 2014 Estimate Zacks Rank *: Short Term 1 3 months outlook
* Definition / Disclosure on last page
$215.80 $183.09 -3.02 0.69 3,987,050 1,115 $211,757 4.13 59 N/A $3.40 1.79
ZACKS CONSENSUS ESTIMATES
Revenue Estimates
(In millions of $)
Q1 (Mar)
Q2 (Jun) 26,666 A 25,783 A 25,306 E
Q3 (Sep) 26,157 A 24,747 A 25,108 E
Q4 (Dec) 29,486 A 29,304 A 29,729 E
Year (Dec) 106,916 A 104,507 A 103,551 E