After the market closes on Monday, IBM Corp. (IBM, -1.51%) will report first quarter earnings. The earnings reported by the company in the last quarter failed to meet expectations as the tech giant struggled with another slowdown in its software business. IBM has been battling to increase sales as it moves from traditional hardware into a more cloud and software focused business. In fact, the Big Blue has failed to achieve sales targets in 7 of the last 8 quarters.
Over-and-above the less than impressive sales figures, IBM saw its shares plummet 3% in after hour’s trading in January this year. This came after a weaker than expected full-year outlook after its last quarterly earnings report. Analyst David Grossman from Stifel said that sentiment on Wall Street felt “neutral to modestly-negative”, with some analysts viewing the problem with IBM as more secular as opposed to cyclical.
Grossman, in a note to clients this week, reiterated a buy rating and price target of $180 on the stock; however, his fiscal 2015 estimates were lowered. Another analyst from Bernstein, Toni Sacconaghi, set the price target at $150 and he also reiterated his revenue outlook that sees IBM missing the consensus by as much as $550 million.
In accordance with 20 sell-side analysts on FactSet, IBM averages a neutral rating on Wall Street. Together, their 12 month average price-target is $159.52, which suggests a decline from the most recent IBM share trade price at $160.67 a share.
Given the FactSet data, analysts anticipate IBM to report $2.82 in GAAP earnings and $2.81 in non-GAAP earnings. Wall Street consensus also calls for a decline in revenue from $22.5 billion in the same period in the previous year to $19.7 billion. This decline would mark a 12 percent year-on-year decrease.
IBM shares have dropped 15 percent from the same quarterly report from the previous year. This means that over the last 12 months, IBM is the second worst performing Dow Component. The company was last down 1.7 percent in late trade on Friday at $160.36.
MT4 Chart: IBM
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