IBM Stock: What To Expect From Q2 Earnings

IBM (IBM) will kick off earnings season for tech companies when it reports second-quarter results late Monday. IBM stock jumped more than 7% in reaction to its last earnings report.

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Other companies in the tech sector scheduled to report earnings in the week ahead include AT&T (T), Snap (SNAP), Tesla (TSLA) and Twitter (TWTR).

Last quarter, IBM reported better-than-expected results and issued guidance that topped Wall Street estimates.

The results showed the progress IBM has made as it continues to undergo a massive multiyear restructuring.

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This includes the spinoff of Kyndryl, IBM’s managed infrastructure services business, which was completed in November. As a result, Kyndryl’s historical operational activity has been reclassified to IBM’s discontinued operations as required by generally accepted accounting principles, or GAAP.

In the separation, Kyndryl was valued at $19 billion.

IBM stock edged up 0.6%, closing at 139.92 on the stock market today.

Price Targets On IBM Stock

According to TipRanks, the average price target on IBM stock is 151.89, with a high forecast of 166 and a low forecast of 135.

IBM stock is currently in a first-stage consolidation with a buy point of 152.94.

IBM has beaten earnings expectations, based on Zacks consensus estimates, in nine of its last 10 quarters. However, it’s missed revenue estimates five times over its last 10 quarters.

For its second quarter, the consensus estimate at FactSet Research calls for adjusted earnings of $2.26 a share, up 40% from the year-ago period. The revenue target is $15.1 billion, up 6%.

The major shifts in business operations help to explain why growth in revenue and earnings has been a struggle. Over the past decade, IBM has invested more than $120 billion in remaking the company. This includes $29 billion in capital expenditures for things like scaling its cloud operations and artificial intelligence offerings and bolstering its security and services capabilities.

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.

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