IBM (NYSE: IBM), on Wednesday, reported better-than-expected earnings for its first financial quarter. Its shares still gained only slightly in extended trading.
Analyst reacts to IBM’s Q1 earnings report
Investors are perhaps focusing more on a marginal miss in terms of revenue.
The tech behemoth also talked of some weakness in its consulting business. Still, Amit Daryanani of Evercore ISI said on CNBC’s “Closing Bell: Overtime”:
These numbers validate IBM being this bastion of stability when there’s macro turmoil. We were surprised by double-digit constant currency growth they had in Red Hat.
His $150 price target on IBM stock suggests an 18% upside from here.
IBM’s guidance for the future
On the plus side, IBM forecasts between 3.0% and 5.0% growth in its revenue this year. In comparison, analysts were at 3.6%.
The Armonk-headquartered firm sees $10.5 billion in free cash flow for the full year – up from $9.3 billion in 2022. Daryanani added:
The fact that they’re comfortable sticking with $10.5 billion free cash flow is fairly impressive – all the more impressive given the macro and IT spent worries.
CEO Arvind Krishna also confirmed today that the company isn’t developing consumer-facing AI products. For the year, IBM stock is down about 10% at writing.
IBM Q1 financial highlights
Net income printed at $927 million versus year-ago $733 million
Per-share earnings also climbed from 82 cents to $1.02
Adjusted EPS came in at $1.36 as per the earnings press release
Revenue went up only 0.4% year-over-year to $14.25 billion
FactSet consensus was $1.26 a share on $14.35 billion revenue
Revenue from infrastructure, consulting, and software businesses climbed 3.7%, 2.8%, and 2.6%, respectively – all roughly in line with Street expectations.
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