Analyst: IBM could become an ‘interesting asset to own’

on Jan 24, 2022
  • IBM reports market-beating results for its fiscal fourth quarter.
  • Amit Daryanini discussed earnings on CNBC's "Closing Bell."
  • Shares of the tech company jumped nearly 7.0% after-hours.

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IBM Corp (NYSE: IBM) on Monday reported its financial results for the fourth quarter that topped Wall Street expectations. Shares of the technology company jumped more than 6.0% in extended trading.

Important points in IBM’s earnings report

IBM reported $2.33 billion in net income that translates to $2.60 per share. In the same quarter last year, its net income was capped at $1.36 billion or $1.52 per share. On an adjusted basis, the American multinational earned $3.35 per share.

At $16.7 billion, the Armonk-headquartered company noted an annualised growth of 6.4% in its quarterly revenue. According to FactSet, experts had forecast $3.30 of adjusted EPS on $15.96 billion in revenue. In the earnings press release, CEO Arvind Krishna said:

Our Q4 results give us confidence in our ability to deliver our objectives of sustained mid-single-digit revenue growth and strong free-cash-flow in 2022.

In comparison, analysts expect a 3.7% YoY increase in full-year revenue. The stock now trades at a PE multiple of 24.40.

Amit Daryanini’s take on IBM’s quarterly results

Revenue from all three segments – Software, Consulting, and Infrastructure came in ahead of estimates in Q4, which was impressive for Evercore ISI’s Amit Daryanini. On CNBC’s “Closing Bell”, he said:

It’s a very impressive revenue number from IBM. There’s a bit of Kyndryl in there, but even without that, consulting grew double-digits, software was up 5-6%. If not much of the mid-single-digit growth they’ve talked about for 2022 is Kyndryl driven, this becomes an interesting asset to own.

IBM spun off Kyndryl – its infrastructure services business in the fourth quarter, which now trades on the NYSE as a separate, publicly listed company.  


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