IBM Q1 results suggest it’s a ‘bastion of stability’
- IBM reports better-than-expected earnings for its fiscal Q1.
- Evercore's Amit Daryanani discussed its earnings print on CNBC.
- IBM stock is currently down about 10% versus the start of 2023.
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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
Copy link to sectionInvestors 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
Copy link to sectionOn the plus side, IBM forecasts between 3.0% and 5.0% growth in its revenue this year. In comparison, analysts were at 3.6%.
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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
Copy link to section- 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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