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IBM surges 5% higher following upbeat performance results for the fourth quarter

Michael Harris
  • January 21st, 23:18
  • Last Updated: January 21st, 23:22
  • IBM beats analysts' estimates for earnings and revenue in the fourth quarter.
  • IBM's revenue had dropped in the past five consecutive quarters in a row.
  • Morgan Stanley changed its overweight rating for IBM to equal-weight on Tuesday.
  • IBM's performance remained fairly upbeat in the stock market in 2019.

The American multinational information technology company, IBM, announced its performance results for the fourth quarter on Tuesday. Beating analysts’ estimates for earnings and revenue, the stock was seen trading 5% higher later in the day.

Based on Refinitiv’s data, analysts had expected $4.69 of earnings per share (EPS) for IBM in the fourth quarter, excluding such items. Tuesday’s report, however, noted a slightly higher $4.71 of earnings per share for the tech giant. On the revenues front, analysts had capped their forecast at $21.64 billion in Q4 versus a significantly higher $21.77 billion, as highlighted in the earnings report on Tuesday.

IBM’s Revenue Had Dropped In The Past Five Quarters In A Row

According to IBM, the growth in revenue was particularly a massive achievement for the company as its revenue remained under pressure for the past five consecutive quarters. Following the Q4 earnings report, IBM also upgraded its guidance for fiscal 2020 and accentuated that the company anticipates the EPS at $13.35 (excluding items). Analysts, on the other hand, have forecasted $13.29 of earnings per share. IBM’s estimate of $13.35 EPS marks a 4% gain as compared to the figure for last year.

Revenue from IBM’s Cloud and Cognitive Software unit was posted at $7.24 billion in the fourth quarter. Beating analysts’ forecast of $7.12 billion, the figure was registered around 9% higher as compared to the same quarter last year. IBM had acquired Red Hat in July 2019. In the fourth quarter, the revenue from IBM’s latest acquisition was recorded 24% higher after a 19% jump in the third quarter.

The Global Technology unit, on the other hand, generated $6.96 billion in revenue for the company in the fourth quarter, versus experts’ forecast of $6.99 billion. The Global Business Services also missed analysts’ estimate of $4.26 billion in revenue as it printed slightly shy at $4.24 billion in Q4.

Morgan Stanley Changed Its Overweight Rating To Equal-Weight For IBM

On the contrary, systems revenue climbed 16% to $3.04 billion in the fourth quarter against the FactSet consensus of $2.84 billion.

Following the Q4 earnings report, Morgan Stanley changed its rating for IBM from the previous “overweight” to the current “equal-weight” on Tuesday.

IBM’s performance in the stock market has remained fairly upbeat in 2019. The stock opened the last year at around $113 per share in January 2019. As of July, share prices were trading as high as $152. The company lost a part of its gain in the second half of 2019 with the stock currently exchanging hands at $139 in the stock market.

About the author

Michael Harris
Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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