Drexel Hamilton Comments on International Business Machines Corp. (IBM) Following Mixed 2Q:17 Results

International Business Machines Corp. (NYSE:IBM) shares slipped 3% in after-hours trading Tuesday, after the tech giant’s second quarter results fell short of revenue expectations, while beating earnings estimates.

IBM reported 2Q:17 sales of $19.29 billion that missed the Street estimate at $19.45 billion, while pro forma EPS of $2.97 beat the Street’s estimate of $2.75. Looking forward, IBM reiterated its 2017 operating EPS outlook from at least $13.80 and free cash flow to be flat.

Drexel Hamilton analyst Brian White commented, “We continue to believe IBM will emerge from this transition a much stronger IT organization. That said, IBM’s stock has been weak around earnings, falling the day after quarterly earnings reports by an average of 3% over the past fourteen quarters (down twelve times). In the meantime, IBM’s 3.9% dividend yield and modest valuation should attract more value investors.”

“We are projecting 2017 EPS of $13.73 and the Street is at $13.70. For 3Q:17, we’re projecting revenue of $18.49 billion and EPS of $3.43 (Street is at $3.38),” the analyst added.

White reiterates a Buy rating on IBM shares, with a price target of $200, which represents a potential upside of 30% from where the stock is currently trading. (To watch White’s track record, click here)

Out of the 16 analysts polled by TipRanks (in the past 3 months), five are bullish on IBM stock, six are sidelined, and five remain bearish on the stock. With a return potential of nearly 8%, the stock’s consensus target price stands at $166.50.


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