Morgan Stanley Sets Expectations on International Business Machines Corp. (IBM) Ahead of Earnings

In a research report issued Thursday, Morgan Stanley analyst Kathryn Huberty shared her expectations on International Business Machines Corp. (NYSE:IBM) as the the next key milestone for the company will be its second-quarter earnings on Monday, July 18, after market close.

Huberty opined, “We expect IBM to report in-line to slightly better than consensus revenue and EPS for the June quarter. With the impact of more flexible enterprise license agreements (ELAs) behind the company and a growing impact from strategic imperatives (SI), we believe IBM has more wind at its back than a year ago. In total, Strategic Imperatives (analytics, cloud, mobile, security, social) make up a growing percentage of revenue (37% in 1Q16 vs.30% in 1Q15) which helped stabilize revenue declines in recent quarters and will improve constant currency revenue trajectory by next year, in our view.”

“We view MS and Street revenue estimates as overly conservative in light of recent checks that point to 2Q IT spending slightly better than 1Q despite a modest Brexit impact,” the analyst added.

Huberty reiterated an Overweight rating on shares of IBM, with a price target of $168, which represents a slight upside potential from current levels.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Kathryn Huberty has a yearly average return of 13.9% and a 59.6% success rate. Huberty has a 8.8% average return when recommending IBM, and is ranked #134 out of 4055 analysts.

Out of the 18 analysts polled by TipRanks, 4 rate International Business Machines stock a Buy, 11 rate the stock a Hold and 3 recommend Sell. With a downside potential of 9.5%, the stock’s consensus target price stands at $145.04.


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