IBM è in agonia


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By Tiernan Ray
Updated April 18, 2018 10:38 a.m. ET
Josep Bori with Berenberg, who has a Sell rating on the stock and a $125 price target, writes that "the worsening gross margins (43.2% versus 45.1% consensus and 43.8% a year ago) and currency headwinds led to a 27% pre-tax profit miss, although it beat EPS consensus by 1% thanks to the help of discrete tax benefits."

Keith Bachman of BMO Capital Markets, who has a Market Perform rating on the stock and a $175 price target, writes that there’s “work to do” at IBM still:

The non-GAAP pretax margin of 9.1% missed our/Street estimates of 11.8%/12.7%. Performance was mainly driven by workforce/cost actions of $610 million, which we think were a ~$450 million y/y headwind, reflecting a 230 bps margin impact. Thus, even with comparable levels of workforce charges, we still think that PTI margins would have missed our estimates. We believe IBM needs to demonstrate it can execute on margin expansion plans for 2H, although we think margin contraction has likely bottomed.

Similarly, J.P. Morgan’s Tien-tsin Huang reiterates a Neutral rating, writing that “IBM still has work to do to generate sustainable revenue growth (in CC) in its core Software and Services businesses, and expand pre-tax margins meaningfully, which we believe is baked in the bull thesis."

Standing up for the stock this morning is Stifel’s David Grossman, who reiterates a Buy rating and a $182 price target, writing that the focus on margins is a bit “hypocritical”:

There was a lot of discussion about reported versus pro forma margin excluding the charge, which we suspect underlies the stock weakness post close [...] The realization of discrete tax benefits, even if consistently used to offset restructuring actions, continues to be looked down upon by many investors. IBM is going through a massive transformation in a fishbowl and we find it a bit hypocritical to reward companies that pro forma out restructuring actions and penalize others like IBM that leave them in; however, that should normalize over time if they execute.

IBM Earnings: It’s All About the Margins - Barron's