International Business Machines Corp. (NYSE: IBM) will report its first-quarter financial results Monday after the markets close. Thomson Reuters has consensus estimates of $2.82 in earnings per share (EPS) and $19.73 billion in revenue. In the same period of the previous year, Big Blue posted EPS of $2.68 and revenue of $22.48 billion.

Is a recovery in the works for IBM? If so, then there needs to be some fundamental changes within the company. That is the message from Credit Suisse, which does not see IBM making its recovery for some time. IBM investors should note that Credit Suisse has the lowest IBM price target and biggest downside expected of all firms on Wall Street.

Credit Suisse also expects a currency headwind of -7.4% to affect the 2015 fiscal year total revenues, as well as an incremental -160 basis points headwind to total revenues since IBM last guided. Past this, the brokerage firm continues to believe that the company faces a painful multiyear process that leads to a prolonged period of underperformance.

During the investor briefing back in February, IBM guided to new “longer”-term objectives to grow revenues in the low single digits and EPS in the double digits. However, no time frame to return to this growth was provided, and Credit Suisse continues to see a difficult transition ahead.

Credit Suisse reiterated an Underperform rating with a price target of $125, implying a downside of 24.4% from current prices.

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Ahead of earnings, a couple other analysts weighed in on IBM’s situation:

• JPMorgan had a Hold rating and set its price target at $170, implying an upside of 2.8%.
• Zacks reiterated a Hold rating.
• Atlantic Securities downgraded IBM to an Underweight rating from Neutral and set its price target at $140, implying a downside of 15.3%.

IBM shares were up about 3% at $165.33 on Monday morning. The stock has a consensus analyst price target of $158.17 and a 52-week trading range of $149.52 to $196.86.

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