What to Expect From IBM Earnings

By Chris Lange Updated Jan 12, 10:02AM EST · Published Jul 18, 1:01PM EDT

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International Business Machines Corp. (NYSE: IBM) is scheduled to release its most recent quarterly results after the markets close on Tuesday. Consensus estimates from Thomson Reuters are calling for $2.74 in earnings per share (EPS) and $19.45 billion in revenue. In the second quarter last year, IBM had $2.95 in EPS and $20.24 billion in revenue.

In a recent sharply negative report, Jefferies analyst James Kisner wrote that the company’s run at the cloud has and will be underwhelming:

Our analysis and conversations with industry contacts suggest that while IBM offers one of the more mature and broad cognitive computing platforms today, the hefty services component of many AI deployments will be a hindrance to adoption. We also believe, based on our analysis, that IBM appears outgunned in the war for talent and will likely see increasing competition over time. Finally, our analysis suggests that IBM’s AI investments aren’t likely to be NPV positive. Reiterate Underperform.

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He continued that “Watson,” the cloud and AI consulting face of IBM, has likely been a mediocre contributor to the company’s fortunes, at best. Otherwise, IBM would be proud enough of its performance to break out its finances, something IBM has refused to do despite Wall Street pressure to give details.

The proof of IBM’s success, or lack thereof, will be the financial results for its second quarter. Most investors believe it will be yet another period in which revenue fell year over year. Also, IBM will provide sketchy data on Watson and related businesses.

A few other analysis weighed in on IBM ahead of the earnings report:

Credit Suisse has an Underperform rating with a $110 price target.
Guggenheim has a Hold rating.
Cleveland Research has a Neutral rating.
Stifel Nicolaus has a Buy rating with a $182 price target.
Pacific Crest has an Equal Weight rating.
Sanford Bernstein has a Neutral rating with a $150 price target.

So far in 2017, IBM has underperformed the broad markets and the stock is down nearly 8% year to date. Over the past 52-weeks, the stock is down about 4%.

Shares of Big Blue were last trading at $152.93, with a consensus analyst price target of $162.93 and a 52-week range of $147.79 to $182.79.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.