International Business
IBM (NYSE)
Forecast has expired
Ended: Sunday December 31, 2006
Target
$99.00 and above
$15.74 (18.9%)
Time Span:3-6mths
Final
$128.38
$45.12 (54.2%)
Recommendation
Rating:Strong Buy
Risk:Aggressive
Stop Loss Price:Unspecified
Final XP:
0
Target reached
Analysis
Recently, IBM reported first quarter EPS of $1.08, compared to the $0.85 reported just one short year ago. Wall Street's consensus estimates were for earnings of $1.05 a share. The increase mainly aided by the residual effects of IBM's continued sweeping cost cuts and restructuring. IBM's services growth hasn't been at its best, to say the least, in recent quarters. Profits have been achieved largely through cost cuts and shifts in labor from costlier markets such as Europe to cheaper but booming markets like India and China. In the first quarter of 2006, the services division showed a 1 percent drop in revenue, though there should have in fact been a 3 percent gain without currency fluctuations. However, gross profit margin of 2.3 percentage points rose to 26.6 percent. In IBM's two other major divisions, hardware and software, revenue rose 6 percent (not considering the PC business and currency changes). But IBM's best hardware results came in some of its lowest-margin segments, including microchips and lower-end servers. The consensus full-year forecast is for $5.81 in earnings per share and revenue of $90.6 billion. Price target ranging from $73.00 to $101.00. http://www.ibm.com