How Will IBM Stock Trend Post Second Quarter Earnings?

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computing giant ibm

ibm
It is scheduled to report results for the second quarter of 2023 on July 19. We estimate that IBM’s revenue will come in at about $15.57 billion for the quarter, marginally ahead of the consensus estimate of about $15.56 billion and roughly flat versus last year. We estimate earnings will be close to $2.05 per share, compared to the consensus of $2.00 per share. So, what are some of the trends likely to drive IBM’s dividend?

We expect IBM’s core software operations to be one of the key drivers of growth in the second quarter. While software-related sales rose just 3% in the first quarter, due in part to currency headwinds and a slowdown in the use of automation, security, and AI-related tools, the company benefited from higher Red Hat sales.
RHT
 products. Red Hat, which was acquired in 2019, has been a key growth driver for IBM, due to its large open source technology portfolio, hybrid cloud platform, and large developer community. IBM has driven mid-single-digit growth for the software business this year and we could see growth pick up a little bit through the second quarter. IBM’s consulting business could benefit from increased demand for application consulting. The AI ​​side of the consulting business is also likely to start to see a bump as companies look to deploy increasingly generative AI tools.

We believe IBM stock is likely to see some modest gains after its second quarter results. At a current market price of $134 per share, IBM stock is trading at roughly 14 times its 2023 earnings rate. We think that’s a reasonable valuation, given that IBM is focusing on core areas like cloud computing, AI, and automation after shedding its legacy businesses. . IBM is also making mid-size acquisitions to bolster its portfolio of higher-margin software products. The company recently acquired Apptio, a cloud software company that helps companies manage and optimize their IT spending. We value IBM stock at $142 a share, roughly 6% of the current market price. See our analysis IBM evaluation: expensive or cheap For more details on what drives our IBM price estimate. Also, check out Analyze IBM revenue For more details on IBM’s revenue trend.

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