Investors in International Business Machines Corporation (NYSE: IBM) are again disappointed by the company’s weak growth figures in the first quarter of 2018.
On Tuesday afternoon, IBM announced its second consecutive quarter of revenue growth, indicating that the large investment in cloud computing and artificial intelligence over the years may eventually begin to achieve results, but the stock initially fell more than 5%.
Excluding certain items, IBM’s earnings per share was $2.45, which was higher than the consensus analyst estimate of $2.42. IBM’s first-quarter revenue was $19.1 billion, which also exceeded Wall Street’s $18.84 billion estimate.
Revenue in the first quarter increased by 5% compared to the same period last year. IBM reported revenue growth of 3.6% in the fourth quarter of 2017, which was the first quarter revenue growth since the first quarter of 2012.
CEO Ginni Rometty will focus on the company’s 14% currency adjustment cloud revenue growth.
“These results further demonstrate that our customers value our innovative technologies, our industry expertise, and our commitment and actions for responsible management of privacy and data,” Rometty said in a statement. “This is also reflected in our Leading position in the enterprise cloud domain, AI and security. ”
Daniel Ives, head of technology research at GBH Insights, said that IBM is slowly moving in the right direction, but investor patience is thinning.
“This street hopes to see a strong strategic requirement because it is still a key factor in the growth of IBM’s growth engine,” he said. “Overall, the bulls hope to achieve even greater results this quarter. Given that the mature traditional mainframe business is the main force of the ship, this is still a tough battle for IBM.”
Looking ahead, IBM reiterated its previous full 2021 EPS guidance price of US$13.80. Analysts have been predicting earnings per share of $13.83.
Bank of America analyst Wamsi Mohan said that IBM is one of the more defensive stocks in large-cap stocks.
Mohan said on Monday that “we think that IBM is a defensive investment given the recurring sales, cost-cutting leverage, robust balance sheet, potential stock returns, and high risk of relatively stable profitability.” Mohan Said that IBM investors may have more cost reductions and acquisitions in the coming years.
Since the beginning of 2013, IBM stocks have not created new historical highs and have fallen by 28.2% over the past five years.
Bank of America has IBM’s “buy” rating and a $200 price target. GBH Insights has an “attractive” rating on IBM stock and a $180 target.