IBM Trading forecasts and signals

One of the world's largest manufacturers and suppliers of hardware and software, IBM presented strong results for the second quarter of 2022, which were better than analysts' expectations. At the same time, the company lowered its forecasts for free cash flow for this year amid the impact of a strong dollar and withdrawal in Russia.The company made a profit of $1.39 billion ($1.53 per share) compared with $1.33 billion ($1.47 per share) a year earlier. Adjusted earnings were $2.31 per share versus $2.33. Revenue for the reporting period increased to $15.54 billion from $14.22 billion. According to preliminary forecasts, the profit indicator was expected at $2.27 per share with revenue of $15.18 billion.It is important to note that IBM presented strong results in terms of revenue by segment. Thus, software revenues increased by 6.4% YoY, consulting revenue increased by 9.8%, infrastructure solutions added 18.9%.An important deterrent was the strong US dollar – IBM generates 48% of sales in foreign markets, which makes IBM vulnerable to the strengthening of the dollar. A strong dollar also has a negative effect on the marginality of operations. Among other things, the inflationary factor exerted pressure on the gross margin – the cost of labor increased, which primarily hit the profitability of the consulting direction.In general, we characterize IBM's results as not bad – after the allocation of a sub-segment of infrastructure services, the issuer began to show positive dynamics, and the consensus forecast assumes sales growth of 6% in 2022. We also believe that a reduction in dividends, on which the company spends about 50% of its total operating cash flow, may be a risk for quotations. The management's forecast for the current year assumes a negative effect from the dynamics of exchange rates at the level of 6%.Analysts of IC Freedom Finance note that IBM is trading near fair levels – the target price is $140, the recommendation is "Hold". At the same time, if management gives strong guidance for 2023 or for the medium term, sentiment can significantly ...

IBM, one of the world's largest manufacturers and suppliers of hardware and software, has announced the acquisition of Randori, a Boston-based cybersecurity startup. The financial terms of the deal were not disclosed, but it is reported that Randori is estimated in the range of $50 to $100 million. The startup raised almost $30 million during two rounds of financing, the last of which was a $20 million Series A investment conducted by Harmony Partners in April 2020.The cybersecurity market is one of the fastest growing and promising segments of the global IT market, marketing agency MarketsandMarkets estimated the cost of cybersecurity worldwide in 2021 at almost $218 billion. Global consulting corporation Accenture conducted a survey of business leaders in 18 countries, according to which, each surveyed company experiences an average of 270 cyber attacks per year.With the acquisition of this startup, IBM will enter a very promising segment. IBM's stock prices are slightly declining on the premarket, as investors apparently would like to get more information about how the acquired company will integrate into IBM's core ...

The market the day beforeTrading on April 20, the main American stock indexes ended in different directions. The S&P 500 dropped 0.06% to 4,459 points, the Nasdaq lost 1.22%, and the Dow Jones added 0.71%. The real estate sectors (+1.85%), non-cyclical consumer goods (+1.46%) and healthcare (+1.34%) looked better than the market. Among the outsiders, under the influence of the fall in Netflix (NFLX) shares, the communications segment turned out to be (-4.07%), manufacturers of discretionary goods also looked worse than the market (-1.46%).Company newsIBM (IBM: +7.1%) exceeded revenue expectations due to its strong growth in the software and consulting segments. The management raised the forecast of the indicator due to the expected increase in sales volumes of the Kyndryl division and the stability of expenses.Baker Hughes (BKR: -3.8%) made a profit at the end of the quarter, but EPS and revenue were below the consensus forecast. At the same time, the volume of orders for the supply of LNG has significantly increased, which can ensure a steady increase in sales during the year.Tesla (TSLA: -4.96%) reported better than expected for the first quarter, recording an intensive increase in sales and a record profit, despite the incomplete utilization of production facilities due to supply instability. The increase in prices for the automaker's products compensated for the increase in its costs.We expectThe real yield of government bonds, reflected in the rate of 10-year US Treasury bonds with inflation protection (TIPS), returned to positive territory for the first time since March 2020, reaching 0.02% at auction on April 19. However, this is not yet due to a weakening of inflation expectations, since the forward average annual inflation rate for the next decade remains at 2.92% since mid-March. The yield of 10-year treasuries is growing amid active sales, as investors expect a decisive increase in the Fed's base rate and a reduction in assets on the regulator's balance sheet. The recovery of real profitability acts as a deterrent and a risk for the stock market, especially given concerns about the revaluation of the value of companies. The inflow of funds into equity funds has amounted to about $193 billion since the beginning of the year after a record figure of almost $1 trillion for the whole of 2021. Nevertheless, the real yield of benchmark bonds has most often been positive since at least 2004. At the same time, JPMorgan analysts believe that the stock market can withstand an increase in real profitability by 200 basis points (bp).On Wednesday, the growth of government bond yields halted as investors assessed the impact of inflation on the financial results of companies. The rate on ten-year treasuries fell by 7 bps, to 2.84%, the yield of "two-year-olds" decreased by 2 bps, to 2.57%.The session on April 21 on the stock exchanges of the APR was multidirectional. Japan's Nikkei gained 1.23%, China's CSI 300 lost 1.84%, Hong Kong's Hang Seng dropped 1.25%. EuroStoxx 50 has been growing by 1.01% since the opening of trading.The price of Brent crude oil futures dropped to $108 per barrel. Gold is trading at $1947 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4420-4490 points.MacrostatisticsWeekly data on the number of initial applications for unemployment benefits are expected today (consensus: 178 thousand after 185 thousand a week earlier). The Philadelphia Federal Reserve's index of manufacturing activity for April will also be published: the forecast assumes a decrease in the indicator to 21.0 points from 27.4 in March.Sentiment IndexThe sentiment index dropped 2 points to 43.Technical pictureThe S&P 500 showed a short-term rebound after fluctuating in the trading range since the beginning of last week. Buyers are intensifying their activity, striving to reach the 200-day moving average, which is at the level of 4490 points. However, the RSI still remains in the neutral zone, the MACD indicator also indicates the preservation of the parity of "bulls" and "bears". At the same time, the chances of the formation of the "inverted head and shoulders" pattern remain, which would be a signal for an upward market reversal. If the bulls fail to strengthen their positions sufficiently, the broad market index may test support at the level of 4350 points in the short ...

One of the world's largest manufacturers and suppliers of hardware and software, IBM, reported a 23% reduction in net profit in the 1st quarter of 2022, to $733 million. Earnings per share amounted to $1.4. Revenue increased by 8% to $14.2. Overall, the financial indicators were higher than analysts' expectations.The company maintained its previous forecast for revenue growth in 2022 by 4-6%. Analysts expect the company's annual revenue to increase by 5.3% to $60.38 billion.IBM shares rose by 2.36% on April 19, and continued to grow by 1.35% on the premarket on April 20, to $130.89 per ...

The market the day beforeOn January 25, the main American stock indexes finished trading in the red zone. The S&P 500 dropped 1.22% to 4,356 points, the Dow Jones lost 0.19%, the Nasdaq showed a stronger drop, falling 2.28%. Almost all sectors included in the S&P 500 closed in the red. The exception was the issuers of the energy industry (+3.96%) against the background of the continuing rise in oil prices and financial sector companies (+0.47%). Technology companies (-2.34%) and telecoms (-2.23%) looked worse than the market.Company newsGeneral Motors (GM: -1.41%) will spend $6.6 billion to build a new electric vehicle manufacturing plant in Michigan.Bloomberg believes that NVIDIA (NVDA: -4.48%) may refuse to acquire the Arm chip developer.Revenue of International Business Machines (IBM: +5.65%) for the fourth quarter amounted to $16.7 billion, showing an increase of 8.6% YoY.ExpectationsThe consumer confidence index published yesterday in January was 113.8 points, exceeding the consensus at 110.5, but slightly short of the December figure of 115.2 points. Despite the negative sentiment associated with the possible dynamics of stocks, some strategists and journalists continue to put forward separate "bullish" theses in their publications. For example, Jefferies experts noted that in each of the last seven cycles of Fed rate hikes, the S&P 500 index showed positive dynamics within 12 months after the start of the next tightening of the PREP. Bloomberg emphasizes that the stock market has grown by 9% YoY during 12 cycles of monetary policy tightening since the 1950s, and in 11 of them there was a positive return on equity securities.The yield of two-year treasuries increased by 6 bps, to 1.02%. The same indicator for "ten-year-olds" rose by 3 bps, to 1.78%, and the yield of 30-year securities rose to 2.12%. Concerns about inflation continue to be fueled by an increase in oil prices. But the main reason for the sell-off is probably still related to fears of a faster rate hike. It is possible that after the meeting of the Federal Open Market Committee (FOMC), the regulator will announce its intention to start raising them in March.Trading on the sites of Southeast Asia ended on January 25 in different directions. China's CSI 300 rose by 0.72%, Japan's Nikkei 225 fell by 0.44%, Hong Kong's Hang Seng showed no significant dynamics, adding 0.01%. EuroStoxx 50 has been growing by 1.09% since the opening of the session.Brent crude futures are quoted at $88.20 per barrel. Gold is trading at $1852.7 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4310-4360 points.MacrostatisticsToday, data on sales of new housing on the US market for December 2021 will be released (forecast: 760 thousand against 744 thousand in November).Technical pictureThe S&P 500 remains below the 200-day moving average. The RSI is in the oversold zone, below 30 points, which indicates a strong bearish trend. The MACD indicator indicates the continuation of the correction development, without showing signs of a reversal. The nearest support is located at the level of 4,300 ...