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IBM Stock Jumps To 22-Month High; Analysts Forecast More To Come

IBM stock

IBM (NYSE: IBM) stock price soared sharply since it topped fourth-quarter revenue and earnings estimates. The company optimized the trader’s sentiments by breaking the streak of five consecutive quarters of revenue decline. The significant debt reduction along with healthy cash flow generation potential is adding to investor’s sentiments.

IBM stock price is currently trading around $155, representing the highest level in the last 22 months. Its share price rallied close to 14 per cent since the beginning of fiscal 2020. IBM’s strategy of moving its focus towards cloud business is supporting its financial numbers.

IBM International Business Machines Corporation daily Stock Chart

Analysts See Further Upside for IBM Stock

The majority of analysts have raised their price targets for IBM share price. For instance, Morgan Stanley’s lifted the price target from $155 to $164. Its analyst Huberty said, “Some of the strong results came from less sustainable sources like currency and mainframe software but Red Hat is a genuine bright spot in the quarter.” The firm raised its EPS estimate to $13.33 for 2020.

IBM Stock Jumps To...

On the other hand, Citi looks optimistic over the arrival of new Chief Executive Officer Arvind Krishna. This is because Arvind Krishna has considerable experience in the cloud business – which bodes well for IBM’s cloud growth strategy.

IBM Fourth Quarter Beat and Upside Financial View Supports Higher Price Target

IBM topped fourth-quarter revenue and earnings estimate by $150ml and $0.02 per share. Its fourth-quarter revenue of $21.78bn increased by 0.08 per cent from the past year period. The revenue growth is driven by a strong performance from cloud business. The cloud revenue of $6.8bn grew 21 per cent from the year-ago period. Its gross margin jumped 190 basis points while the company reduced debt by $10b since the closing of the Red Hat acquisition.

IBM Stock Jumps To...

Looking ahead, we are positioned for sustained revenue growth in 2020 as we continue to help our clients shift their mission-critical workloads to the hybrid cloud and scale their efforts to become a cognitive enterprise,” “said Ginni Rometty, IBM chairman, president, and chief executive officer.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.