There’s a lot of earnings news floating around right now. As was the case with Netflix, some of it was remarkably bad. But in other cases, such as Tesla, the first quarter of 2022 has been a fantastic period. For IBM (NYSE: IBM), Q1 2022 was somewhere in the middle, although the company did report a solid earnings beat that impressed Wall Street.
The IT giant reported that revenue was up 8% from last year, with most of this growth coming from IBM’s hybrid cloud platform. This hybrid business saw revenues rise over 14%, the main growth driver for the company. In total, overall revenues hit $14.2 billion for Q1 compared to last year’s $13.2 billion. That’s also around $500 million higher than most analyst targets.
IBM posted a profit of around $733 million, roughly 83 cents per share, a figure that’s noticeably worse than the $955 million profit reported back in Q1 2021. While overall profits are down, net income for continuing operations actually went up from $403 million to $662 million in a year, so the bottom line isn’t necessarily that bad.
IBM expects to see revenue growth somewhere around the mid-single-digit mark, although inflation, supply chain costs, and other issues might eat into this figure a bit. IBM CFO Jim Kavanaugh said that demand for IBM’s cloud business is going to be a long-term driver for the computing giant.
In response to the results, analysts on Wall Street were quick to bump up their price targets for the company. This includes Bank of America analyst Wamsi Mohan, who raised his price target to $165 per share.
“Sustainable revenue growth has been historically elusive for IBM, but the company has made significant progress on portfolio changes, and in our opinion, revenue outperformance while maintaining Free Cash Flow is a material positive change in trajectory,” Mohan mentioned in a note to his clients.
Credit Suisse’s Sam Badri also made a similar remark and price target, noting that IBM’s transition to hybrid cloud architecture is going to be a big deal for the firm going forward, and putting a $168 price target on IBM stock. These aren’t massive upgrades, but they are still noticeable nonetheless. Going forward in 2022, IBM didn’t have any specific revenue forecast or earnings forecast besides its initial percentage target for top-line growth. Wall Street predicts around $61 billion in total revenue for 2022.
Shares were up around 7.5% on the news. It was a refreshing change from Wednesday’s shocking Netflix results, which caused a massive selloff in the stock. Other notable earnings results, such as Tesla’s Q1 figures, were record-breaking, although that came to no one’s surprise.
IBM Company Profile
IBM looks to be a part of every aspect of an enterprise’s IT needs. The company primarily sells software, IT services, consulting, and hardware. IBM operates in 175 countries and employs approximately 350,000 people. The company has a robust roster of 80,000 business partners to service 5,200 clients–which includes 95% of all Fortune 500. While IBM is a B2B company, IBM’s outward impact is substantial. For example, IBM manages 90% of all credit card transactions globally and is responsible for 50% of all wireless connections in the world. – Warrior Trading News
