International Business Machines (NYSE: IBM) is approaching its next earnings report – scheduled for Wednesday, July 22 – in a highly unorthodox position, as it had already offered a rather concerning preview of the figures to its investors.
Specifically, IBM made an announcement last week revealing that both its revenue and earnings per share (EPS) are likely to come below expectations, with the former hitting $17.2 billion – $17.86 billion was expected – and the latter $2.93 – $3.02 was anticipated.
The disappointing figures might have, however, also turned the equity into a ‘Buy’ as it already suffered a massive selloff on the news, making it unlikely there is much potential for a further downside after the Wednesday filing.
Still, the ground remains shaky for IBM stock investors considering the company also warned that the ongoing memory shortage and the prevailing focus on artificial intelligence (AI) are significantly harming its business.
Is IBM a good stock to buy?
Nonetheless, Wall Street remains surprisingly optimistic regarding International Business Machines shares.
Specifically, the majority of analyst notes issued during the previous week were bullish, with the company receiving four ‘Hold,’ one ‘Sell’ – coming from HSBC’s Stephen Bersey and accompanied by a $231-to-$191 price target downgrade – and five ‘Buy’ recommendations.
Notably, the most recent forecast update – provided by JPMorgan’s (NYSE: JPM) Brian Essex on July 17 – was positive even after the bloodbath triggered by the earnings preview and featured a ‘Buy’ rating and a forecast downgrade from $291 to $250: from a 36.52% upside to 17.37%.
Lastly, the overall attitude on Wall Street is that IBM stock is a ‘Moderate Buy,’ while the average 12-month price target stands at $295.76 for a 38.86% predicted rally, per the data Finbold retrieved from TipRanks on July 21.
Thus, International Business Machines shares appear worth investing in following the preview plunge and ahead of the official filing, though the fact that nearly every non-positive expert recommendation was assigned within the last week gives ample room for caution.
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