IBM: sell or buy after mixed earnings report?

International Business Machines Corp. released its first quarter earnings report. Let’s see how IBM performs amid the coronavirus.

What do the numbers say?

IBM’s adjusted EPS (earnings per share) dipped by 18.2% to $1.84 compared to $2.25 a year ago. However, it exceeds analysts’ expectations, what is quite good. Unlike EPS, the revenue was lower than it was anticipated. It was $17.57 billion with forecasted $17.62 billion.

What does it mean?

IBM was damaged by the coronavirus like other companies. The main hit was on  cognitive applications and transaction processing businesses, used heavily by retailers and the automotive industry, which can’t work now properly. However, IBM’s CFO reassured that 70% of its customers are minimally influenced by the virus spread.

Buy or sell?

According to MarketWatch, 5 analysts have buy ratings, 12 have hold ratings, and 2 have sell ratings, along with an average price target of $132.28. Due to the reaction after the report the price could go up, but then after some time it may go down.

We could wait until the price gives us a hint. If it breaks up through the resistance line on 117, it might go up further with a greater possibility than go down. And, if it breaks down through the support line on 111 that lays on the 50-day moving average, it might go down.

FBS Analyst Team

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