This post was originally published on this site
The technology corporation reported first-quarter revenue of $14.20 billion, up 7.7% YoY and topping the consensus estimates of $13.81 billion. Operating EPS stood at $1.40 compared with the consensus estimates of $1.41 per share.
Consulting segment revenue came in at $4.83 billion, up 13% YoY and above the expected $4.62 billion. The company reported software revenue of $5.77 billion, up 12% YoY and just above the consensus projection of $5.7 billion.
Infrastructure revenue came in at $3.22 billion, down 2.2% YoY and almost in line with the analyst consensus of $3.42 billion.
IBM reported a Q1 adjusted gross margin of 52.9%, compared to 54.6% in the same period last year and analyst expectations of 54.4%.
Going forward, the company expects FY constant currency revenue growth to be at the high end of the mid-single-digit range. IBM anticipates annual FCF in the range of $10 billion to $15 billion.
IBM reported $10.8 million in cash on hand in Q1, up from $3.2 billion at the 2021 year-end.
”We are off to a solid start for the year, and we now see revenue growth for 2022 at the high end of our model,” said CEO Arvind Krishna.
Morgan Stanley analyst Erik Woodring raised the price target to $157.00 per share from the prior $150.00 to reflect stronger 2022 revenue outlook. He added that IBM delivered “a relatively clean quarter.”
“IBM’s stronger CY22 rev outlook reflects improving execution and a constructive IT market backdrop, where SW/Services spend should remain resilient, even in a challenged macro. We’re incrementally more constructive after two consecutive Q’s of outperformance,” the analyst said in a client note.
BofA analyst Wamsi Mohan also raised the price target to $165.00 per share from $162.00 after the company delivered solid results and robust guidance.
“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. With the benefits of the Mainframe cycle yet to accrue in 2022/2023, we view the portfolio as defensive (outperforms in a difficult macro environment) and expect sustained revenue growth beyond 2022. Reiterate Buy,” Mohan added in a note.
IBM stock price closed at $129.15 yesterday.
By Senad Karaahmetovic
