IBM (IBM) is scheduled to report results of its fiscal fourth quarter after the market close on January 21, with a conference call scheduled for 5:00 pm ET. What to watch for:
1. GUIDANCE: Along with its last report, IBM reiterated its fiscal 2019 adjusted earnings per share view of "at least" $12.80. At the time, analysts were expecting the company to report FY19 EPS of $12.81, but that view has since lowered slightly to $12.80. Meanwhile, analysts expect the company to report Q4 EPS of $4.68 on revenue of $21.64B.
2. MS DOWNGRADE: Earlier today, Morgan Stanley analyst Kathryn Huberty downgraded IBM to Equal Weight form Overweight and cut her price target to $155 from $170, noting tha thte firm's recent Chief Information Officer and Value Added Reseller surveys point to further deceleration in 2020 IT spending and channel checks suggest companies continue to digest excess IT capacity purchased in 2018. Huberty said she sees slowing hardware budget growth and rising memory prices pressuring earnings at enterprise hardware companies, though she lowered her estimates for NetApp (NTAP), HP Enterprise (HPE) and Pure Storage (PSTG). The analyst added that she is "incrementally" concerned about share loss and declines at core IBM.
3. EVERCORE DOWNGRADE: Meanwhile, Evercore ISI analyst Amit Daryanani last week downgraded IBM to In Line from Outperform and cut his price target on the shares to $145 from $160. Daryanani said at the time that he expects macro headwinds combined with a difficult 1H20 setup that warrants "incremental caution" especially given the current net leverage. The analyst added that while IBM continues to be an appealing asset in a Hybrid First era and thinks the more than 4% dividend yield will provide support, he said that "skewed" expectations for the December quarter and calendar year 2020 create downside risk to street estimates and keep the stock range-bound.
4. 'CLOUD HOPPER': The Wall Street Journal reported in late December that cyberattackers alleged to be working for China's intelligence services stole "volumes of intellectual property" from "scores of companies" over the past several years in a hack dubbed "Cloud Hopper' by the security researchers who first found evidence of it in 2016. At least a dozen cloud providers - including IBM, HP Enterprise and CGI Group (GIB) - were breached and The Journal's investigation found hundreds of companies that had relationships with those breached cloud providers, including Rio Tinto (RIO), Philips (PHG), American Airlines (AAL), Deutsche Bank (DB) , Allianz (AZSEY) and GlaxoSmithKline (GSK), the report stated.
5. 'QUANTUM SUPREMACY': Reuters reported in October that Alphabet's (GOOG, GOOGL) Google said achieved a milestone in computing research by utilizing a quantum computer to solve a complex problem in minutes that would take the currently most powerful supercomputer thousands of years to solve. The report noted at the time that Google was racing competitors such as IBM and Microsoft (MSFT) to be the first to commercialize this kind of technology.
Microsoft
+0.67 (+0.40%)
Alphabet
+4.38 (+0.30%)
HP Enterprise
-0.14 (-0.93%)
Alphabet
+4.15 (+0.28%)
NetApp
-1.14 (-1.83%)
IBM
+0.69 (+0.50%)
Pure Storage
-0.03 (-0.16%)