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Morningstar's International Business Machines Corp Stock Analysis

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IBM's Q1 Marks First Full Quarter With Kyndryl as Only a Customer; Shares Fairly Valued

Julie Bhusal Sharma Equity Analyst

Analyst Note

| Julie Bhusal Sharma |

IBM's first-quarter results missed our expectations on the bottom line. We had been slightly more optimistic on margin expansion given that the quarter was the first full quarter in which IBM's low-margin Kyndryl business had been spun off. Nonetheless, the quarter included bright spots like upped guidance and strength in consulting revenue, as digital transformation demand has seemingly no end in sight. All in all, we're maintaining our fair value estimate of $126 per share for the narrow-moat IT services provider, which leaves the company fairly valued. Shares are up nearly 2% upon results, which we believe to be a result of guidance.

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International Business Machines Corp's Company Profile

Business Description

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.

One New Orchard Road
Armonk, NY, 10504
T +1 914 499-1900
Sector Technology
Industry Information Technology Services
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type High Yield
Employees 307,600

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