IBM: Profit margin guidance is bright, but growth is slow and valuations are high, so look elsewhere (HSBC)
Although IBM lowered its constant currency revenue guidance, it maintained guidance for a 100 basis point year-on-year increase in profit margins.
Although IBM lowered its constant currency revenue guidance, it maintained guidance for a 100 basis point year-on-year increase in profit margins. Accordingly, HSBC slightly raised its EPS forecast for the next few years. However, given that IBM's expected profit growth rate is significantly lower than the industry median and the stock price is relatively high, analysts believe that higher value investment opportunities can be found elsewhere. One-sentence conclusion: Although IBM's profit margin story sounds good, it cannot conceal the nature of its weak revenue growth. At the current valuation level, its price/performance ratio is far inferior to other technology companies. Positive/negative: negative for IBM (IBM.US). The market may have expected profit margin improvement, but has insufficient understanding of the company's overall low growth and valuation premium structural issues. Catalyst: The next quarter's financial report will verify whether revenue growth can reach an inflection point. Is the growth trend accelerating for Red Hat and Consulting? Can the company's quantum computing or WatsonX platform in the AI field bring revenue contribution beyond expectations?