2024-04-25 23:53:26 ET
Summary
- We had previously highlighted the $190-200 area as the best sell zone for IBM.
- Revenues for IBM were soft in Q1-2024, with consulting growing at sub-inflation rates and clients pulling back.
- The Company's gross profit margin remains high, but it may not be sustainable in the face of increasing competition and a potential downturn.
Timing is everything in markets. When we last covered International business Machines Corporation ( IBM ) we looked at the results and the valuation and felt that this was almost there at the right level for investors to exit and not look back. Specifically, we said:
The only time when it was more expensive was when sales fell post COVID-19 and the stock rebounded back. At present, the odds of you making money here over the medium term look slim. The business is doing ok, but has long term structural headwinds. A push into the cloud will further challenge the stodgy business lines and AI will be margin compressing for IBM in the long term. With this euphoria in place on the results, we think the stock could run to the low $190's and perhaps even eclipse $200. We would use the opportunity to sell.
Read the full article on Seeking Alpha
For further details see:
IBM: Big Blue Sees Crimson As It Blows Money On HashiCorp