Market Update (NYSE:IBM): IBM Jumps 6%: Morgan Stanley Ups to Buy on Return to Growth in 2019

[at Barrons.com] – Shares of International Business Machines (IBM) are up $7.47, or 6%, at $133.57, after Morgan Stanley’s Katy Huberty this morning raised her rating on the shares to Overweight from Equal Weight, writing that the company’s made progress in moving its business to its so-called “strategic imperatives,” things that include analytics, Big Data and cloud computing. “We expect the valuation disconnect to correct with new disclosures (expected at IBM’s Feb 25th analyst day), stabilizing revenue trends this year (with acceleration in 2017+), and improving FCF (as early as 2H16).” Huberty has a chart up-front in her report on the projected return to growth: Revenue from the strategic imperatives now makes up 35% of total revenue, which Huberty thinks compares favorably to Microsoft’s (MSFT) 36% of revenue from cloud computing in 2015. Read more on this. International Business Machines Corporation (IBM) , valued at $128.51B, began trading this morning at $130.00. Looking at today’s trading action, the company’s one day range from $129.75 to $134.00 and has traded between $116.90 and $176.30 over the past year. Priced at 9.34x this year’s forecasted earnings, IBM shares are relatively expensive compared to the industry ’s 5.51x forward p/e ratio. And for dividend hunters, the company pays shareholders $5.20 per share annually in dividends, yielding 4.30%. According to a consensus of 19 analysts, the earnings estimate of $2.08 per share would be $0.83 worse than the year-ago quarter and a $0.87 sequential decrease. Furthermore, our analysis shows the full-year EPS estimate to be $13.50, which would be a $1.42 setback when compared to the last year’s annual results. The quarterly earnings estimate is based on a consensus revenue forecast of the current quarter of $18.24 Billion. If realized, that would be a 6.89% decrease over the year-ago quarter. More recently, JMP Securities Initiated IBM at Mkt Outperform (Nov 20, 2015). Previously, Cantor Fitzgerald Initiated IBM at to Hold. Investors should keep in mind is that the average price target is $132.15, which is 1.65% above where the stock opened this morning. See more in (NYSE:IBM) Similar Articles: Market Update (NYSE:IBM): IBM tries to bolster cloud growth with developer tools Company Update: International Business Machines Corporation (NYSE:IBM) – Chumbak Selects IBM Cloud to Accelerate Business Growth Market Update (NYSE:IBM): IBM’s Strategic Imperatives Continues to Report Growth in 3Q15