Q4 Preview: IBM (IBM) Needs Strong Growth Demonstration to Continue Momentum

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International Business Machines Corp. ( IBM ) is higher today, ahead of the company's fourth quarter earnings release, expected out after the market closes today. Shares are up0.9% today.

IBM is expected to report EPS of $4.08 with revs of $28.27 billion.

Shares of the company gained 8.7% through the quarter, to $146.76 at the end of December. The stock is 3.1% since the end of the quarter, and ended 2010 12.9% better.

Data from Bloomberg has 18 analysts with a Buy on IBM, 9 with a hold, and none suggesting to Sell. The analyst price target average is $155.50, with a high of $170 and low of $137.

Summary
During their third quarter report, IBM boosted their FY10 EPS outlook from $11.25 to $11.40. IBM shares also closed 3.36% lower following their Q310 earnings beat and increased guidance.

J.P. Morgan thinks "Hardware refreshes, increased focus on data warehousing, and growth recovery in software appear to be factored in shares of IBM. In our view, valuation may be range-bound in the near term until the services business can exhibit greater stability." JPM has an Overweight rating on the shares, which they've had since October 2008.

Janney is looking for an EPS of $4.05 coupled with revs of $28.29 billion. Janney is expecting a solid report from IBM, led by Systems & Technology and Software, with a notable showing from its Services segment.

Specifically, Janney is looking for 9.5% growth in S&T, driven by servers and storage units. In Software, 5% growth is estimates driven by "business analytics, storage management, and business integration with added help coming from acquisitions." Services are expected to grow at a 2% steady pace.

Janney is pegging 10% growth guidance for FY11, resulting in GAAP EPS of $12.67, operating margins growing 40 basis points to 19.6%, and $103.28 billion in revs. Janney has a Buy rating on the stock, with a fair value of $165 on the shares.

International Business Machines is expected to release their Q410 earnings on Tuesday, January 18, 2011, at approximately 4:00pm EST. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results withi0 n seconds of their release.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: IBM , WFC

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