International Business Machines Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

The quarterly results for International Business Machines Corporation (NYSE:IBM) were released last week, making it a good time to revisit its performance. The result was positive overall - although revenues of US$16b were in line with what the analysts predicted, International Business Machines surprised by delivering a statutory profit of US$1.96 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for International Business Machines

Taking into account the latest results, International Business Machines' 20 analysts currently expect revenues in 2024 to be US$63.2b, approximately in line with the last 12 months. Statutory per share are forecast to be US$9.05, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$63.1b and earnings per share (EPS) of US$8.65 in 2024. So the consensus seems to have become somewhat more optimistic on International Business Machines' earnings potential following these results.

There's been no major changes to the consensus price target of US$186, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values International Business Machines at US$222 per share, while the most bearish prices it at US$130. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that International Business Machines is forecast to grow faster in the future than it has in the past, with revenues expected to display 2.7% annualised growth until the end of 2024. If achieved, this would be a much better result than the 3.7% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 8.7% per year. So although International Business Machines' revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards International Business Machines following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that International Business Machines' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple International Business Machines analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for International Business Machines that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com