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IBM Gains 3.7% on Solid Q2 Results

Shares of global information technology firm International Business Machines (IBM) gained 3.7% in extended market hours on Monday after the company reported upbeat second-quarter 2021 results. The company offers software, middleware and hardware, and provides consulting and hosting services.

Adjusted earnings per share (EPS) increased 7% year-over-year to $2.33, beating the Street’s estimates of $2.29.

Quarterly revenue surged 3% year-over-year to $18.7 billion, surpassing analysts’ expectations of $18.29 billion. (See International Business Machines stock chart on TipRanks)

Cloud & Cognitive Software revenues rose 6.1% to $6.1 billion; revenues of Global Business Services segment totaled $4.3 billion, up 11.6%; and Global Technology Services revenues remained almost flat at $6.3 billion. Meanwhile, Systems revenues declined 7.3% to $1.7 billion, and revenues of Global Financing segment fell 8.6% to $242 million.

The Chairman and CEO of IBM, Arvind Krishna, said, “In the second quarter, client adoption of our hybrid cloud platform contributed to strong performance in Global Business Services and software and drove improved overall revenue growth. We remain on track to deliver full-year revenue growth and meet our cash flow objective.”

Last week, BMO Capital analyst Keith Bachman maintained a Hold rating on the stock but raised the price target from $150 to $155 (12.4% upside potential). In anticipation of the Q2 results, the analyst said, “There is modest upside tension to consensus revenue estimates of $18.3 billion.”

Overall, the stock has a Moderate Buy consensus based on 4 Buys, 3 Holds and 1 Sell. The average International Business Machines price target of $153 implies 11% upside potential. The company’s shares have gained 11.3% year-to-date.

According to TipRanks’ Smart Score rating system, IBM scores a 9 out of 10, suggesting that the stock is likely to outperform market averages.

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