After publishing a disappointing first-quarter earnings of 2013 (Sales down -5.1% and -4.9% below the consensus estimates), the IBM' share collapsed by more than 8% on 19 April. However, the fundamentals of the company remain strong, and we are now back to an interesting entry point.
The profitability is improving with a net margin of 15.9% in 2012 and 18.3% estimated in 2015. Moreover, the leverage ratio Debt/EBITDA is expected to decrease from 0.84x in 2012 to 0.66x in 2015.
Technically, the security is in a negative configuration in the short term as the downward slope of the 20-day moving average shows. Nevertheless, the stock seems in an oversold situation, near to its USD 186 support in weekly data, corresponding to a bullish trend line as well as the 100-week moving average. This level might stop the bearish trend in the short term.
Thanks to the technical pattern, active investors can take a long position above USD 186. The downside potential is limited and the timing seems perfect to benefit from a technical rebound.
The goals will be fixed at USD 215.8 in a first time. However, a bearish trend would regain the upper hand if the security crosses USD 186.
International Business Machines Corporation (IBM) is one of the world's leading computer services companies. Net sales break down by activity as follows:
- cognitive solutions and transaction processing software development (41.4%);
- IT services (31.6%): consulting (management of logistic chains, financial performance, CRM, human resources, etc.), application management, systems integration, cloud computing, hosting, technical support services, etc.;
- sale of IT infrastructure (25.3%): hybrid IT infrastructure solutions, microcomputers, servers, peripheral devices, networks, data storage equipment, etc.;
- financing of computer equipment (1%);
- other (0.7%).
Net sales are distributed geographically as follows: the United States (41.5%), Americas (9.8%), Europe/Middle East/Africa (29.7%), Japan (9%) and Asia/Pacific (10%).