Stock of the week - IBM (21.04.2022)

12:57 PM 21 April 2022
  • IBM reported Q1 2022 results on Tuesday

  • Sales and profit lower than in Q1 2022

  • Results mixed compared to market's forecasts

  • Full-year guidance boosted

  • IBM sees small impact of withdrawal from Russia

  • Stock trades 3% year-to-date higher

International Business Machines Corporation, more widely known as IBM, was one of the first US tech companies to report earnings for the first quarter of 2022. However, IBM's release was overshadowed by a release from Netflix, also on Tuesday, that triggered large moves on the markets. Nevertheless, as a mature, established and dividend-paying stock, IBM may prove to be a nice addition to the tech portfolio. Let's take a look at recent financials from the company. 

Mixed Q1 2022 results

Start investing today or test a free demo

Open real account TRY DEMO Download mobile app Download mobile app

IBM reported financial results for Q1 2022 on Tuesday after the close of the Wall Street session. Sales generated by the company in the January-March 2022 period turned out to be better than expected with total revenue coming in 2.5% above median estimate. Results were also better on a year-over-year basis with total revenue increasing 8% YoY. Solid sales were driven primarily by software and consulting revenue while infrastructure revenue dropped on an annual basis. On the other hand, most earnings measures missed market expectations but were also higher year-over-year.

  • Total revenue: $14.2 billion vs $13.85 billion expected

  • Software revenue: $5.77 billion (+12.3% YoY)

  • Consulting revenue: $4.83 billion (+13.3% YoY)

  • Infrastructure revenue: $3.2 billion (-2.3% YoY)

  • EPS: $1.40 vs $1.41 expected

  • Net Income: $1.27 billion vs $1.31 billion expected

  • EBITDA: $2.62 billion vs $2.94 billion expected

Full-year guidance boosted

Company continues to see strong growth across most business segments. While sales in the Infrastructure unit were year-over-year lower in Q1 2022, it is not seen as a reason for concern. IBM is expected to premiere its new next-generation mainframe computer later into the year and it is believed that lower spending in Infrastructure is related to clients waiting for a new product from the company. Outlook for the company's other business units, especially cloud business, is promising. IBM expects that 51% of all IT spending will be made into public cloud by 2025, up from around 41% this year. This means that the company expects demand for cloud services, including its own cloud services, to increase significantly in the coming years. IBM even decided to boost full-year sales guidance for 2022 - company now expects sales growth to be at the high-end of a "mid-single digit range" up from a previous guidance that called for growth to be in  "mid-single digit range".

Small impact of withdrawal from Russia

Unsurprisingly, mentions of the ongoing Russia-Ukraine war and its implications were made in the commentary to earnings release. IBM decided to withdraw from Russia at the beginning of March. Company said that it does not expect a major negative impact from the decision to exit the Russian market as Russia accounted for just 0.5% of its global sales and 2.0% of global profits. As the company becomes more and more oriented towards Software, impact of supply chain disruptions on the company is also likely to be minor. However, consequences of Russia-Ukraine war and sanctions levied on Russia in the aftermath of its invasion may have a negative impact on the European economy. Slowdown in Europe could have a negative impact on IBM's business as the continent accounts for 30% of the company's sales. Nevertheless, the company's adjusted forecasts do not assume an economic slowdown in Europe this year.

A look at the chart

IBM's quarterly earnings report was well received by investors - company's stock rallied around 7% on Wednesday during the first post-earnings trading session. As a result stock has fully erased a year-to-date loss and finished Wednesday's trading around 3% higher compared to end-2021 levels. Situation looks even more interesting when we take a look at the chart. 

Share price of IBM leaped higher yesterday and managed to break above a key resistance zone ranging above $132 handle. This zone is marked with previous price reactions, 61.8% retracement of the pandemic drop as well as downward trendline. A break above the trendline gave some hope that the stock may snap a half year long downward move. Stock finished yesterday's trading slightly above $138 handle, more or less on the level of local highs from early-January and early-February 2022.

Source: xStation5

Share:
Back
Xtb logo

Join over 1 000 000 XTB Group Clients from around the world

The financial instruments we offer, especially CFDs, can be highly risky. Fractional Shares (FS) is an acquired from XTB fiduciary right to fractional parts of stocks and ETFs. FS are not a separate financial instrument. The limited corporate rights are associated with FS.
This page was not created for investors residing in Brazil. This brokerage is not authorized by the Comissão de Valores Mobiliários (CVM) or the Brazilian Central Bank (BCB). The content of this page should not be characterized as an investment offer in Brazil or for investors residing in that country.
Losses can exceed deposits

We use cookies

By clicking “Accept All”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

This group contains cookies that are necessary for our websites to work. They take part in functionalities like language preferences, traffic distribution or keeping user session. They cannot be disabled.

Cookie name
Description
SERVERID
userBranchSymbol cc 10 October 2024
test_cookie cc 25 January 2024
adobe_unique_id cc 9 October 2025
__hssc cc 9 October 2024
SESSID cc 2 March 2024
__cf_bm cc 9 October 2024
intercom-id-iojaybix cc 6 July 2025
intercom-session-iojaybix cc 16 October 2024
xtbCookiesSettings cc 9 October 2025
TS5b68a4e1027
countryIsoCode
xtbLanguageSettings cc 9 October 2025
userPreviousBranchSymbol cc 9 October 2025
TS5b68a4e1027
intercom-device-id-iojaybix cc 6 July 2025
__cf_bm cc 9 October 2024
__cfruid
__cfruid
__cf_bm cc 9 October 2024
__cf_bm cc 9 October 2024
_cfuvid
adobe_unique_id cc 9 October 2025
_cfuvid
TS5b68a4e1027
xtbCookiesSettings cc 9 October 2025
SERVERID
TS5b68a4e1027
__hssc cc 9 October 2024
test_cookie cc 1 March 2024
__cf_bm cc 9 October 2024
_cfuvid
_cfuvid
__cf_bm cc 9 October 2024
__cf_bm cc 9 October 2024

We use tools that let us analyze the usage of our page. Such data lets us improve the user experience of our web service.

Cookie name
Description
_gid cc 9 September 2022
_gat_UA-98728395-1 cc 8 September 2022
_gat_UA-121192761-1 cc 8 September 2022
_gcl_au cc 7 January 2025
_ga_CBPL72L2EC cc 9 October 2026
_ga cc 9 October 2026
__hstc cc 7 April 2025
__hssrc
_vwo_uuid_v2 cc 10 October 2025
_ga_TC79BEJ20L cc 9 October 2026
_vwo_uuid cc 9 October 2025
_vwo_ds cc 8 November 2024
_vwo_sn cc 9 October 2024
_vis_opt_s cc 17 January 2025
_vis_opt_test_cookie
af_id cc 23 February 2025
afUserId cc 25 January 2026
af_id cc 24 January 2026
AF_SYNC cc 1 February 2024
_ga cc 9 October 2026
_gid cc 10 October 2024
_ga_CBPL72L2EC cc 9 October 2026
__hstc cc 7 April 2025
__hssrc
_ga_TC79BEJ20L cc 9 October 2026
_gcl_au cc 7 January 2025
AnalyticsSyncHistory cc 31 March 2024

This group of cookies is used to show you ads of topics that you are interested in. It also lets us monitor our marketing activities, it helps to measure the performance of our ads.

Cookie name
Description
MUID cc 3 November 2025
_omappvp cc 21 September 2035
_omappvs cc 9 October 2024
_uetsid cc 10 October 2024
_uetvid cc 3 November 2025
_fbp cc 7 January 2025
fr cc 7 December 2022
_ttp cc 3 November 2025
_tt_enable_cookie cc 3 November 2025
_ttp cc 3 November 2025
hubspotutk cc 7 April 2025
IDE cc 3 November 2025
YSC
VISITOR_INFO1_LIVE cc 7 April 2025
hubspotutk cc 7 April 2025
_omappvp cc 11 February 2035
_omappvs cc 1 March 2024
_uetsid cc 10 October 2024
_uetvid cc 3 November 2025
_ttp cc 3 November 2025
MUID cc 3 November 2025
_fbp cc 7 January 2025
_tt_enable_cookie cc 3 November 2025
_ttp cc 3 November 2025
li_sugr cc 30 May 2024
guest_id_marketing cc 9 October 2026
guest_id_ads cc 9 October 2026
guest_id cc 9 October 2026
muc_ads cc 9 October 2026
VISITOR_PRIVACY_METADATA cc 7 April 2025
MSPTC cc 3 November 2025
IDE cc 3 November 2025

Cookies from this group store your preferences you gave while using the site, so that they will already be here when you visit the page after some time.

Cookie name
Description
bcookie cc 9 October 2025
lidc cc 10 October 2024
UserMatchHistory cc 31 March 2024
bscookie cc 1 March 2025
li_gc cc 7 April 2025
bcookie cc 9 October 2025
li_gc cc 7 April 2025
lidc cc 10 October 2024
personalization_id cc 9 October 2026

This page uses cookies. Cookies are files stored in your browser and are used by most websites to help personalise your web experience. For more information see our Privacy Policy You can manage cookies by clicking "Settings". If you agree to our use of cookies, click "Accept all".

Change region and language
Country of residence
Language