Investing.com -- International Business Machines (NYSE:IBM) shares fell less than 1% after the second-quarter earnings report.
IBM shares are down more than 3% so far this year.
The company reported adjusted earnings of $2.18 a share on revenue of $15.48 billion. Analysts expected earnings of $2.02 a share on revenue of $15.58B. Revenue was down 0.4% from last year.
Software revenue rose 7%, while consulting revenue was up 4% and infrastructure revenue was down 15%.
IBM said it continues to expect full year 2023 constant currency revenue growth of 3% to 5%. At current foreign exchange rates, currency is expected to be neutral to revenue growth.
“Organizations are using our hybrid cloud and AI technology, and our consulting capabilities, to transform their operations," said CEO Arvind Krishna. "We continue to respond to the needs of our clients who seek trusted, enterprise AI solutions, and we are particularly excited about the response to the recently launched watsonx AI platform. Finally, we remain confident in our revenue and free cash flow growth expectations for the full year.”
UBS analysts reiterated a Sell rating and a $110 per share price target on IBM stock as they believe the reiterated guidance bears a risk.
For IBM "to hit the high-end, Software, ex OpenShift, has to grow 9% for the full year, a challenging bar in our view given the macro. Therefore we expect Consensus cc rev growth ests to settle around 1%-2% in Q3 and 3% in Q4, an improvement from flat in Q2 but at the low end of the CY23 implied guide," they said.
BofA analysts are more bullish as they lifted the price target by $8 to $160 per share on the Buy-rated stock.
"Reiterate Buy as we believe the turnaround at IBM (rev growth and FCF improvement) will continue. The company has a defensive portfolio, attractive dividend yield and an underappreciated AI portfolio."
(Additional reporting by Senad Karaahmetovic)