Big Blue Heads for $200 on Double Digit Revenue Growth

In its quarterly earning released on Monday, IBM (NYSE:IBM) reported revenues of $26.7 billion – up 12% from the same period last year. With IBM reporting its 4^th consecutive quarter of double digit revenue growth, its shares have marched higher since its announcement. IBM’s stock is up nearly 50% in the last year surpassing Microsoft (NASDAQ:MSFT) as the second largest technology company by market cap behind Apple (NASDAQ:AAPL). IBM’s primary competitors include HP (NYSE:HPQ), Dell (NASDAQ:DELL) and Oracle (NASDAQ:ORCL).

Based on IBM’s continued strong performance we have raised our Trefis price estimate for IBM’s stock to just about $200, which is 5-10% above the market price.

Revenue growth for IBM was driven by strong performance in growth markets as well as IBM’s initiatives like Business Analytics, Cloud and Smarter Planet. We wrote about its Business Analystics and Smarter Planet in a note titled 2 Growth Areas for IBM. Smarter Planet sales were up more than 50% driven by new initiatives while Cloud revenues were on track to double in 2011. Growth markets and Business Analytics also saw double digit growth that supported its growth.

Hardware & Software Drive Revenue Growth

IBM’s software and hardware (servers, storage, RSS & microelectronics OEM) segments’ revenues were up 17% each over the same period last year. Software revenue growth was driven by key branded middleware like WebSphere and information management. In hardware, servers revenue was up 20 percent, with strong performance in System z, Power, and System x servers.

We have also made updates to our IBM margin forecasts.

See our full analysis of IBM.