What’s Happening With IBM Stock?

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IBM: International Business Machines logo
IBM
International Business Machines

IBM stock (NYSE:IBM) has held up better than the broader technology pack this year, declining by just about 3% year-to-date, compared to the broader Nasdaq-100, which remains down by almost 11%. The stock has also risen by about 6% over the last month. There are a couple of factors that have helped IBM stock outperform this year. Firstly, IBM is growing once again after several years of revenue declines, following the spin-off of its low-margin information-technology services business. Over Q4 2021, the company posted stronger than expected revenue of $16.7 billion, up 6.5% versus last year and by over 8.6% adjusted for currency effects and spin-offs, marking IBM’s highest revenue expansion in almost a decade. The growth was driven by a strong performance of IBM’s hybrid cloud business, which grew by 16% year-over-year, and the consulting operations, which grew by around 13%. Separately, with monetary policy getting tighter and the U.S. Federal Reserve raising interest rates, investors have been moving out of high-multiple growth stocks toward value picks and this appears to be helping IBM stock, which trades at just about 13x forward earnings.

However, now that IBM stock has seen a rise of about 6% over the last month, will it continue its upward trajectory in the near term, or is a decline imminent? Going by historical performance, there is a slightly higher chance of a decline in IBM stock over the next monthOut of 336 instances in the last ten years that IBM stock saw a twenty-one-day rise of 6% or more, 153 of them resulted in IBM stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 153 out of 336, or only about a 46% chance of a rise in IBM stock over the coming month. See our analysis on IBM Chance of A Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last ten years’ data

  • After moving 0.06% or more over five days, the stock rose in the next five days on 50% of the occasions.
  • After moving 4% or more over ten days, the stock rose in the next ten days on 56% of the occasions.
  • After moving 6% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 46% of the occasions.
Relevant Articles
  1. Up 21% In The Last Six Months, Will IBM Stock See Further Gains Post Q4?
  2. IBM Stock Gains 10% Over The Last Month On Strong Earnings, AI Progress. What’s Next?
  3. With Stock Down 1% YTD, Will Lackluster IT Spending Impact IBM’s Q3 Results?
  4. How Will IBM Stock Trend Post Q2 Earnings?
  5. How Will IBM Stock Trend Post Q1 Earnings?
  6. Forecast Of The Day: IBM Infrastructure Revenues

We estimate  IBM valuation to be around $142 per share, about 10% ahead of the current market price.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

 Returns Mar 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 IBM Return 5% -4% -22%
 S&P 500 Return 1% -7% 98%
 Trefis MS Portfolio Return 2% -9% 259%

[1] Month-to-date and year-to-date as of 3/28/2022
[2] Cumulative total returns since the end of 2016

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