IBM Share Price Forecast December 2021 – Time to Buy IBM?
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Shares of American multinational technology IBM (NYSE: IBM) are in the green today after closing at $130.63 on December 23rd (19:59 EST). IBM recently completed spinning off portions of its legacy businesses. The new publicly traded company called Kyndryl Holdings will concentrate on parts of IBM’s business centred around cloud computing and artificial intelligence technologies. After the separation, many investors are wondering whether it’s the right time to invest in IBM.
IBM – Technical Analysis
According to the financial statement released by IBM, the market cap of the company is at $116.36 billion with total assets worth $144.21 billion. Revenue for 2020 was at $73.62 billion with a profit margin of 7.59% compared to $77.15 billion in 2019.
Oscillators for IBM such as Relative Strength Index (14)(72.93), Stochastic %K (14, 3, 3)(97.99), Commodity Channel Index (20)(142.35), Average Directional Index (14)(27.08) and Awesome Oscillator(6.81) are neutral. Moving averages such as Exponential Moving Average (10)(126.76), Simple Moving Average (10)(126.33), Exponential Moving Average (20)(124.45), Simple Moving Average (20)(122.77) and Exponential Moving Average (30)(123.76) are indicating a buy action.
68% of all retail investor accounts lose money when trading CFDs with this provider.
Recent Developments
In recent years, IBM has succeeded in the global business services division in addition to its cloud and cognitive software segment. The segment contributed $4.4 billion to Q3’s revenue growth which is a year-over-year increase of 11.6%. IBM’s consulting arm which helps clients implement Big Blue’s cloud solutions experienced a Q3 revenue increase of 17% year over year. After the Kyndryl separation, IBM’s Global business services, together with the cloud and cognitive software division, represents more than 70% of the company’s revenue.
The new company Kyndryl provides IT infrastructure services and has a large customer base of 4000 clients. Before the separation, Kyndryl accounted for $14.1 billion of IBM’s reported revenue of $54.1 billion for the first three quarters of 2021. But Kyndryl has also been a drag on IBM’s revenue growth as its 2021 net loss through three quarters increased to $1.6 billion from the prior year’s $1.3 billion. The company’s net income over this period was $3.4 billion.
IBM’s other sectors including the cloud computing businesses have seen steady revenue growth which experienced a 16% revenue increase. IBM’s cloud and cognitive software segment saw revenue growth of 2.5% year over year to reach $5.7 billion in Q3. Year-to-date revenue for this division has increased from $16.5 billion in 2020 to $17.2 billion this year.
Should You Buy IBM Shares?
Investors who have waited for the separation are in a beneficial position. The company provides a dividend yield of over 5% as of this writing, while Kyndryl currently offers no dividend. It has also produced over $10 billion in free cash flow annually for over a decade. IBM has retained the majority of its capability for generating free cash flow despite the revenue lost with Kyndryl’s departure. The company has put forward an estimate of capability for generating free cash flow despite the revenue lost with Kyndryl’s departure to reach $35 billion.
IBM has become a compelling opportunity for investors after Kyndryl’s separation. Using its hybrid cloud strategy, it has successfully competed with some of the bigger rivals in this industry. Similar to that of Amazon, IBM’s financial services combine the low cost of a public cloud solution with the private cloud businesses, such as banks. Thus IBM is a good company to invest in right now because of its consistent ability to generate free cash flow, a hefty dividend, combined with forecasted revenue growth for the next several years.
Buy IBM Stock at eToro from just $50 Now!
