-- International Business Machines' (IBM) Q1 earnings are likely to move higher, but unlikely to reignite the bull case as the quarterly beat won't boost full-year earnings or free cash flow guidance, Morgan Stanley said in a Tuesday research report.
The company could post a Q1 beat as channel checks indicate year-over-year software growth during the quarter, while consulting jobs postings tracker gained 14% sequentially, according to the note.
Morgan Stanley revises Q1 EPS estimate to $1.91 from $1.83 earlier on revenue of $16.2 billion from $15.8 billion. For Q2, it expects EPS of $3.03 on revenue of $17.9 billion, analysts wrote.
Artificial intelligence disruption risk exists at IBM, concentrated in data and automation, making it crucial that IBM shows full year estimate upside to overcome valuation pressure, according to the brokerage.
IBM is scheduled to report Q1 financial results on April 22.
The brokerage said it reiterated its equalweight rating on the stock and cut its price target to $215 per share from $247.
Price: $240.69, Change: $+2.87, Percent Change: +1.20%