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29.03.2021 10:58 AM
Analysis of INTERNATIONAL BUSINESS MACHINES CORPORATION's (IBM) stocks

INTERNATIONAL BUSINESS MACHINES CORPORATION (IBM) is a technology company operating in five segments: cloud and cognitive software, global business services, global technology services, and global financing.

  • The cloud and cognitive software solutions segment provides customers with integrated, secure cloud, data processing, and artificial intelligence (AI) solutions. The system includes three business areas: cognitive applications, cloud and data processing platforms, and transaction processing platforms.
  • The Global Business Services segment provides consulting, business process, and application management services.
  • IBM's Global Technology Services segment provides information technology (IT) infrastructure, and platform services. The systems segment provides infrastructure platforms to meet the requirements of multi-cloud and enterprise artificial intelligence workloads.
  • The Global Financing segment deals with financing, which is mainly carried out through IBM Credit LLC, as well as refinancing and remarketing.

The analysis of the company's shares shows good fundamental data. The company has a fair value above capitalization and attractive multipliers. The P/E ratio for the current year is 15.0x, which is significantly less than the average for the US market. The fair value multiplier for EV/Revenue is 2.19x. IBM pays an excellent dividend of 4.98% per annum. For each dollar invested, the investor receives $0.21 in the company's assets.

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The margin generated by the company is quite high and amounts to 16.7% for 2021, but the prospects for profit growth and increased sales are low. The company has a high debt burden of Leverage (Debt / EBITDA) 2.53x, which makes its shares vulnerable in the event of a market fall. IBM Asset Utilization Low ROA (Net Profit / Asset) 4.40

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IBM's strengths: The forecasts of analysts surveyed by Standard & Poor's for business development are very poor. This is either due to good visibility of the main activities, or due to accurate income reports. The company is one of the most profitable companies in the US market, with high dividend expectations.

IBM's weaknesses: The stock is close to its long-term resistance on the weekly time frame. Therefore, the growth potential may be limited. However, further bullish movement at the intersection of this resistance will be a positive signal. The stock is close to the main daily resistance at $131.65, which should be eliminated to get a new growth potential. According to Standard & Poor's forecast, the outlook for revenue growth in the coming fiscal years will be very low. The company demonstrates a fairly high level of debt in proportion to its EBITDA. Over the past few months, analysts have been revising down their revenue forecast. Over the past year, analysts have significantly revised down their earnings estimates.

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In the previous 4 weeks, the company's shares behaved positively, and the system gave a buy signal, but the resistance at 132 is confusing. In this regard, it would be nice to get the closing of the week, or even better, the month behind this level. If this condition is met, investors can buy IBM shares for up to 5% of the liquid capital and targets for 160 and 200. Traders should limit the amount of possible losses to 1% of the capital level. It is necessary to think about closing the position when the price falls below the level of 105. It is advisable to be careful and to follow the rules of money management.

Daniel Adler,
Analytical expert of InstaForex
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