International Business Machines Corporation (NYSE:IBM) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. International Business Machines reported US$16b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.96 beat expectations, being 9.0% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Taking into account the latest results, International Business Machines' 20 analysts currently expect revenues in 2024 to be US$63.2b, approximately in line with the last 12 months. Statutory per share are forecast to be US$9.05, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$63.1b and earnings per share (EPS) of US$8.66 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$186, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values International Business Machines at US$222 per share, while the most bearish prices it at US$130. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the International Business Machines' past performance and to peers in the same industry. One thing stands out from these estimates, which is that International Business Machines is forecast to grow faster in the future than it has in the past, with revenues expected to display 2.7% annualised growth until the end of 2024. If achieved, this would be a much better result than the 3.7% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 8.7% per year. Although International Business Machines' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards International Business Machines following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$186, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple International Business Machines analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for International Business Machines you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com