Fly Intel: What to watch in IBM's earnings report
IBM (IBM) is scheduled to report results of its fiscal first quarter after the market close on April 16, with a conference call scheduled for 5:00 pm ET. What to watch for: 1. FY19 CONSENSUS UP A TICK: Along with its last report, IBM guided for fiscal 2019 operating earnings per share of "at least" $13.90. At the time, analysts were expecting the company to report FY19 EPS of $13.84, but that consensus figure has since risen to $13.91. In addition, IBM guided for FY19 free cash flow of about $12B, compared to the $11.9B it reported in FY18. 2. BLOCKCHAIN ECOSYSTEM: In late January, Aetna (CVS), Anthem (ANTM), Health Care Service Corporation, PNC Bank (PNC) and IBM announced a new collaboration to design and create a network using blockchain technology to "improve transparency and interoperability in the healthcare industry." The companies said that the goal of the collaboration is to create an inclusive blockchain network that can benefit multiple members of the healthcare ecosystem in a highly secure, shared environment. The members involved plan to add more partners to the network in the future, including other health organizations, healthcare providers, startups, and technology companies, they said. 3. JEDI CONTRACT: Last week, Reuters reported that U.S. Defense Department spokeswoman Elissa Smith confirmed that Amazon (AMZN) and Microsoft (MSFT) had been picked as the final bidders for the Joint Enterprise Defense Infrastructure Cloud contract that may be valued around $10B. The selection leaves out Oracle (ORCL) and IBM, who had previously been viewed as potential bidders. 4. CREDIT SUISSE NOTE: Last Thursday, Credit Suisse analyst Matt Cabral initiated coverage of IBM with an Outperform rating and a price target of $173. In a research note to investors, the analyst cited the impact of the company's pending Red Hat (RHT) takeover generating synergies while bringing together the industry expertise and incumbency to "help customers move to hybrid." Cabral also noted that while IBM has sustainable free cash flow of roughly $12B excluding Red Hat, he anticipates the deal will be cash flow accretive in the first year, becoming the company's "main driver of growth."