IBM: From Boring to Soaring?
International Business Machines has been a boring stock for years, and is still well below its highs from early 2013. But that's been changing in the last month.
First came a strong earnings report on January 21. Profit and revenue both beat estimates, but the real story was strong growth in cloud computing. That suggested IBM is finally moving beyond its legacy mainframe business and into the 21st century.
The story got even bigger on January 30 when cloud chief Arvind Krishna became CEO of the entire company (replacing Ginni Rometty). IBM quickly ripped all the way to a new 52-week high and then paused to digest its gains.
A "Golden Cross" formed as it rested, with the 50-day simple moving average (SMA) rising above the 200-day SMA. IBM also held support near last year's peak around $150.
This gives buyers a potential risk-management zone below the February 18 low.
The other thing to remember is that IBM has much lower multiples than most other big IT and software companies. (A fraction of
Microsoft in terms of price/sales or price/earnings.) If it's truly staging a turnaround, analysts and investors could soon talk about the need for higher valuations.
First came a strong earnings report on January 21. Profit and revenue both beat estimates, but the real story was strong growth in cloud computing. That suggested IBM is finally moving beyond its legacy mainframe business and into the 21st century.
The story got even bigger on January 30 when cloud chief Arvind Krishna became CEO of the entire company (replacing Ginni Rometty). IBM quickly ripped all the way to a new 52-week high and then paused to digest its gains.
A "Golden Cross" formed as it rested, with the 50-day simple moving average (SMA) rising above the 200-day SMA. IBM also held support near last year's peak around $150.
This gives buyers a potential risk-management zone below the February 18 low.
The other thing to remember is that IBM has much lower multiples than most other big IT and software companies. (A fraction of
Microsoft in terms of price/sales or price/earnings.) If it's truly staging a turnaround, analysts and investors could soon talk about the need for higher valuations.
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