Will International Business Machines Corp (NYSE:IBM) End Its Losing Streak?

January 17, 2018, 13:12 pm ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

International Business Machines Corporation (NYSE:IBM) has been on a losing streak over the past few years having recorded 22 consecutive quarters of revenue declines. However, it is likely that the company has reached an inflection point where its fortunes are about to change for the better given that the company recorded a meager 0.4% revenue decline in Q3 2017.

Article Summary

IBM’s losing streak has lasted for the past 22 quarters.

The company is expected to report slight revenue growth for Q4 2017.

The company might rally higher this year if its current investments pay off.

Here’s the trading report on IBM.

IBM is largely expected to report a 1.4% increase in revenues over the fourth quarter by majority of the investment analysts’ community. The company’s stock ranks at position 8 on the list of the most shorted Dow stocks, which could work in its favor, if the Q4 report is as positive as expected.

Some of the factors that could work in the company’s favor include the fact that Warren Buffet’s Berkshire Hathaway Inc. (NYSE: BRK.A) is almost done liquidating its position in the company, which could boost investor sentiment towards the stock. A positive Q4 earnings report could also force many of the traders who have shorted IBM stock to cover their short positions, which could in turn cause the company’s stock price to rally higher.

Another reason why the stock might rally higher after the Q4 report is the fact that the company has been engaged in share buybacks for the past decade, which has reduced the total number of outstanding shares. The remaining shares are being cut at an annual rate of 3%, which means that a slight improvement in the company’s revenues is likely to translate into much higher revenues per share.

The company has also invested heavily in blockchain technology as well as providing cloud services and in developing products based artificial intelligence to serve businesses. These investments are likely to bear fruit in the next few years, which could translate into higher revenues and a rally in the company’s stock price.

In conclusion, it is not enough to know that a stock is likely to head higher, or lower this year; as an investor, it is important to time your entry and exit points accurately in order to minimize risk and maximize your profit potential.

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