What changed
$IBM — Designs and sells computer hardware, software, and services.
🎯 Q1 FY26 | Rev $16B | EPS $1.91 vs $1.81 🟢
💡 Consensus expects IBM's legacy revenue to slowly decline while Red Hat and Consulting grow modestly. The Q1 beat (EPS $1.91 vs $1.81) and raised FCF guidance ($1B YoY increase) suggest the transformation is gaining traction faster than priced in.
🏢 Business Quality: 6/10 | Valuation: fair
📉 Reward/Risk: Upside 8% to $295 (next earnings beat) vs downside 12% to $240 (miss on FCF guidance). Ratio 0.67:1.
🔮 Catalyst: Next earnings (July 2026): FCF guidance update and Red Hat growth rate. Metric: FCF conversion >100% and Red Hat revenue growth >15%. Failure signal: FCF guidance cut or Red Hat deceleration.
💰 Entry: Current price $272.36 is near post-earnings highs. Ideal entry $255-$260 (5-7% pullback) for better risk/reward.
Also in play: $ACN $ORCL $MSFT $CSCO $HPE $TSM