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IBM adds to losses as Street digests Q3 report

  • Evercore has downgraded IBM (NYSE:IBM -4.2%) to Hold a day after the company missed Q3 estimates, offered light full-year guidance, pulled its 2015 EPS target, and reported a 7% Y/Y services backlog drop. Not surprisingly, many other firms have cut their targets.
  • Credit Suisse's Kulbinder Garcha, bearish for some time, has slashed his target by $35 to $125. Though calling the resetting of expectations a positive and noting a mainframe upgrade cycle is on the way, Garcha argues IBM "continues to face multiple issues to revenue growth including high mainframe exposure, negative cloud impact and weak IT spending."
  • BofA/Merrill's Wamsi Mohan tries to find a silver lining. "In our opinion, the reset in expectations provides an opportunity for IBM to redefine the broader strategy without the rigidity of near term targets. We expect a detailed business strategy update at the Analyst day in 2015 but near term headwinds will likely keep the stock range bound and we remain Neutral."
  • The WSJ observes IBM could lose its status as one of the S&P 500's 20 most valuable companies for the first time in history.
  • Yesterday's earnings coverage

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