IBM Transformation Continues, Cantor's Brian White Reiterates Buy

In a report published Tuesday, Cantor Fitzgerald analyst Brian J. White reiterated a Buy rating and price target of $198 on International Business Machines Corp. IBM. The company reported robust 2Q15 results, as compared to its quarterly results over the last 12-18 months, while reiterating its EPS guidance for 2015.

Despite the skepticism regarding the company being able to achieve a turnaround and continuing negative sentiment on the stock, IBM's shares saw an almost 7 percent increase in price from the low seen two weeks ago, following the results announcement.

IBM's sales, revenue and EPS for Q2 beat the estimates, with the EPS benefiting from a lower tax rate. "We were encouraged by the performance of IBM's Services business with revenue upside, strong signings performance and constant currency backlog growth," White stated.

The company was also able to grow its strategic initiatives by over 20 percent year-on-year in Q2, while cloud revenue rose more than 50 percent during the quarter.

According to the Cantor Fitzgerald report, "[T]he company expects a more seasonal downtick in 3Q:15 than our estimates reflect but also a stronger EPS rebound in 4Q:15."

The revenue and EPS estimates for 2015 have been lowered from $83.9 billion to $83.0 billion and from $15.88 to $15.75, respectively.