International Business Machines: One Sick Stock

The stock that was the worst performer in the Dow Jones Industrial Average for the last two years may be setting investors up for another disappointing year in 2015.

So far this year, International Business Machines IBM shares have declined from its December 31 close ($160.44) to $154.58 or nearly 4 percent at the time of this article being written. This does not compare well with the S&P 500 decline of only two percent.

Related Link: IBM Shares Break Below 52 Week Lows

Will It Ever See $200 Again?

From a longer-term perspective, IBM is quite some distance from its March 2013 all time high ($215.90). While IBM is off by 40 percent over this time period, the S&P 500 Index has returned nearly 30 percent.

When IBM shares reached $150.50 in mid-December, it visited territory that has not been seen since January 2011, when the issues bottomed at $146.64. One has to wonder if the corresponding bounce to $163.00 was strictly a technical one after coming close to the psychological support level of $150.00.

Poor Fundamentals And Getting Worse

The fundamentals for the company are bad and getting worse. It plummeted in October when the company completely abandoned its 2015 earnings forecast. Obviously, the company's transition in leadership and the shift to cloud computing is not going smoothly.

Weaker-than expected software sales, lower productivity in services and customers abandoning data storage hardware in favor of the cloud are just a few problems that are plaguing the company. Despite cutting jobs and shedding its unprofitable chip unit, Globalfoundries Inc., Big Blue shares continue to be in a freefall since flirting with $200.00 in July 2014.

Related Link: Anne Marie Baiynd On How IBM Could Go Down To $152

No Help From Wall Street Analysts

Wall Street analysts have not exactly been ahead of the freight train barreling south, as they did not express caution ahead of its huge Q3 miss. While the Street was looking for a $4.32, EPS came in at $3.68. In addition, the company missed on revenue by nearly $1B ($22.40B vs, $23.37B).

The most recent move by the Street was an initiation of coverage by Standpoint Research, with a Buy recommendation and $198.00 price target. Since the October debacle, only Evercore Partners had downgraded the issue, moving from Buy to Hold and lowering its price target from $210.00 to $180.00 on October $180.00.

The Street high price target resides with Cantor Fitzgerald who maintains a Buy rating and $198.00 price target. The Street low price target can be found at Credit Suisse who maintains and underperform rating and $125.00 price target.