IBM: Here's What Analysts Are Saying Ahead Of Monday's Report

International Business Machines Corp. (NYSE: IBM) is scheduled to report its second quarter results after Monday's closing bell.

Estimize is expecting the company (based on 104 estimates) to earn $3.80 per share on revenue of $20.970 billion. This compares to the Wall Street consensus estimate calling for the company to also earn $3.79 per share but on revenue of $21.001 billion.

Here is a recap of what some of Wall Street's top analysts commented on IBM.

Morningstar: IBM Holds A ‘Defensible' Position

Peter Wahlstrom commented in a note in late April that IBM holds a "defensible" position across its enterprise software, IT services, and hardware segments. The analyst added that the combination of these segments provides the company with a "unique ability" to develop and deliver solutions to key customers and that this ability is "key to the company's wide economic moat."

Wahlstrom also noted the company has experienced its share of "challenges" over the past 10 years, but its underlying profitability has "steadily improved" due to cost reductions and a shift toward software and higher-value services. Looking forward, the company's new initiatives (such as Watson and the Internet of Things unit) should drive revenue higher while offsetting declining profits in its core and legacy businesses.

Bottom line, IBM has an "entrenched customer relationship" along with a "solid" development pipeline which may "protect" the company's competitive advantages.

Janney: Return To Growth ‘Necessary' Before Multiple Expansion

Joseph Foresi commented in a note on June 9 that shares of IBM can only experience multiple expansion after the company returns to growth.

According to Foresi, investors are "getting closer to the bottom" with each passing quarter, but the timing of the bottom remains uncertain. The analyst suggested that "maybe" the bottom would occur at the end of 2015.

RBC: ‘All You Need To Know'

Amit Daryanani discussed IBM's second quarter print in a note on July 2.

Daryanani is expecting IBM to earn $3.77 per share in the quarter on revenue of $21.0 billion. The analyst noted that since the euro moved from 1.07 to around 1.12 (since April's quarterly print) the company likely received a $200 million increment revenue benefit.

Daryanani did note several negative headwinds that may have impacted the bottom line, including a "muted" IT spending, continued software weakness among peers, and "underwhelming" performance from hardware competitors.

The analyst also pointed out that IBM has "executed well" in its Strategic Imperatives, however the company's newer products contribute to cannibalization of its legacy business and generally have lower than corporate margins.

Credit Suisse: Growth ‘Still Elusive'

Kulbinder Garcha previewed IBM's results in a note on July 14.

According to Garcha, IBM is expected to report an earnings per share of $3.71 on revenue of $21.1 billion in the second quarter.

The company faces four fundamental concerns: 1) a "weak" order book and "shrinking" industry-wide deal sizes, 2) the cloud may ultimately be margin dilutive for the company, 3) restructuring efforts are becoming "less effective;" and 4) evidence exists and points to "significant" internal turmoil and underinvestment.

Looking forward, Garcha stated that IBM continues to face a "painful multi-year process" that will result in a "prolonged" period of underperformance.

UBS: Software Still ‘At Risk'

Steven Milunovich previewed IBM's results in a note on July 14.

According to Milunovich, IBM will report in-line results in its second quarter print. The analyst noted that the company "avoided major misses" the last two quarters and he is expecting "more of the same" for the second quarter and the rest of the year.

Milunovich stated that IBM should avoid most of the hardware "pitfalls" that its competitors went through, but the company's software results are still expected to be "weak." As such, the company should consider "shrinking" its services business through divestitures to reduce its legacy exposure while boosting the strategic imperative percent and increase the probability of future growth.

Without structural changes, IBM is considered to be in a "multi-year turnaround" with "more pain possible."