Why Did International Business Machines Corporation (IBM) Investors Go Insane?

International Business Machines Corporation (IBM) will probably climb 22.82 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $200price as 12-month high target. This represents a whopping 64.22 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $150, which represents a return potential of 23.16 percent when compared to the closing price of the stock of $121.79 on Thursday, January 10. The lowest price target for the stock is $115 — slightly more than -5.58 percent from IBM’s current share price.

The stock is currently hovering around the first support level of $120.54. Below this, the next support is placed in the zone of $119.29. Till the time, the IBM stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 58.59 on daily chart, which may remain a cause for concern. If the price breaks below $119.29 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $122.45 mark may result into a pull-back move towards $123.11 level.

On 10th of January, International Business Machines Corporation (NYSE:IBM) shares ended higher after a volatile session. The shares accumulated 1.1 points or 0.91 percent at $121.79 with a light trade volume of 3.835 million shares. After opening the session at $120.08, the shares went as high as $121.86 and as low as $119.95, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $111 billion and now has 911.2 million shares outstanding. International Business Machines Corporation (IBM) stock has gained 0.54 percent of market value in 21 trading days.

IBM stock has a trailing 3-year beta of 1.09, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $12.25 a share in the trailing twelve months. The stock’s value has surged 7.14 percent year to date (YTD) against a decline of -25.66 percent in 12 month’s time. The company’s shares still trade -28.83 percent away from its 1-year high of $171.13 and 14.96 percent up from 52-week low of $105.94. The average consensus rating on the company is 2.7, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Shares of International Business Machines Corporation (IBM) are trading at a P/E ratio of 9.8 times earnings reported for the past 12 months. The industry IBM operates in has an average P/E of 22.12. Its P/E ratio went as low as 10.12X and as high as 13.39 over the 5-year span. Further, it is sporting a 1.38 on the Price-to-Sales ratio. Compare this with the industry average P/S of 534.69. 46.2 percent is the gross profit margin for International Business Machines Corporation and operating margin sits at 14.2 percent. Along with this, the net profit margin is 7.1 percent.

Let’s take a look at some insider activity at International Business Machines Corporation (NYSE:IBM) and see the pattern. The earliest insider trade took place on 11/02/2018. Rometty Virginia M gathered a total of 8.5 thousand shares of company at average share price of $117.51. The total for the purchase was set at $998.84 thousand. After this transaction, the Chairman, Pres. and CEO account balance stood at 251.9 thousand shares. The stock grew 3.64 percent since that insider purchase. On 11/01/2018, Swedish Joseph, Director, purchased 2 thousand shares at a price per share of $116.42. This added 232.84 thousand shares to the insider’s fortune and the stock saw a 4.61 percent rally in value since the news became public. This transaction left 3.26 thousand shares in the Director account.

On 11/01/2018, Director Waddell Frederick H performed a purchase transaction worth $249.73 thousand. This purchase at $115.99 each has added 2.15 thousand shares into the insider’s portfolio position. Meanwhile, shares have recorded 5 percent increase since the transaction was reported. The insider now is left with 2.76 thousand shares remaining in the account. Taurel Sidney, who performs the Director job, bought 4.31 thousand shares for $495.85 thousand. The acquisition occurred on 10/31/2018 was priced at $115.02 per share. The share price soared 5.89 percent since the reporting date. Taurel Sidney now left with a stake of 23.8 thousand IBM stock worth $2.9 million after the insider buying.