IBM: F4Q-14 results to be under pressure with FY-15 outlook still uncertain; target lowered to $165 from $180 at Deutsche Bank; Hold (156.94 -2.16)
Deutsche Bank lowers their IBM tgt to $165 from $180 as they expect secular challenges to persist for co, pressuring F4Q-14 results and co's FY-15 outlook. Mgmt backed off of its $20 FY-15E EPS last Q, and will likely give guidance on the call which is substantially lower given challenges. Firm expects rev to continue to be under pressure from the shift to the cloud and the negative Y/Y drag from the sale of the Series x business to Lenovo, although a new mainframe cycle slightly mitigates these declines. FX headwinds are also expected to continue and lower China demand is hurting co more than its peers.