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Full interview: Top analyst Sacconaghi says IBM not as cheap as it appears

Bernstein analyst Toni Sacconaghi shared his views on IBM and its first quarter earnings on CNBC's "Halftime Report" Wednesday.

On IBM's valuation: "It appears inexpensive on price-to-earnings, but I think, as you all noted, it does have net debt, and its cash flow is structurally weaker than its earnings," Sacconaghi said. "We think the cash flow has benefited from a number of one-time items like a lower tax rate and some sales of intellectual property, so the real, sort of, multiple is closer 16 or 17 times cash flow, which is simply too expensive for a company whose top line is structurally declining."

On IBM's financial results: "This is a company that overall is descaling. Revenue has been declining about 2 or 3 percent per year if you take out acquisitions and currency," he said. "And when a company descales, it's very, very difficult not to see profit pressure and that's really what we're seeing."

Sacconaghi is a senior research analyst at Sanford C. Bernstein, noted for his coverage of tech stocks. His picks have a 21.2 percent one-year average return with a 70 percent success rate, according to analyst ranking service TipRanks, placing him in the top 3 percent of all Wall Street analysts covering any industry.

He also discusses:

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