Is IBM the Corporate Version of Apple?
With a trifecta of revenue streams, one analyst on Tuesday called IBM the corporate version of Apple.
“When you look at the IBM business model, they’re about packaging hardware, software and services and making it work together. They do it on the enterprise side, very similar to what Apple does on the consumer side,” Sterne Agee technology analyst Shaw Wu said on “Fast Money.”
Wu initiated a “buy” rating on the stock and a price target of $230 per share, which he said was based on a 13½ multiple of calendar 2013 EPS at $17.
IBM shares closed at $193.35 per share, up 0.3 percent.
Although 58 percent of IBM’s revenue comes from outside the United States, Wu sounded bullish on the company’s prospects abroad.
“Asia is slowing down but still growing faster than rest of the world,” he said. “We actually see Asia as a whole as a high-growth market.”
Wu said he preferred IBM, which has expanded from hardware to software, over a company like Oracle, which has moved in the opposite direction.
But from Wu’s perspective, it was a focus on customer service that set IBM apart from its competitors, much like Apple.
“IBM is one of the few companies, in our view, that really understands that for the enterprise space,” he said.
Joe Terranova of Virtus Investment Partners said he has been long IBM for two years and would trim his position were the stock to fall below $180 per share.
“I think if you’re in tech, IBM is the place to be,” Steve Cortes of Veracruz said.
Patty Edwards of Trutina Financial was pickier.
“It’s not revenue-driven earnings growth. I’ve got a problem with that. I’d rather be in something like Qualcomm,” she said.
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Trader disclosure: On Feb. 7, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova is long VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long IBM; Terranova is long EMC; Terranova is long AXP; Terranova is long AAPL; Terranova is long TRLG; Terranova is long JOY; Terranova is long SNDK; Terranova is long MCD; Terranova is long MA; Terranova is long OXY; Terranova is long SU; Terranova is long CNX; Terranova is long CSCO; Terranova is long SBUX; Terranova is long FXE; Terranova is long TBT; Cortes is long MO; Cortes is long SO; Cortes is long Treasuries; Cortes is short SINA; Cortes is short BAC; Cortes is short Silver;
For Patty Edwards
Trutina Financial is long AAPL
Trutina Financial is long GLD
Trutina Financial is long INTC
Trutina Financial is long CME
Trutina Financial is long QCOM
Trutina Financial is long DIS
Trutina Financial is long YUM
For Andy Busch
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For Jason Bazinet
Gregory Hertz, CFA, CPA, Associate, holds a long position in the securities of Walt Disney Co.
A member of the household of Tobias M Levkovich, Strategist, holds a long position in the securities of Walt Disney Co.
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For Shaw Wu
Sterne Agee makes a market in shares of (AAPL), (CSCO), (DELL), (EMC), (HPQ), (IBM), INTC)
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