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

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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.

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