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IBM Q2 On Tap: Drexel Expects Progress, Guggenheim Expects Little

International Business Machines (IBM) is scheduled to report Q2 earnings this coming Tuesday, July 18th, after market close, and the Street is tuning up its models for what to expect.

Street consensus for the June-ending three months is for $19.5 billion in revenue and $2.75 per share in earnings.

All eyes will be on the “strategic imperatives” business that includes cloud computing, among other things, while some may want to see signs of a what is expected to be a new mainframe upgrade cycle.

There’s some sharp disagreement about what kinds of “transformative” indications will be in Tuesday’s results.

For the bull case, Drexel Hamilton’s Brian White, who has a Buy rating on the stock, and a $200 price target, writes today that he’s “not expecting fireworks, just more signs of progress in this transition."

IBM’s transition to cloud computing has been “long and painful,” he notes, but the company will “emerge from this a much stronger IT organization."

Double-digit growth in strategic imperatives is crucial, he notes:

Given that IBM is transitioning its portfolio to more next generation technologies, we continue to monitor trends in the company's strategic imperatives businesses as a barometer for the success of the company's transformation. During 1Q:17, IBM grew its strategic imperatives revenue by 13% (constant currency) to $7.8 billion and we believe the market would like to continue to see a...