Wall Street analysts have been lowering their expectations for the first quarter quite a bit in the last three months. Three months ago, analysts still expected IBM (NYSE:IBM) to report EPS of $2.56 for the upcoming quarter. Now, these expectations have been lowered to a consensus of $2.34. This might sound like a negative development for the company's prospects, but I believe that it simply creates an environment where IBM can perform better than expected. The earnings release is expected on the 18th of April.
Wall Street's history
While management has provided a clear (Non-GAAP) EPS guidance for the full fiscal year, there are no specifics for what to expect in the first quarter. For the full fiscal year, IBM expects to report Non-GAAP EPS of $13.80 compared to last year's $13.59. Despite management expecting an EPS improvement yoy, Wall Street believes that the first quarter will not be part of this improvement. Last year, IBM reported an EPS of $2.35 in the first quarter. Now, Wall Street believes that EPS will be down once cent to $2.34. Of course this would not be a disaster, but it would be odd nonetheless. This seems less odd though when we consider analysts' previous performance when it comes to predicting IBM's EPS:
