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TheStreet Open House

IBM Investor Briefing: What Wall Street's Saying

NEW YORK (TheStreet) -- IBM (IBM) holds its annual investor briefing in New York City on Wednesday. Shareholders are eager to find out about the tech giant's plans to juggle the often competing demands of its cloud computing and hardware businesses.

In an interview with The New York Times over the weekend, IBM CEO Virginia Rometty acknowledged that this is a "rocky time" for the tech giant, which is looking to grow its cloud business without causing severe impact to its vast installed base of hardware products.

>>Read More: IBM CEO Rometty Reaches for the Cloud

Revenue from IBM's Systems and Technology Group plunged 23% year over year during the company's recent first-quarter results, while revenue from the company's Software, Services and Global Financing businesses all grew.

Investors are aware of the challenges facing Big Blue. IBM shares, which gained 1.26% to $192.48 in Monday trading, have fallen 5.85% over the last 12 months.

In her interview with The New York Times, Rometty said that IBM is making progress as it pushes deeper into areas such as big data and cloud computing. At last year's investor briefing, IBM hiked its 2015 target for big data and analytics revenue to $20 billion from $16 billion. Back in 2010, IBM had set an initial goal of $10 billion by 2015.

Big data refers to the management of vast quantities of unstructured data, or information that is outside the realm of traditional databases. Examples include email messages, PowerPoint presentations, audio, video and social media information.

Last month IBM cranked up its big data efforts, unveiling new servers built around its Power Systems technology, opening up the specifications for its latest POWER8 processor and teaming with Google (GOOG) to build open servers.

Earlier this year, in her annual letter to shareholders, Rometty vowed to maintain the company's significant presence in hardware, just six weeks after clinching a $2.3 billion deal to sell the firm's low-end server business to Lenovo.

In her letter, Rometty described 2013 as a successful year for IBM, but acknowledged that "our performance did not meet our expectations." The CEO pointed, in particular, to the company's operating pre-tax income, which declined 8% year-over-year, and its overall revenue dip.

In the letter, Rometty outlined three strategic imperatives for IBM -- making markets by transforming industries and professions with data, remaking enterprise IT infrastructure for the cloud era, and enabling "systems of engagement" for enterprises.

Here's what Wall Street analysts are saying about IBM's investor event on Wednesday:

Bernstein Research Analyst Toni Sacconaghi - Market Perform, $180 Price Target

As in prior years, we expect IBM's Analyst Day to focus on the company's strategic direction and key growth and cost initiatives. We do not expect any changes to IBM's current roadmap, nor do we expect the company to provide financial guidance beyond 2015. While IBM's stock has historically outperformed following the analyst day, we don't expect any specific catalysts to come out of the meeting.

Deutsche Bank - Hold, $200 Price Target

Expect reiteration of $20+ in EPS by 2015. IBM is holding its Analyst Day on Wednesday, May 14 in New York. We expect IBM to reiterate its 2015 roadmap to EPS in excess of $20, but we believe it is unlikely that the company will introduce a new EPS plan beyond 2015. We also expect IBM to outline strategic initiatives to drive top-line growth, and believe the company will give an update to its capital-allocation priorities, tax rate and cash flow targets. With limited revenue growth, we expect IBM's shares to be range bound and view shares as fairly valued at current levels.

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