CNBC’s Jim Cramer advised investors on Thursday to exercise caution as they debate buying IBM stock after the company announced its third-quarter earnings.
“Even after IBM’s rally of nearly 5% today, the stock is still significantly down from where it traded just a few months ago. I’m optimistic…but keep in mind that going forward this is a ‘confidence but verify ‘ situation continues,” he said. .
IBM beat revenue and earnings estimates in its third-quarter results reported Wednesday and raised its revenue outlook. The business software and consulting firm said sales were up 6.5% year-over-year.
While the strong US dollar is a headwind for the company, which expects it to have 7% less annual revenue than it would otherwise have made, IBM still reiterated its earlier this year forecast of about $10 billion in free cash flow.
“All things considered, and while IBM still has a lot of room for improvement, this quarter was a big step forward for them, and it was a big win for the bulls,” Cramer said.
He added that the company’s spin-off of its managed infrastructure services business in Kyndryl in November 2021 looks set to pay off.
“Remember, IBM went through that whole Kyndryl spin-off to become a growth company again, and that’s what they are now — they have a growth in spades,” he said.
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