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IBM's Cloud Selected by Movius to Provide Improved Services

Zacks Equity Research

International Business Machines Corporation IBM recently announced that its Public Cloud has been adopted by Movius to help its clients maintain communications continuity, while also meeting their regulatory and data protection requirements.

Per the terms of the deal, Movius will host its MultiLine application on IBM’s cloud, which will enable its clients to leverage IBM’s highly efficient and secure cloud services to protect sensitive data.

Notably, Movius is also a part of the IBM Public Cloud Ecosystem, an initiative that supports global system integrators (GSIs) and independent software vendors (ISVs) to aid customers digitally transform their workloads on IBM’s public cloud.

The Movius deal bodes well for the IBM due to MultiLine’s growing clout in the market, which was recently adopted by Cantor Fitzgerald Ireland to adhere with European Union regualtions. Moreover, it is expected to drive IBM’s cloud revenues in the near term.

International Business Machines Corporation Price and Consensus

International Business Machines Corporation Price and Consensus

International Business Machines Corporation price-consensus-chart | International Business Machines Corporation Quote

Robust Adoption to Drive Top-Line

IBM has been witnessing robust traction for its cloud services driven by the digital transformation taking place in the market.

Markedly, IBM’s services were selected by Broadridge to deliver to superior cloud-based solutions to its clients in the financial services industry to aid their digital transformation efforts.

Moreover, the company’s cloud services were adopted by Banco Sabadell to help facilitate its digital transformation requirements and support the strategic evolution of its business model with IBM cloud capabilities.

These client wins highlight the growing demand for IBM’s services, which are expected to drive top-line growth over the long haul.

Notably, IBM’s cloud and data platforms revenues increased 19% year over year in fourth-quarter 2019. The upside was driven by increased synergies from its acquisition of Red Hat and robust traction in its Cloud Paks suite.

Digital Transformation to Sustain Growth

IBM is expected to benefit from the rapid digital transformation taking place worldwide, triggered by coronavirus-led work-from-home wave.

Further, as companies shift away from legacy systems to scalable, enterprise-tuned platforms, there is immense scope for growth for software solution providers like IBM, as it is likely to boost the adoption of its analytics, cloud computing and security solutions across all industries.

However, stiff competition in the cloud computing market from the likes of Amazon Web Services AMZN and Microsoft MSFT Azure is a headwind.

Zacks Rank & Key Pick

IBM currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology sector is CyberOptics Corporation CYBE, which sports a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for CyberOptics is currently pegged at 12%.

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