IBM (IBM) is scheduled to report results of its fiscal fourth quarter after the market close on January 24, with a conference call scheduled for 5:00 pm ET. What to watch for:

1. GUIDANCE: Along with its last report, IBM guided for a Q4 effective tax rate in the high teens, adding that the Kyndryl separation would result in a loss of $3B of revenue in November and December, or 20c-25c per share. Meanwhile, analysts expect the company to report Q4 earnings per share of $3.14 on revenue of $15.98B.

2. UBS DOWNGRADE: Two weeks ago, UBS analyst David Vogt downgraded IBM to Sell from Neutral with a price target of $124, down from $136. Near-term risk to Q4 operating estimates and an "elevated valuation" leaves the shares "vulnerable" over the next 12 months, Vogt told investors in a research note. The analyst added at the time that IBM was trading at over three turns above its trailing three and five-year averages, indicating the market is underwriting management's mid-single-digit target "despite a history of execution issues." Further, he believes the shares are s also pricing in 2022 and 2023 earnings estimates that are 10% higher than his estimates.

3. M&A: IBM was very active in deals during the last quarter, starting in late October with its agreement to acquire McD Tech Labs from McDonald's (MCD) to "further accelerate the development and deployment of its Automated Order Taking - AOT - technology." The M&A continued a week later when IBM Security announced plans to acquire endpoint security solutions company ReaQta. Following the separation of is Kyndryl business in November, IBM also announced the purchase of SXiQ, an Australian digital transformation services company specializing in cloud applications, cloud platforms and cloud cybersecurity.

The deals continued with the start of the new year, as IBM in early January announced that it acquired Envizi, a data and analytics software provider for environmental performance management, for an undisclosed amounts. IBM also went the other way, however, as it signed an agreement last week to sell healthcare data and analytics assets that are currently part of the Watson Health business to Francisco Partners. The assets acquired by Francisco Partners include data sets and products, including Health Insights, MarketScan, Clinical Development, Social Program Management, Micromedex, and imaging software offerings. The news came a couple of weeks after Axios reported that IBM had renewed efforts to sell Watson Health and was looking to fetch more than $1B for the unit.