Shares in IBM rose 2.5 percent in afternoon trade, leading the market higher ahead of the company's quarterly results, as investors bet on the possibility of an improved full-year forecast.

Analysts, on average, expect International Business Machines Corp to report later on Thursday a 12 percent drop in second-quarter revenue to $23.5 billion, according to Reuters Estimates.

But earnings per share are expected to rise slightly to $2.01, helped by a shift to more profitable businesses and by cost cuts. as well as by a lower number of shares.

William Lefkowitz, options strategist at vFinance Investments, said the whisper number was much higher, around $2.20 per share to $2.30 per share.

Analysts also said they were focusing on the possibility of a higher outlook from IBM. The company's previous outlook was for full-year earnings of at least $9.20 per share -- a target many said looked easily achievable due to a stabilizing economy.

Bernstein Research analyst Toni Sacconaghi said IBM may raise its outlook to reflect a solid first half of the year, perhaps to 'at least $9.30'.

IBM has fared better than many other technology companies, helped in part by its growing focus on profitable software and services like outsourcing and technology support.

EPS is likely to see upward revisions as the year progresses, and the strong defensiveness of IBM's portfolio makes it attractive in an uncertain spending environment, Sacconaghi said in a research report earlier this week.

IBM shares rose $2.74, or 2.6 percent, to $109.96 in afternoon trade.

(Reporting by Ritsuko Ando, with additional reporting by Doris Frankel in Chicago)

Ibm