IBM stocks climb of its third-quarter earnings report set for October 23rd, IBM (NYSE: IBM) has received optimistic price target upgrades from Goldman Sachs and Bank of America. These revisions reflect growing confidence in the company’s performance and future prospects.
IBM Stocks Climb
Goldman Sachs analysts have raised their price target on IBM from $220 to $250, maintaining a Buy rating on the stock. Bank of America has also set its price target at $250, indicating a bullish outlook for the tech giant.
Positive Trends in Software Segment
Bank of America analysts expect strength in IBM’s software segment, particularly driven by improvements in transaction processing and Red Hat services. They project revenue and earnings per share (EPS) for the third quarter to be approximately $14.9 billion and $2.22, respectively. These estimates closely align with Street consensus estimates of $15 billion and $2.21.
Consulting Business Outlook
Although consulting revenues are anticipated to remain flat year-over-year due to a pullback in discretionary projects, IBM’s consulting division is expected to benefit from backlog conversions and opportunities in generative AI.
Year-to-Date Performance
IBM shares have risen about 40% year-to-date, outpacing the 20% increase in the S&P 500. This surge has generated optimism surrounding the company’s turnaround efforts, particularly in revenue growth and improvements in free cash flow.
Anticipated Mainframe Cycle
Bank of America highlights the anticipated new mainframe cycle in 2025 as a contributing factor to the positive sentiment surrounding IBM. They state, “Reiterate Buy on continued turnaround (revenue, free cash flow improvement), defensive portfolio, attractive dividend.”
Conclusion
As IBM navigates challenges in the consulting space while capitalizing on opportunities in software and AI, analysts believe the company is well-positioned for solid performance. The recent price target increases from leading analysts reflect confidence in IBM’s strategy and future growth potential.
Trade Anytime, Anywhere with EFI Markets
EFI Markets is a trusted stock market trading platform, making trading easy with its efficient interface and a variety of tools and features.