Shares of IBM IBM rose in early trading on Thursday, following the company’s strong fourth-quarter results.
The company’s positive results added to the excitement of the current earnings season. Here, we delve into key insights provided by analysts in response to the release.
BMO Capital Markets on IBM
Keith Bachman of BMO Capital Markets maintained a Market Perform rating while increasing the price target from $155 to $210.
Bachman highlighted IBM’s solid fourth-quarter performance, yet expressed concerns about Software, which remained “our biggest question mark on the stock,” he noted in a statement. Nonetheless, the company’s full-year free cash flows surpassed expectations, with a guidance of $12 billion for fiscal 2024, “exceeding both our and investor expectations,” he added.
“Moreover, IBM guided to the low end of its mid-single-digit growth model for FY24, which implies acceleration versus FY23,” Bachman further wrote.
Stifel On IBM
David Grossman, an analyst at Stifel, upheld a Buy rating while raising the price target from $183 to $190.
Grossman observed a 3.3% year-on-year revenue growth reported by IBM, with Software underperforming and infrastructure exceeding expectations. “PTI margins +110bp y/y reflecting cost actions (over half) and gross margin improvement (pricing, cost actions, mainframe mix),” he added.
The 2023 free cash flow figure of $11.2 billion surpassed guidance on lower capex and cash taxes, while the 2024 guidance was deemed “reasonable,” the analyst further stated.
Check out other analyst stock ratings.
RBC Capital Markets on IBM
Matthew Swanson, an analyst at RBC Capital Markets, reiterated an Outperform rating while increasing the price target from $179 to $200.
“IBM delivered a solid quarter with FCF coming in well above consensus despite consulting and software revenue being below consensus estimates,” Swanson wrote in a note. The full-year 2024 guidance was “also highlighted by FCF of ~$12B, well ahead of consensus, driven predominantly by adj-EBITDA growth,” he added.
“Management highlighted that the book of business around generative AI and watsonx had doubled from q/q,” the analyst stated.
BofA Securities on IBM
Wamsi Mohan of BofA Securities maintained a Buy rating while raising the price target from $170 to $200.
“Given the strong trajectory of cash flow, we now expect IBM can deliver close to $13bn FCF in F25,” Mohan said.
“F24 guidance implies the next mainframe launch in F25, which sets IBM up to see the next two years of strong revenue growth,” he added.
IBM Price Action: Shares of IBM had risen by 10.86% to $192.82 at the time of publication Thursday.
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