CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We lift our target by $20 to $216, utilizing a P/E of 21x our ’24 EPS view, near peers, but well above IBM’s three-year average (~14x) on growing interest in the company’s AI and hybrid cloud solutions and our view that investor sentiment is improving around the company following years of underperformance. We maintain our ’24 EPS view at $10.30 and raise our ’25 estimate by $0.12 to $11.02. IBM shares have experienced some multiple expansion in recent months. While we think shares will continue to justifiably trade below many higher-growth consulting peers given IBM’s high level of net debt ($43.1B exiting ’23, 86% of which is fixed with an average rate of 3%), we also believe the company still has some room to grow its multiple further as AI momentum accelerates and customers initiate more sizeable and transformative spending on AI projects (vs. current industry levels at around ~$1M per project). IBM is one of the leading providers, differentiated by its large consulting business and governance focus.