International Business Machines (IBM) is expected to post “solid” Q3 results amid continued strength in generative artificial intelligence consulting as well as free cash flow performance, RBC Capital Markets said Thursday.
The technology giant is scheduled to report Q3 results Oct. 23. RBC expects adjusted earnings of $2.24 per share on revenue of about $15.08 billion.
“Peer results would suggest continued strength in consulting, while software traction likely remains the larger catalyst for sentiment improvement,” RBC analysts, including Matthew Swanson, said in a note to clients.
“We continue to look for greater software traction, particularly from Red Hat, which management expects to reaccelerate in the 2H, as 1H strength was largely driven by better-than-expected infrastructure performance late in the refresh cycle as well as GenAI supporting consulting, while ‘discretionary spend’ saw headwinds,” the analysts said.
RBC raised its price target on the IBM stock to $250 from $211 while maintaining its outperform rating.