IBM (IBM) will likely provide a bullish update at its Investor Day event in early February, overcoming foreign-currency headwinds and other challenges early in 2025, paving way for a strong year, analysts at BofA Securities said Thursday.
The analysts said while IBM’s Q4 results, due out Jan. 29, may narrowly lag consensus estimates, its performance should improve during 2025, supported by 7% year-over-year growth for its software segment and a rebound for its consulting and infrastructure divisions during H2 2025.
IBM’s consulting business likely was hampered by a pullback in discretionary spending late in 2024, according to BofA analysts, who are forecasting a 2% decline in Q4 revenue from the segment and a 1% drop during Q1 2025. They expect a turn-around by mid-year, bolstered by a backlog of conversions for generative artificial intelligence, potential M&A and a recovery in discretionary spending.
Infrastructure revenue similarly will see an H2 rebound, with a 6% year-over-year increase in 2025 as customers begin to replace existing mainframe systems with the new Z17 architecture.
BofA analysts increased their price objective for IBM to $260 from $250 and reiterated their buy rating.