CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We raise our price target by $19 to $196, utilizing a P/E of 19x our ’24 EPS estimate, near peers and above IBM’s 3-year historical average (~14x) and our previous multiple (17.5x) as IBM continues to execute its growth and cost-cutting initiatives despite a tough macro. We raise our ’24 EPS view by $0.20 to $10.30 and raise our ’25 view by $0.38 to $10.90. IBM prints Q4 sales of $17.4B and EPS of $3.87, both slightly above consensus ($17.3B/$3.78). Quarterly sales grew 4.1% Y/Y, highlighted by strong growth in Consulting (up 5.8%), which also exhibited an impressive quarterly book-to-bill of 1.30 (and 1.15 for the full year). We think IBM’s unique ability to provide consulting along with top-notch proprietary hardware and software solutions (including watsonx for AI) is working in today’s increasingly complex environment, helping warrant multiple expansion. IBM has also cut costs by a significant amount, and we are impressed by the increase of its YE ’24 cost reduction target from $2B to $3B.