Four-star UBS analyst David Vogt is going against the crowd when it comes to tech giant IBM (IBM). Indeed, in a recent update, UBS raised its price target on IBM from $170 to $195 but kept a Sell rating. Vogt noted that a weaker U.S. dollar and the launch of IBM’s next mainframe cycle (z17) could help boost second-quarter revenue. However, the firm warned that these positives might not be enough to offset mixed demand, especially in IBM’s Software and Consulting divisions. UBS also pointed out that spending cuts, particularly in government consulting projects, could hurt the company’s growth this quarter.
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This cautious view is in contrast to what other analysts said just last month. In fact, both Bank of America and Evercore ISI raised their price targets and maintained Buy ratings, thereby showing significantly more confidence in IBM’s long-term outlook. More specifically, Bank of America’s five-star analyst, Wamsi Mohan, increased his target from $290 to $320. He argued that IBM has moved past its old reputation as a “value trap” by shifting its focus to faster-growing software businesses and cutting back on slow, high-cost operations. He believes that these changes will lead to stronger revenue growth going forward.
Separately, Evercore ISI also sees a brighter future for IBM. Therefore, it raised its price target from $275 to $315. Five-star analyst Amit Daryanani expects IBM to grow revenue in the mid-to-high single-digit range and believes that the company could earn between $16 and $18 per share annually within the next three years. While UBS is more concerned about near-term risks in IBM’s consulting business, analysts like Mohan and Daryanani see IBM’s recent changes as a solid foundation for stronger long-term performance.
What Is the Target Price for IBM?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on IBM stock based on 10 Buys, five Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average IBM price target of $281.50 per share implies 2.1% downside risk.
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