Analysts Raise IBM Price Target After Earnings Print

IBM (NYSE: IBM) reported the second consecutive quarter of sales growth and delivered an earnings beat.

The IBM Analysts: Katy Huberty of Morgan Stanley maintained an Equal-weight rating for IBM, while raising the price target from $152 to $164. Credit Suisse’s Daniel Knauff raised the price target to $167.

The IBM Thesis: The second-quarter results demonstrate improving execution and a strengthening demand environment, Morgan Stanley’s Huberty said in the note.

“A higher-quality revenue beat, improving macro trends, and important investments in talent, partnerships, and go-to-market improve our confidence in a 2022 growth acceleration,” the analyst wrote.

However, she added, “Investments are driving stronger GBS and Cloud & Cognitive Software growth, which builds confidence in IBM's ability to reach sustainable mid-single-digit revenue growth but limits short-term EPS upside.”

In a separate note, Credit Suisse analyst Knauff said the strong second-quarter results “should help get the stock back on track following some NT investor concerns post-mgmt. changes announced 7/2.”

“We’re encouraged by momentum around our wider hybrid cloud thesis, and remain focused on RHT + core infra. SW + GBS ahead,” the analyst wrote.

"We look toward the planned 4Q spin-off of Kyndryl as a key catalyst, easing the path to sustained growth which supports multiple expansion ahead,” he added.

IBM Price Action: Shares of IBM had risen by 1.57% to $140.26 at the time of publication Tuesday.