In a report released today, Brian Essex from J.P. Morgan maintained a Hold rating on International Business Machines (IBM – Research Report), with a price target of $244.00.
Brian Essex’s rating is based on a combination of factors that reflect both positive and cautious elements in IBM’s recent performance. While IBM’s total revenue growth for the first quarter was in line with expectations, the company’s software segment did not meet constant currency growth expectations, which is a critical area for valuation support. This shortfall was primarily due to a slowdown in the Hybrid Cloud and Transaction Processing businesses, which raises concerns about the company’s ability to maintain momentum in these key areas.
On the positive side, IBM’s consulting revenue was stable, and the company showed strong cost management, leading to better-than-expected margins and free cash flow. Additionally, the mainframe business showed promise with the upcoming z17 cycle, which is expected to drive demand due to its enhanced features. Despite these strengths, the overall outlook remains cautious due to the software growth miss and the uncertain macroeconomic environment, leading Essex to maintain a Hold rating on the stock.
Essex covers the Technology sector, focusing on stocks such as Check Point, International Business Machines, and CyberArk Software. According to TipRanks, Essex has an average return of 9.6% and a 54.11% success rate on recommended stocks.
In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $233.00 price target.