In a report released today, Erik Woodring from Morgan Stanley maintained a Hold rating on International Business Machines (IBM – Research Report), with a price target of $228.00.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
Erik Woodring has given his Hold rating due to a combination of factors that include IBM’s growth targets and current valuation levels. Although IBM’s management has outlined ambitious revenue and free cash flow growth targets, these align closely with Morgan Stanley’s expectations, indicating a mid-single-digit revenue growth and a high-single-digit free cash flow growth through 2027. The targets are achievable, but they require flawless execution, especially given IBM’s current high valuation at 25 times the projected earnings for 2025.
While IBM’s strategic focus on software as a key driver for revenue and profitability is promising, meeting its multi-year targets at these premium valuations is crucial for further stock price appreciation. The stock’s potential value range, based on projected earnings, suggests modest returns unless IBM can significantly outperform its set targets. As such, Erik Woodring remains cautious, maintaining a Hold rating, as the company needs not only to meet but exceed its goals to justify a more bullish stance.
In another report released on February 3, DBS also maintained a Hold rating on the stock with a $221.00 price target.