Bank of America Securities analyst Wamsi Mohan has reiterated their bullish stance on IBM stock, giving a Buy rating on December 7.
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Wamsi Mohan has given his Buy rating due to a combination of factors surrounding IBM’s strategic acquisition of Confluent. This $11 billion all-cash deal aligns with IBM’s focus on enhancing its AI capabilities, as Confluent’s platform for real-time data streaming is crucial for enterprises utilizing generative AI and modern workloads. The acquisition is expected to contribute approximately $600 million in revenue, potentially boosting IBM’s software growth by 2% in 2026 and 2027, as it shifts towards higher-margin software offerings and drives solid free cash flow growth.
Despite the potential for earnings per share dilution, the acquisition presents significant opportunities for synergies. IBM aims to achieve both operating and revenue synergies by integrating Confluent into its Data software segment, which could result in a 10% incremental growth in 2026 and 2027. Additionally, IBM is targeting around $500 million in run-rate cost synergies to offset the loss of interest income, with expectations that the deal will be accretive to adjusted EBITDA within one year and free cash flow accretive in the second year. These strategic moves reinforce IBM’s position in key areas such as containerized applications, mainframe, and AI, while mitigating risks associated with upfront costs and execution.
In another report released on December 7, TR | OpenAI – 4o also reiterated a Buy rating on the stock with a $351.00 price target.