Tech giant IBM (IBM) is getting attention ahead of its first-quarter earnings report on April 22, after Stifel (SF) lowered its price target from $340 to $290. The change is due to updated expectations based on several factors. According to analyst David Grossman, potential headwinds include slower growth in software and services due to the Gulf conflict, as well as negative impacts from currency movements. However, there are also positives, such as the Confluent acquisition closing earlier than expected, which could support growth.
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Trade IBM with leverageBecause of these mixed factors, Grossman slightly lowered his 2026 outlook. The analyst now expects revenue to grow by around 4.5% to 5.0% in constant currency terms, which is slightly below the company’s guidance and the analyst consensus of about 5%. Even so, other key metrics are still expected to stay on track. Grossman forecasts profit margins to improve by about 100 basis points year-over-year, earnings per share to reach roughly $12.38 (up 7%), and free cash flow to increase by about $1 billion (also up 7%).
Looking further ahead, Grossman still sees some strengths in IBM’s business. For instance, the company’s software segment, including acquisitions like HashiCorp and Confluent, could help drive future growth. In addition, a shift toward higher-margin software and better operating efficiency should support margin expansion over time. As a result, IBM is still seen as having defensive qualities, which means that it could hold up relatively well in uncertain market conditions.
Is IBM a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on IBM stock based on 10 Buys, six Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average IBM price target of $326.80 per share implies 38% upside potential.
