Investment firm Citi (C) has started covering tech giant IBM (IBM) with a Buy rating and a $285-per-share price target. According to analysts led by five-star-rated Fatima Boolani, IBM stands out as a defensive stock at a time when the overall enterprise software sector is facing pressure from AI competitors. Indeed, IBM’s long history of adapting to different technology cycles gives it an advantage. Because of its deep integration across critical IT systems around the world, the company is not only protected from disruption but is also well-positioned to build and scale new enterprise AI solutions.
Claim 30% Off TipRanks
New trading tool for IBM bullsIn addition, Citi sees multiple growth drivers supporting IBM’s outlook. For instance, the company is benefiting from AI demand without needing to invest heavily in capital-intensive infrastructure. At the same time, recent acquisitions are expected to create synergies across IBM’s product and consulting businesses. On top of that, IBM’s mainframe business and transaction processing systems continue to generate strong revenue, while its quantum computing technology adds to its potential growth.
As a result, Citi expects IBM to deliver steady revenue growth in the high single digits over time. The firm also sees room for improvement in earnings and free cash flow, driven by better cost efficiency and the impact of recent acquisitions. Despite these positives, IBM is still trading at a noticeable discount compared to other large tech companies. Therefore, Citi believes that the stock offers an attractive risk-reward profile over the next 12 months.
Is IBM a Buy, Sell, or Hold?
Overall, analysts have a Moderate Buy consensus rating on IBM stock based on 11 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 $324.19 per share implies 37.9% upside potential.
