IBM (IBM): Softness Should Continue, Reiterating Underperform - Jefferies
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Jefferies analyst, James Kisner, reiterated his Underperform rating on shares of IBM (NYSE: IBM) on the belief that IBM may be boasting about growing annuity revenue, but Software Subscription/Support/Mainframe Monthly Maintenance is declining organically.
The analyst believes that the headwinds in the Software business are likely to drive declining EPS over the coming years which isn't reflected in the current valuation.
Outside of the Maintenance issue, he also believes recent IP Income growth is unsustainable.
This led to an EPS cut of $0.02 bringing the current quarter down to $4.92, CY16 to $13.53 and CY17 to $12.75.
No change to the price target of $125.
Shares of IBM closed at $162.22 yesterday.
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