IBM (IBM) on Track to Deliver on Its Long-Term Plan - Analyst
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Price: $206.16 --0%
Rating Summary:
8 Buy, 15 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 7 | Down: 6 | New: 12
Rating Summary:
8 Buy, 15 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 7 | Down: 6 | New: 12
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Deutsche Bank reiterated a Buy rating on IBM (NYSE: IBM) and raised its price target on the stock to $240.00 (from $225.00).
Analyst Chris Whitmore said he expects IBM’s recently refreshed mainframe hardware and a POWER 7+ server refresh in early October to support re-accelerating hardware growth in the near term. He also expects the mainframe cycle and pSeries upgrade to drive improving growth in Services and Software revenue over multiple quarters.
“Specifically, we expect software and services growth rates to improve with ~6 month lag (vs. the hardware refresh) which historically has translated into a +5% Y/Y growth improvement in Services and +6% Y/Y in Software. Further, improving business mix should support revenue growth and improving operating leverage going forward,” said Whitemore.
"IBM’s steady earnings cadence is primarily attributable to its ongoing product mix shift to S/W (higher margins), accretive acquisitions and share buybacks. In addition, IBM is benefiting from cost reduction initiatives including optimized service delivery through global integration, productivity improvements and cost cutting / global sourcing (~$900M of cost actions taken in FY12)," added the analyst.
In summary, IBM is on track to deliver on its long term plan, which appears very achievable in light of management’s operational track record, thinks Whitemore.
For an analyst ratings summary and ratings history on IBM click here. For more ratings news on IBM click here.
Shares of IBM closed at $207.45 yesterday, with a 52 week range of $168.88-$210.69.
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Analyst Chris Whitmore said he expects IBM’s recently refreshed mainframe hardware and a POWER 7+ server refresh in early October to support re-accelerating hardware growth in the near term. He also expects the mainframe cycle and pSeries upgrade to drive improving growth in Services and Software revenue over multiple quarters.
“Specifically, we expect software and services growth rates to improve with ~6 month lag (vs. the hardware refresh) which historically has translated into a +5% Y/Y growth improvement in Services and +6% Y/Y in Software. Further, improving business mix should support revenue growth and improving operating leverage going forward,” said Whitemore.
"IBM’s steady earnings cadence is primarily attributable to its ongoing product mix shift to S/W (higher margins), accretive acquisitions and share buybacks. In addition, IBM is benefiting from cost reduction initiatives including optimized service delivery through global integration, productivity improvements and cost cutting / global sourcing (~$900M of cost actions taken in FY12)," added the analyst.
In summary, IBM is on track to deliver on its long term plan, which appears very achievable in light of management’s operational track record, thinks Whitemore.
For an analyst ratings summary and ratings history on IBM click here. For more ratings news on IBM click here.
Shares of IBM closed at $207.45 yesterday, with a 52 week range of $168.88-$210.69.
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