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(Updated - August 16, 2016 9:24 AM EDT)
Oppenheimer initiated coverage on IBM (NYSE: IBM) with a Perform rating. Analyst Ittai Kidrone thinks IBM must grow its Strategic Imperatives business, while managing the expected declines in its legacy businesses.
"The company has refocused its business on key initiatives (Strategic Imperatives) in an effort to return to consistent revenue and FCF growth after several years of decline. Based on our analysis, we believe IBM could stabilize revenue in 2016 and drive marginal growth in 2017 and beyond, as its transformation takes hold. With operating margin likely bottoming in 2016, IBM appears poised to drive growth in earnings and FCF when combined with slight revenue growth. While we have a positive bias, we believe IBM is not far enough along in its transformation to deliver upside on a consistent basis, a needed element for multiple expansion. This leads to our neutral view," said Kidrone.
Shares of IBM closed at $161.88 yesterday.
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