Evercore ISI Reiterates Outperform Rating on IBM (IBM), 'CY26 guide is much better than feared'

Evercore ISI analyst Amit Daryanani reiterated an Outperform rating and $250.00 price target on IBM (NYSE: IBM).

The analyst commented: "IBM reported Jun-qtr revenue/EPS results that were in-line with their negative pre-announcement last week ($17.2B/$2.93) with 1% y/y revenue growth driven by 5% cc software growth, +1% cc growth within Consulting, partially offset by -7% y/y cc declines in Infrastructure. Highlights from the quarter include an acceleration in RHT (up +11% y/y at cc vs. +10% last quarter), Data growing +18% at cc, and Distributed Infrastructure growing +37% y/y driven by POWER and storage. As previously mentioned, IBM’s revenue shortfall was attributed to clients shifted IT/capex budgets towards servers, storage, and memory purchases to secure supply constrained systems/components ahead of price increases. FCF came in at ~$2.5B for Q2 which was down slightly y/y. IBM lowered their CY26 cc revenue growth guidance to up 4-5% y/y (f/x will have a neutral impact) – although this is down vs. their prior guide of up more than 5% y/y at cc, their updated guide is better than feared (vs. expectations of up low/mid single-digits at cc). In addition, IBM also maintained their 2026 FCF guide at up ~$1B y/y. IBM still expects ~100bps of annual PTI margin expansion. Lastly, IBM indicated that they will invest more than $10B in quantum over the next five years and that they remain on track to deliver the first large-scale fault-tolerant quantum computer by 2029. Net/Net: Q2 results were in-line with negative preannouncement but CY26 guide is much better than feared."

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 $210.50 yesterday.

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