BMO Capital Raises Price Target on IBM (IBM) to $165; Reiterates Market Perform

BMO Capital reiterated a Market Perform rating on IBM (NYSE: IBM), and raised the price target to $165.00 (from $155.00), following the company's 2Q earnings report.

Analyst Keith Bachman commented, "In terms of the quarter, we have mixed views. Revenue growth in the June Q with acquisitions declined by ~2.6% y/y and ~4.6% y/y without the benefit of M&A. Further, profit before tax declined by 24% y/y in the June Q. We think "core" IBM represented 59% of revenues and declined by 12% to 13% y/y, whereas strategic imperatives represented 41% of revenues and grew by 12%. Given the slowdown in strategic imperatives and steady decline in core, we believe that revenue growth will take some time, excluding M&A. However, we believe that system revenue declines will be less severe in 2017, given easy compares and a likely mainframe cycle. However, against ongoing weakness in revenue, IBM is guiding to flat to modest y/y pre-tax income growth in the Dec Q, to reach $13.50 in non-GAAP EPS, helped by improved margins."

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 $159.86 yesterday.

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