UBS Downgrades IBM (IBM) to Sell
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UBS analyst David Vogt downgraded IBM (NYSE: IBM) from Neutral to Sell with a price target of $124.00 (from $136.00).
The analyst comments "We downgrade IBM shares to Sell from Neutral given near-term risk to Q4:21 'operating ests', lower PF EPS ests, and an elevated valuation that leaves the shares vulnerable over the next 12 months, in our view. On our NTM PF EPS of $9.47, IBM is trading at >14x , over 3 turns above its trailing 3- and 5-year averages indicating the mkt is underwriting mgmt's mid-single-digit target despite a history of execution issues. In addition, we believe the mkt is also pricing in '22 and '23 EPS 10% higher than our est. Lastly, we believe IBM's multiple has benefited from a macro rotation from growth -> value creating risk. While some expansion was to be expected post the spin from the ~10x long-term average given an 'optically' better PF rev outlook and margin profile, if mults mean revert to ~10x, shares could fall 15-20%, below our base case."
Shares of IBM closed at $135.03 yesterday.
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