UPDATE: IBM (IBM) Estiamtes, PT Lowered to $112 at UBS; 'Not Immune to Macro, FX, Slowing IT'
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UBS analyst David Vogt lowered the price target on IBM (NYSE: IBM) to $112.00 (from $118.00) while maintaining a Sell rating. Vogt said the company is not immune to macro, fx, and slowing IT services growth.
The analyst commented, "We are lowering our IBM estimates and price target given Consulting revenue growth is likely to slow faster than expected, IBM faces incremental FX headwinds relative to mid July, and we believe margins are unlikely to expand above guidance in CY22. Since mid July, key functional currencies like the Yen, Euro, and British Pound have declined an incremental 2%-5%, negatively impacting IBM's top line by at least an incremental 100bps in Q3 in our view. In addition, IT services industry demand should slow, acting as a headwind not only in the second half of CY22 but also CY23. As a read across, IT Services bellwether Accenture recently provided implied organic growth of just 5.5-8.5%, down from over 20% the past 4 quarters, highlighting the risk of a faster deceleration at IBM Consulting than expected. Recently, Accenture's organic growth has been ~800bps faster than IBM Consulting."
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