BMO Capital Cuts Price Target to $155 Following IBM's (IBM) 3Q Earnings
BMO Capital maintained a Market Perform rating on IBM (NYSE: IBM), and cut the price target to $155.00 (from $165.00), following the company's 3Q15 earnings results. Analyst Keith Bachman believes that IBM faces a long transition driven by pressure in legacy business units/products that are greater than the impact of strategic imperatives.
Bachman commented, "We believe that software margins were the most concerning part of the quarter. Software revenue growth in constant currency (CC) was about consistent withthe past few quarters at a negative 3% y/y, off a relatively easy comparison. More concerning was that software operating margins were 32.1% compared to34.4% in the June quarter. Software margins have been trending lower, but the340 basis point decline y/y is nevertheless concerning. In the June 2015 quarter, software margins declined by 210 basis points y/y."
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Shares of IBM closed at $149.22 yesterday.