Investing.com -- HSBC downgraded IBM to Reduce from Hold and cut its price target to $191 from $231 in a note on Tuesday, arguing that a basket of IBM's peers offers superior earnings potential for the same investment.

Analyst Abhishek Shukla told investors that HSBC constructed a "synthetic IBM" using SAP, Accenture, HP and IonQ to replicate IBM's subsector exposure, saying investors could buy a combination of shares in those four companies for $287.56, matching IBM's current price.

The firm added that this synthetic portfolio would deliver 2030 estimated earnings per share of $23.15, versus IBM's projected non-GAAP EPS of $16.59, a 40% difference, "with broadly similar subsector exposure."

According to HSBC, IonQ "may be stealing a march over IBM's quantum business," noting IBM received only $100 million in new quantum computing orders over the past five quarters compared with almost $600 million for IonQ.

The bank also stated that IBM's growth is "less sustainable as it is dependent upon continued cost cutting" compared with SAP and Accenture.

HSBC expects IBM's software non-GAAP EBIT to rise at a compound annual growth rate of 10.6% through 2030, roughly in line with SAP, but driven by weaker revenue growth.

Shukla noted that IBM trades at 22.0 times its 2027 estimated non-GAAP price-to-earnings ratio, above the sector median of 16.9 times, despite slower expected earnings growth. The bank's new target implies 33.6% downside from current levels.