JPMorgan analyst Brian Essex reiterated an Overweight rating and $250.00 price target on IBM (NYSE: IBM), with shares closing at $234.12.

Essex said third-quarter results should show signs of recovery as deals that slipped in the second quarter convert, noting that partner conversations suggest the issues are "mostly transitory," with customers delaying mainframe purchases rather than canceling them.

The analyst noted that roughly one-third of slipped deals had already been closed at the time of IBM's last earnings call, and expects third-quarter results to reflect incremental progress with slipped mainframe and related software business through the second half of 2026.

Essex cited a shift in spending toward server, storage, and memory as a headwind that contributed to slipped mainframe and related enterprise license agreement business in the second quarter. He added that large mainframe commitments are typically planned well in advance, pointing to timing issues rather than demand loss.

The analyst said he would not expect an upward revision to IBM's fiscal year 2026 growth and free cash flow guidance, considering seasonality and the current spending environment, with a trough still anticipated next year.