MoffettNathanson analyst Lisa Ellis had the computing giant IBM (NYSE:IBM) in her bad books for years. I say “had” here because that recently changed, and it was enough to give Big Blue a notch up.
In a move that reversed several years of bearishness, Ellis turned her rating on IBM from “underperform” to “market perform.” This reflects her belief that IBM’s ability to generate solid revenue streams should be ready to go. The biggest reason for this turnaround came from an industry outlook on demand for IT services. Increasing demand from the cloud services sector for necessary hardware, and rising demand for digital services in general, would help fuel the ongoing rise of IBM.
In fact, Ellis believes that we’re in the middle of a rise in corporate IT consumption that will prove a “once-in-a-generation” affair. Not that it’s all sunshine and flowers for IBM to come, though; IBM itself expects serious potential problems out of quantum computing. It believes that such technology will prove a death knell for data encryption. Moreover, IBM faces internal strife as well; investors are suing several IBM executives over the use of mainframe sales to cover up losses elsewhere connected to new and “trendier” projects.
Most analysts are in a wait-and-see pattern when it comes to IBM stock with a Hold rating. With an average price target of $142.14, IBM stock offers a 1.1% upside potential.