Analyst David Vogt of UBS maintained a Sell rating on International Business Machines, retaining the price target of $200.00.
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David Vogt has given his Sell rating due to a combination of factors related to IBM’s performance and future outlook. The expected revenue for the third quarter is anticipated to align with estimates, but there are concerns regarding the company’s consulting segment, which faces potential risks in both the European and US Federal markets. While infrastructure is expected to perform better than anticipated, the overall growth in software and consulting is projected to be lower than consensus estimates.
Additionally, although IBM’s operating margin and EPS might slightly exceed expectations due to a favorable mix, the free cash flow guidance remains a concern. The anticipated increase in free cash flow guidance to $13.75 billion is already factored into market expectations, and challenges related to supply chain and working capital dynamics persist. These factors, combined with a valuation based on a price target of $200, suggest limited upside potential, justifying the Sell rating.