Big Blue got a big new champion as IBM (NYSE:IBM) was declared an “outperform” at RBC Capital. It was the start of coverage for IBM therein, and it started off with a bang. The bang was sufficient to drive IBM shares up, gaining over 2.5% at the time of writing.
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RBC Capital, by way of analyst Matthew Swanson, noted that he was “impressed” with IBM’s software platform and particularly liked how well IBM could have its systems added to businesses’ operations. Swanson not only kicked off the coverage with an Outperform rating, but he also added a $188 price target on IBM shares, about a 25% premium over current pricing. Swanson also gave a nod to the pandemic, which required networks to become broader and far more complex. That gave IBM a much greater opportunity to shine, and shine it has.
In fact, IBM is shining so hard that it’s made one serious step forward. We all know the furor around self-driving cars these days, but how about a self-driving boat? Or perhaps a self-sailing boat…whatever term you care to apply, IBM has one. Known as the Mayflower, the vessel completed a transatlantic crossing late last year after years of false starts and failed attempts. Products like that, alongside IBM’s Watson and other systems, have made IBM “misunderstood and undervalued,” as Swanson put it. Given that IBM derives around 75% of its revenue from software and consulting, that’s an important distinction to make.
Is IBM Stock a Sell or Buy?
Meanwhile, most analysts are a bit more skeptical than Swanson. With four Buy ratings, seven Holds, and one Sell, IBM stock is rated a Hold by analyst consensus. Further, with an average price target of $147.27, IBM stock also comes with a downside risk of 2.07%.
