IBM initiated with a Hold at Jefferies

Jefferies initiated coverage of IBM with a Hold rating and $180 price target. The analyst likes the “transformative moves” IBM has taken to reposition itself as a software-led story, including the Red Hat acquisition, Kyndryl spinoff and investments in artificial intelligence. However, IBM is growing revenue below its software peers while operating at lower margins, the analyst tells investors in a research note. The firm believes the stock can “grind higher,” but thinks upside is capped in the absence of a meaningful acceleration in software.