BofA Maintains Buy Rating On IBM With $152 Price Target
Ahead of IBM's Q2 2023 earnings report, the BoFA securities have reiterated a 'Buy' rating once again and have set a $152.00 target for the company's stock.
IBM's earning report for the second quarter of 2023 is scheduled to be released on the 19th of July. The timing of this buy rating is very important as it comes ahead of the Q2 report. Once the earnings report is released, the IBM stock will attract more volatility - That's why it appears that the BofA is informing the market players ahead of time.
IBM Shares Will Outperform In 2nd Half Of 2023
Despite the weak macro environment in the USA & other big economies, the analysts at BofA believe that IBM shares will perform well during the 2nd half of 2023. The reason behind this optimism in IBM's performance is attributed to the improved economic fundamentals around the world.
BofA says that the IBM revenue growth was better than the expectations. In addition, the company is also enjoying favorable FX conditions, AI adaptability, FCF uplift, and improved pre-tax margins.
Similarly, the company is also expected to record healthy growth in the AI sector due to its service known as the WatsonX.
According to the BofA, the commentary for the H2 will likely lead to the outperformance of the stock. Furthermore, BofA believes that IBM would have to put emphasis on its 2023 guidance as well. Similarly, revenue growth of around 3% - 5% based on the constant currency basis will also help the stock to achieve its price target.
For the 2nd quarter, the BofA analysts are expecting a $5.12 billion revenue from consulting while the consensus is for $50.08 billion only. In addition, the firm also sees a 3% growth in the software sector during the 2nd quarter. Just like that, low-mid single-digit growth in transaction processing is also expected by the BofA.
Looking ahead, it would be interesting to see what the upcoming earning report of IBM reveals. If it is in line with the BofA analysts, we will likely see a jump in the stock's price.