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With a market cap of $193.2 billion, Armonk, New York-based International Business Machines Corporation (IBM) is a global leader in information technology. The company provides integrated solutions leveraging hybrid cloud, AI, and consulting to support clients' digital transformations globally.
Shares of the technology and consulting company have outperformed the broader market over the past 52 weeks. IBM stock has surged nearly 39% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 32.3%. In 2024, IBM shares are up 27.8%, compared to SPX's 24.7% gain on a YTD basis.
Looking closer, IBM has also outpaced the Technology Select Sector SPDR Fund’s (XLK) 28.8% return over the past 52 weeks and a 21.9% YTD gain.
IBM stock tumbled 6.2% following its mixed Q3 results on Oct. 23, with revenue of around $15 billion missing analyst expectations of $15.2 billion, despite a profit beat with $2.30 adjusted EPS versus the $2.27 consensus. The company's performance was weighed down by a 7% decline in Infrastructure revenue and flat Consulting segment sales, as clients pulled back on discretionary spending amid economic uncertainty. Additionally, a $2.7 billion one-time pension settlement charge led to a significant GAAP net loss, further contributing to investor concerns. While Software growth and hybrid cloud demand were strong, concerns about uneven segment performance and limited transformative impact from AI initiatives also contributed to the stock's decline.
For the current fiscal year, ending in December, analysts expect IBM's EPS to grow 5.2% year-over-year to $10.12. The company's earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 17 analysts covering the stock, the consensus rating is a “Hold.” That’s based on four “Strong Buy” ratings, one “Moderate Buy,” 10 “Holds,” and two “Strong Sells.”
On Oct. 24, Morgan Stanley lowered IBM's price target to $208 and maintained an “Equal Weight” rating, citing Q3 revenue and operating income misses in Consulting and Infrastructure, despite strong Software growth and shares trading near all-time highs.
As of writing, IBM is trading below the mean price target of $221.41. The Street-high price target of $260 implies a potential upside of 24.4%.
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