Investing.com — Ahead of its third-quarter earnings report scheduled for October 23, IBM (NYSE:) has earned new high street price targets from Goldman Sachs and Bank of America, reflecting growing confidence in the company's performance.
Goldman Sachs analysts recently raised IBM's price target from $220 to $250, maintaining a Buy rating on the stock. Similarly, Bank of America has also set its price target at $250, indicating a bullish outlook for the tech giant.
Bank of America analysts said in a note that they expect strength in IBM's software segment, particularly driven by improving trends in transaction processing and Red Hat services.
They project third-quarter revenue and earnings per share to be approximately $14.9 billion and $2.22, respectively, which closely aligns with Street consensus estimates of $15 billion and $2.21. , respectively.
The firm noted that while consulting revenue is expected to remain flat year-over-year due to a pullback in discretionary projects, the company's consulting business will benefit from backlog conversions and opportunities in generative ai.
With IBM shares up about 40% so far this year, compared to a 20% gain for the year, there is optimism around the company's turnaround efforts, including revenue growth and improvements in free cash flow.
BofA said the new mainframe cycle expected in 2025 also contributes to the positive sentiment.
“We reiterate buy in case of continued recovery (revenue, FCF improvement), defensive portfolio, attractive dividend,” the bank said.
As the company continues to face challenges in the consulting space and capitalize on opportunities in software and artificial intelligence, analysts see IBM positioned for strong performance, justifying its high price targets.
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