‘Don't Be Afraid to Buy IBM Stock Right Now,' Says Five-Star Analyst
Five-star Bank of America analyst Wamsi Mohan kept a Buy rating on IBM (IBM) and set a price target of $270 after saying that the tech company is a safe investment with expected growth ahead. Indeed, he believes that IBM will grow its revenue and cash flow, which could help fund more mergers and acquisitions in the future. In his note, Mohan focused on transaction processing (TP) software, a key part of IBM's mainframe systems, which has not only stabilized but is now growing again, even in today's cloud-focused tech world.
Confident Investing Starts Here:
Mohan explained that TP software makes up about one-third of IBM's total software revenue, earning between $5 billion and $7 billion per year, with most of this coming from IBM Z mainframe systems. In addition, growth in this area is being driven by new pricing models, technological improvements, and high demand for reliable systems that are used in critical business operations. Mohan also pointed out that many IBM Z customers are increasing their usage in order to handle more digital transactions, which has boosted IBM's recurring software revenue.
Interestingly, while Red Hat has been a major driver of growth for IBM, TP software is also becoming more important. In fact, IBM expects this part of the business to grow by mid-single digits, while the total software segment is expected to grow by about 10%. It is worth noting that IBM has added features like WatsonX AI and switched to more flexible subscription pricing, which has helped more customers sign on and stay longer. As a result, these strategies are helping IBM grow both usage and revenue by making the software a deeper part of customers' businesses, according to Mohan.
What Is the Target Price for IBM?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on IBM stock based on eight Buys, five Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average IBM price target of $260.62 per share implies 0.7% upside potential.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
Citi names Bank of America veteran Zhang as new China country head
By Selena Li HONG KONG (Reuters) - Citigroup said on Monday it had appointed Wenjie Zhang as its new country officer and banking head for China, after the exit of its former China head in November. Zhang was also named president and executive director of Citibank China, the company said in a statement. The appointment is subject to regulatory approvals. He will act as the lead Citi representative and as its single, coordinated face in the mainland China market, the company said, leading the team and fostering strong regulatory relationships and risk controls. He will fill the role after former Citi China head Luke Lu left in November for personal reasons. Zhang will join Citi in July and will be based in Shanghai, reporting to Marc Luet, Citi's Head of Japan, Asia North and Australia and Banking, the bank said. A seasoned banker with 30 years of experience in corporate and institutional banking, Zhang was most recently the president of China and Shanghai branch manager for Bank of America China, according to Citi's statement. Prior to that, he was co-head of global banking and executive vice president at HSBC China, after stints at JPMorgan, Citi and Credit Agricole CIB. Citi is cutting up to 200 information technology (IT) contractor roles in China, two people familiar told Reuters last month, as the bank looks to hire its own staff globally for such operations to improve risk management and data governance. Citi, which already has a banking business in China, is in the process of setting up a securities unit in the country. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
16 hours ago
- CNBC
These stocks could benefit if interest rates break out higher
A handful of stocks may be well positioned to benefit from rising Treasury yields, according to Bank of America. Both the benchmark 10-year and 30-year Treasury have climbed recently to reach worrisome milestones. The 10-year yield was last at about 4.43%, just shy of the key 4.5% level, and up from 4.01% in early April. The yield on the 30-year bond stands just under 5%, also a key level that's drawn investor attention, and up from 4.41% when President Trump unveiled sharply higher tariffs on imported goods. The rise in Treasury yields largely reflects investor concern tied to the health of the U.S. economy, the size of the government debt and the state of the dollar. When the Court of International Trade on Wednesday struck down most of President Donald Trump's tariffs, the White House immediately appealed the decision, saying "it is not for unelected judges to decide how to properly address a national emergency." The ruling was stayed the next day by an appeals court, leaving investors continuing to question the direction of U.S. trade policy. Yet, despite all the confusion, investor appetite for risk assets has grown in the past two months , while demand for Treasury debt has waned. Against this backdrop, Bank of America looked for stocks that outperform the S & P 500 the most when 10-year Treasury note yields rise, measuring performance against month-over-month changes in the 10-year yield since 2014. Financials dominate the screen, accounting for six of the top 10 spots. Here's a look at the names that floated to the top of BofA's model. Prudential Financial snagged the top spot on the list with a 48% correlation to changes in the 10-year yield. Stock in the insurance and retirement planning giant has pulled back more than 12% so far in 2025. Its dividend yields 5.2%. PRU YTD mountain Prudential Financial stock in 2025. Nearly two thirds of analysts maintain a hold rating on Prudential stock, with their consensus price target implying 9% upside. Prudential beat Wall Street analysts earnings estimates when it reported first-quarter results in late April. JPMorgan Chase also made the cut. The bank yields 2.1% and shares have added more than 10% so far in 2025, while the S & P 500 has risen less than 1%. What's more is the bank's 35% correlation to changes in the 10-year yield. CEO Jamie Dimon has warned more than once this year that the economy could be headed for a recession, but JPMorgan Chase has outperformed, recently reporting first-quarter results that topped analyst estimates, fueled by strong profits from its trading desk. JPM YTD mountain JPMorgan Chase shares in 2025. Roughly 59% of analysts surveyed by FactSet rate JPMorgan Chase a buy, with the consensus price target implying a little more than 3% upside. Other names on the list include Charles Schwab and MetLife .
CBS News
16 hours ago
- CBS News
Runners from across the country to partake in Bank of America 13.1 Half Marathon in Garfield Park
Thousands of runners are gearing up for the fourth annual Bank of America Half 13.1 Marathon on Sunday morning on Chicago's West Side. Those taking part will give it their all as they put feet to pavement in Garfield Park. The marathon draws people from all over the city, state, and country. Last year, some international participants participated. Runners will have a unique experience of the city's West Side neighborhoods. The course weaves through our historic parks and boulevards, starting and finishing in Garfield Park with some scenic loops through Humboldt and Douglass Parks. Organizers say their goal is to support and advance health and wellness on Chicago's west side, with a chance to showcase local businesses on the city's West Side. Map of the Bank of America 13.1 Marathon Runners will head south on Independence to Douglass Park and then back up through Jackson, eventually up Sacramento to Humboldt Park. The race kicks off at 7 a.m. with a Race Day Festival to follow at 8 a.m.
