In a research report published this morning, Cantor Fitzgerald analyst Brian White reiterated a Buy rating on International Business Machines Corp. (NYSE:IBM) with a price target of $198, ahead of the company’s Investor Briefing event, which will take place in NYC next week, February 26.
White noted, “During IBM’s Investor Briefing, we believe IBM must articulate how the company has positioned itself to benefit from key secular trends around cloud computing, Big Data and mobility. In our view, the cloud discussion will be very important next week. As such we expect IBM to highlight its position across key strategic imperatives that include cloud, Big Data analytics, mobility, social and security. During 2014, IBM grew strategic imperatives by 16% YoY to $25 billion and now represents 27% of sales. More specifically, cloud revenue increased by a strong 60% in 2014 to $7 billion. As part of the analytics discussion, we expect Watson to be an important theme at the meeting and especially given the venue of the event (i.e., Watson’s global headquarters).”
The analyst concluded, “Given the third consecutive year of underperformance in IBM’s stock relative to the S&P 500 Index and a sharp P/E contraction relative to the market during this time, we believe value investors will be searching for signs that the worst is over for IBM. We expect 2015 to be another transitional year for IBM; however, we also recognize the work IBM has already completed by divesting lower-value-add businesses and investing in key secular trends. At the same time, sell-side sentiment hovers around 20-year lows, IBM is trading at just 9.7x our CY:16 EPS estimate, and the stock sports an attractive 2.7% dividend yield.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian White has a total average return of 20.9% and a 75.1% success rate. White has a -4.0% average return when recommending IBM, and is ranked #12 out of 3476 analysts.