IBM (IBM.US) shares dropped over 3.0% after Morgan Stanley downgraded the iconic tech company to 'equal weight' from 'overweight', citing concerns of decelerating revenue growth.
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Bank analysts lowered price target to $148 per share from $152.00 and noticed signs of a slowdown in IT spending, which coupled with deteriorating macroeconomic environment could have a negative impact on "Big Blue" future performance.
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"Since the beginning of 2022, IBM has been the best performing name in our coverage, outperforming our IT Hardware coverage by 40 points, and the S&P 500 by 25 points. However, as Y/Y comps get more difficult, IBM laps its mainframe and ELA renewal cycles, and macro uncertainty persists, we are increasingly more guarded that IBM can sustain its goal of mid-single digit Y/Y revenue growth (in constant currency) in CY23," the analysts wrote in a client note.
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On the other hand, analysts' from BofA pointed to the recent outperformance of IBM stock and lifted the price target to $152 per share from $145 as in their opinion the company should benefit from its defensive positioning.
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"We expect shares of IBM to outperform in a weaker macro backdrop on an improving fundamental story." BofA analysts pointed to continued turnaround at IBM (expanding revenue and rising FCF), defensive portfolio and high dividend yield.
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Key IBM ratios. Source: Barchart
IBM (IBM.US) stock pulled back from its 2022 highs in recent days after recording positive returns in the last 52 weeks. Stock launched today's session with a bearish price gap and is moving towards local support at $137.65, which is marked with previous price reactions and 23.6% Fibonacci retracement of the upward wave launched in March 2020. Source: xStation5
