IBM shares rise after RBC upgrades stock


Ethan Miller | Getty Images

IBM Chairman, President and CEO Ginni Rometty delivers a keynote address at CES 2016 at The Venetian Las Vegas on January 6, 2016 in Las Vegas, Nevada.

The difficult times for IBM shareholders are over, according to one Wall Street firm.

RBC Capital Markets raised its rating for the technology company to outperform from sector perform, citing the stock’s inexpensive valuation.

“We think IBM is an attractive large-cap value stock for investors in 2018 as the potential for revenue and margin stability should enable a re-rating,” analyst Amit Daryanani wrote in a note to clients Wednesday. “A return to gross margin stability coupled with revenue growth in 2018 should set-up the stock for a year of outperformance especially considering the depressed valuation.”

IBM underperformed the market in 2017 with its shares down 8 percent versus the S&P 500’s 19 percent return. IBM shares rose 1.3 percent in premarket trading Wednesday.

The analyst said IBM generates roughly half of its revenue from “annuity-like” services contracts and software licenses. He said the company’s valuation of 11 times price to earnings and more than 3 percent dividend yield are “very attractive.

Daryanani increased his price target for IBM shares to $180 from $160, representing 17 percent upside to Tuesday’s close.

“IBM represents the best mix of technology businesses in the enterprise segment,” he wrote. “We think IBM has cultivated the preeminent technology portfolio.”

— CNBC’s Michael Bloom contributed to this story.

Source link

Products You May Like

Articles You May Like

Gundlach says he’s long energy stocks, short Facebook at Sohn Conference
Here’s why that scholarship might not be free after all
Schlumberger quarterly profit surges 88%
Burger King fuels Restaurant Brands profit beat
European markets seen opening higher as earnings, ECB meeting takes center stage

Leave a Reply

Your email address will not be published. Required fields are marked *