IBM shares gained 1.5% on Monday after Goldman Sachs initiated coverage with a “buy” rating and a $200 price target, 14% above Monday’s closing price of $175.01. The analysts highlighted IBM’s successful pivot to long-term growth, driven by its investments in AI and a shift towards modernized software and services. Goldman Sachs emphasized IBM’s “organic investments in AI offerings (WatsonX)” and its integrated use of open-source large language models (LLMs) as key competitive advantages. They predict IBM will achieve 5% to 7% long-term revenue growth and a 10% increase in free cash flow.
IBM’s stock performance has been mixed, with a 0.92% increase over the past month, underperforming the Computer and Technology sector’s 6.41% gain. The company’s upcoming earnings report on July 24, 2024, is anticipated to show an EPS of $2.17 and revenue of $15.58 billion for the quarter. Overall, IBM’s valuation reflects a forward P/E ratio of 17.42, indicating a premium over the industry’s average of 12.66. Despite the mixed recent performance, analyst optimism and strategic AI investments are positioning IBM for futur