IBM’s stock took a hit on Thursday after the tech giant reported a disappointing third-quarter revenue performance, falling short of analysts’ expectations. The news sent shockwaves through the market, causing IBM shares to plunge by over 6% in early trading. While the company’s software segment continued to show strong growth, weakness in consulting and infrastructure services weighed heavily on the overall results.
Analysts weighed in on the earnings report, offering their insights and adjusting their ratings and price targets accordingly. Morgan Stanley’s Erik Woodring maintained an Equal-Weight rating but lowered his price target from $217 to $208, reflecting concerns over the underperformance in consulting and infrastructure. BMO Capital Markets analyst Keith Bachman remained cautiously optimistic, reiterating a Market Perform rating while raising his price target from $235 to $260. He pointed to the company’s strong software growth fueled by recent acquisitions.
Bank of America Securities analyst Wamsi Mohan remained bullish on IBM, maintaining a Buy rating and a price target of $250. He highlighted the company’s expanding AI business and confidence in its 2025 outlook. Goldman Sachs’ James Schneider also maintained a Buy rating with a price target of $250, advising investors to buy the stock on the pullback, citing the company’s guidance for continued software acceleration in 2025. RBC Capital Markets analyst Matthew Swanson also maintained an Outperform rating and price target of $250, emphasizing the strength of IBM’s software segment, particularly Red Hat.
However, Piper Sandler analyst James Fish expressed concerns about the pause in discretionary spending, indicating continued IT budget constraints. While he highlighted the encouraging growth of Red Hat, he also acknowledged the weakness in infrastructure, indicating a potential negative for on-premise companies.
Despite the mixed bag of results, IBM’s management remains confident about the company’s future trajectory. They are projecting significant cost savings through productivity initiatives and anticipate an improving consulting environment and hardware refresh cycle in 2025. While some analysts remain cautious due to near-term challenges, others believe that IBM’s strong software growth and strategic investments in AI position the company for long-term success.