IBM Stock Tumbles 6% Following Morgan Stanley's Price Target Cut

IBM Outperforms Earnings Estimates Amidst Market Challenges

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Oct 25, 2024
Summary
  • Analysts Divided on IBM’s Future, Set Diverse Price Targets
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International Business Machines (IBM, Financial) saw its stock shed 6% of its value during the mid-day trade on Thursday after Morgan Stanley downgraded its price target to $208.00 from $217.00 while retaining an “equal weight” rating. Its stock was down to as low as $216.29 and was finally up to $218.18 during the trading period, with volume slightly above the average.

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This raise or lower in price by Morgan Stanley (MS, Financial) has been accompanied by several analyst ratings, which have been considerably different from each other. Earlier this year, DZ Bank downgraded its recommendation on the IBM company from a ‘buy' to ‘hold status, and this came with a set price target of $215.00. Royal Bank of Canada, which raised its target to $250.00 with an “outperform” rating and Evercore ISI, which increased its estimates to $240.00, retained an “outperform” rating. Bank of America also continued the same positive trend, increasing their target to $250.00 with “buy”. Nonetheless, UBS Group remained negative on the stock, assigning the shares a far lower price estimate at $145.00 and a “sell” recommendation.

However, there are mixed feelings from institutional investors who have newly invested in IBM and even increased their share ownership amidst today's decline. IBM has a market capitalization of $200.51 billion; it owns a current ratio of 1.12 and a quick ratio of 1.08. The firm's debt-to-equity ratio is also still at 2.20.

IBM generated an EPS of $2.30 for the current quarter, against expectations of $2.35 and revenues of $14.97 billion. The numbers above show that the company was able to achieve only a 1.5% year-on-year increase in revenues. In the next year, analysts expect IBM to report earnings per share of $10.1 on an annualized basis.

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