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A Look at IBM's Growth Initiatives in 2017

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Part 14
A Look at IBM's Growth Initiatives in 2017 PART 14 OF 14

What Do Analysts Recommend for IBM Stock?

Wall Street’s views on IBM stock

In this series, we’ve looked at the technologies in which IBM (IBM) plans to continue to invest in 2017 and thereafter. We’ve also discussed some aspects of IBM’s value proposition in the US software industry. We compared the company’s forward dividend yield with Microsoft’s (MSFT), Oracle’s (ORCL), and SAP’s (SAP) as of January 7, 2017.

What Do Analysts Recommend for IBM Stock?

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Let’s now take a look at market views and metrics for IBM, starting with Wall Street analysts’ views of the company. As shown in the graph above, of the 28 analyst recommendations on IBM stock, 60% were “hold,” about 28% were “buy,” and 12% were “sell.”

Price performance and target prices

IBM’s stock movement in the past month has been positive. As of January 7, 2017, it had gained ~5.7%. Earlier in this series, we learned that IBM was selected by Cornerstone Macro as one of the “Dogs of the Dow” in 2017. Morgan Stanley (MS) also believes that IBM’s initiatives and investments in its Strategic Imperatives segment are underrated.

In the last 12 months, IBM’s Strategic Imperatives has garnered $32.0 billion in revenue, which is about 40.0% of its overall revenue. This gain boosted IBM’s stock, which has recovered after touching a five-year low in late 2015. It has risen ~23% in the past year.

Wall Street’s consensus target price for IBM is $156.62 per share. The median target price was $160 as of January 7, 2017. IBM stock was $169.53 per share that day.

Investors interested in gaining exposure to IBM could consider investing in the SPDR S&P 500 ETF (SPY), which has an 8.7% exposure to application software and invests ~0.7% of its holdings in IBM.

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