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Why Have Most Analysts Given IBM ‘Hold’ Recommendations?

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Wall Street analysts’ view on IBM

Earlier in this series, we looked at how Brexit will impact the technology sector as a whole. We also explored IBM’s forward dividend yield compared to those of its peers, including Microsoft (MSFT), Oracle (ORCL), and SAP (SAP), as of June 27, 2016. We also looked at the forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiples of these players.

Now, let’s take a look at select market-centric views and metrics for IBM. We’ll start with Wall Street analysts’ views on the company. Of the 27 analyst recommendations on IBM’s stock, 56% were “holds” as of June 27, 2016. About 26% were “buys,” and 19% were “sells.”
analysts recommendations

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IBM’s price performance

IBM’s stock price movement during the past month has been positive. As of June 27, 2016, the company’s stock has risen by 4.6%. Earlier in the series, we discussed the factors that played important roles in boosting IBM’s stock.

Analysts’ target prices

The Wall Street consensus target price for IBM is $143.62 per share. The median target price was $150 as of June 27, 2016. IBM’s price was $143.5 on June 28 in premarket trading. Morgan Stanley’s Katy Huberty believes that IBM’s stock could reach $195.

For diversified exposure to select software companies in the United States, you may want to consider investing in the SPDR S&P 500 ETF (SPY). SPY has 8% exposure to the application software industry.

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