Wall Street’s view of IBM stock
In this series, we’ve explored International Business Machines’ (IBM) forward dividend yield compared to Microsoft’s (MSFT), Oracle’s (ORCL), and SAP’s (SAP). We’ve also looked at some aspects of IBM’s value proposition in the US software industry and the forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiples for these players.
Now let’s take a look at select market-centric views and metrics for IBM, starting with Wall Street analysts’ views of the company. As you can see in the graph below, of the 24 analyst recommendations for IBM stock, 54.0% have recommended a “hold” as of April 11, 2017. About 25.0% have recommended a “buy,” and 21.0% have recommended a “sell.”
Price performance and target prices
The movement of IBM stock in the past month has been negative. As of April 11, 2017, it fell ~4.1%.
Despite continuing with its no-revenue-growth trend, IBM’s Strategic Imperatives segment continued to post double-digit growth in fiscal 4Q16. Although Strategic Imperatives grew, IBM’s margins continue to be under pressure, especially as the earnings date for fiscal 1Q17 is approaching. That may have dampened market sentiment for IBM stock. However, in the last year, IBM stock has risen close to ~14.0%.
Wall Street’s consensus target price for IBM is $169.15 per share. As of October 18, 2016, its median target price was $168, and the stock was trading at $170.30.
If you’re interested in gaining exposure to IBM, you can consider investing in the SPDR S&P 500 ETF (SPY). SPY has an 8.7% exposure to application software and invests ~0.70% of its holdings in IBM.