Arik Hesseldahl

Recent Posts by Arik Hesseldahl

IBM Shares Surge as Analysts Raise Price Targets

Shares in IBM rose by more than two percent today in the wake of no fewer than four upgrades by analysts after they had a chance to meet with company management Tuesday. IBM shares closed the day at $165.86, up $3.58.

Of the upgrades I saw, the most aggressive was that of Chris Whitmore at Deutsche Bank, who boosted his price target on IBM to $200 from $175. At the Tuesday meeting, IBM repeated its promise to double its earnings per share to $20 and to boost sales by $20 billion by 2015. That was good enough for Whitmore to say his his prior price target was “conservative.”

“We believe there is ample flexibility for IBM to beat this target and expect investors to place a larger premium on IBM’s earnings stream as confidence in this goal increases,” he wrote.

Confidence in Big Blue was all over the analyst-verse today. As Robert Cihra wrote in his research note, “IBM took more time than usual to showcase some advanced tech initiatives, we get the sense IBM has rejuvenated pride in its massive $6 billion annual research and development spend, in contrast to more standards/commodity-reliant competitors, seeing continued opportunities toward ever-higher margin mix.” By “standards/commodity-reliant competitors” he means Hewlett-Packard. We’ll see what its peripatetic polyglot CEO has to say about that at HP’s analyst/press meeting next week.

Also, IBM is spending aggressively to grow in emerging markets, which Cihra said is a likely to prove to be a good thing: “Whereas much of IBM’s focus in mature/developed markets comes down to efficiency and improving margin mix, the company’s emerging geo strategy includes happily spending on growth.” Cihra raised his price target to $185, and practically all the analysts covering IBM are now expecting it to hit $180 or more.

Oh yes, and IBM once again showed off the Watson supercomputer that so brilliantly got the whole world talking anew about the man vs. machine struggle last month. Maybe it scared them into all those upgrades? Time will tell.