On Thursday, Morgan Stanley (NYSE:MS) adjusted its outlook on IBM shares (NYSE:IBM), reducing the price target to $179 from the previous $186, while retaining an Equalweight rating on the stock. The assessment followed IBM's first-quarter revenue and earnings per share (EPS), which aligned closely with Morgan Stanley's expectations. The company also confirmed its full-year 2024 guidance during the earnings call.
The firm noted concerns about emerging weaknesses in IBM's Consulting services and pointed out the business's expectation of a second-half-weighted year. Additionally, the upcoming acquisition of healthcare data and analytics assets from Truven Health Analytics, part of the IBM Watson Health business, by investment firm Francisco Partners, referred to as the HCP acquisition, was mentioned as a factor that could increase the risk of IBM's execution of its business strategy.
The analyst stated that at the current share price of $168, IBM's stock is considered to be fairly valued, leading to the decision to maintain the Equalweight rating. This rating suggests that the analyst believes IBM's stock is projected to perform in line with the average return of the stocks covered by Morgan Stanley within the industry over the next 12 to 18 months.
IBM's reiteration of its full-year 2024 guidance indicates a steady outlook for the company's performance, despite the potential challenges highlighted by Morgan Stanley. The new $179 price target reflects the firm's adjusted expectations for IBM's future stock performance.
InvestingPro Insights
As IBM (NYSE:IBM) navigates through its full-year 2024 with a steady outlook, recent data from InvestingPro provides additional context for investors considering the company's stock. With a market capitalization of $168.77 billion and a P/E ratio that has adjusted to 19.8 in the last twelve months as of Q1 2024, IBM demonstrates significant size and a valuation that reflects investor expectations for future earnings.
The company's commitment to shareholder returns is evidenced by its impressive track record of raising dividends for 54 consecutive years, a testament to its financial stability and consistent performance. This dedication to dividends is coupled with a notable 3.61% dividend yield as of the latest data, making IBM an attractive option for income-focused investors. Additionally, IBM's stock has enjoyed a high return over the last year, with a 53.02% price total return, underscoring the positive momentum the stock has experienced.
InvestingPro Tips highlight IBM's low price volatility and its position as a prominent player in the IT Services industry. The company's recent large price uptick over the last six months is also worth noting, as it may signal investor confidence in IBM's strategic initiatives and market position. For those looking to delve deeper into IBM's performance and future prospects, InvestingPro offers additional insights and tips. For instance, there are currently 6 more InvestingPro Tips available for IBM, which can be accessed by investors looking to make a well-informed decision.
To gain a comprehensive understanding of IBM's investment potential and access these valuable tips, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. This offer can help investors stay ahead with real-time data and expert analysis as they assess IBM's position in the dynamic tech landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.