Shares of IBM IBM rose in early trading on Thursday, after the company reported better-than-expected earnings for the first quarter.
Bernstein On IBM
Analyst Toni Sacconaghi maintained a Market-Perform rating and price target of $145.
IBM’s first-quarter results were broadly in-line with the consensus estimates, Sacconaghi said in a note. “As expected, IBM reaffirmed its FY 2023 revenue and FCF targets, though it did broaden its expected revenue growth range to 3% – 5%,” he added.
IBM indicated a deceleration in consulting demand in the U.S., while there is no erosion in its consulting backlog, the analyst mentioned. “We note that Consulting historically has been a cyclical business, and we see some risk to 2H revenues from a potentially weaker macro environment,” he added.
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Morgan Stanley On IBM
Analyst Erik Woodring reiterated an Equal-Weight rating, while reducing the price target from $143 to $135.
“IBM beat 1Q EPS and kept CY23 rev growth largely unchanged at 3-5% Y/Y in CC & $10.5B FCF, reflecting lower growth in Consulting and RHT, but stronger TPP,” Woodring said in a note.
Although IBM’s first-quarter results were better than feared, it needs a “strong 2H ramp” to meet its only slightly lowered earnings guidance for 2023, the analyst stated. “Lowered Consulting outlook reflects end of 1Q deterioration,” he added.
IBM Price Action: Shares of IBM had risen by 0.69% to $127.19 at the time of publishing Thursday.