Oppenheimer thinks investors have not to fully appreciated International Business Machine ‘s new software product focus. The investment firm initiated shares of the technology titan at an outperform rating. Analyst Param Singh’s $320 price target represents about 28% upside from Monday’s close. Shares of IBM have surged 34% in the last 12 months. However, Singh believes that IBM’s valuation will naturally rise as the company’s pivot to software becomes more appreciated by the market. “We believe investors have missed IBM’s transition, with the stock still covered by multiple IT hardware/services analysts,” the analyst wrote. “IBM should re-rate higher, in our view, and trade closer to the comparable average given the pivot/growth in its software portfolio, inflection in consulting growth, and expanding gross and pre-tax margins.” Singh underscored IBM’s software portfolio and growing consulting revenue as additional highlights. IBM’s new AI-focused Red Hat offerings and related consulting engagements should also benefit from the company’s focus on AI deployment, Singh added. “Our bullish stance is predicated upon our view that IBM: (1) will see sustained “double-digit” revenue growth in its software portfolio driven primarily by its Red Hat offerings; (2) will see an inflection in its consulting growth in 2H25 with recovery in application development/management; and (3) has optionality with creation and management of AI applications (incl. Generative AI),” the analyst said. “We believe these drivers will result in strong expansion activity with existing customers, and drive continued gross (on higher software mix) and pre-tax margin expansion.” Analysts are mostly bullish on the stock. LSEG data shows that 10 of 21 who cover IBM rate it a buy, while another eight have a hold rating on it.
IBM is a buy that’s poised to rally nearly 30%, Oppenheimer says