IBM : BofA maintains Buy recommendation on eve of earnings release
April 23, 2024 at 04:00 pm
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On Tuesday, Bank of America reiterated its Buy recommendation and $220 price target on IBM, ahead of the release of the American IT group's Q1 results.
In a research note, the intermediary said it was concerned about the development of consulting activities in the wake of the warning issued by Accenture last month.
Conversely, BofA said it expected a possible upward revision of targets in software, where IBM is currently forecasting growth of around 10%.
The analyst says he will be paying particular attention tomorrow to the evolution of the order backlog in generative AI, which he said had reached $100 million at the last business update, but could now reach $500 million, according to his estimates.
BofA still expects IBM to generate $12 billion in free cash flow (FCF) in 2024.
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International Business Machines Corporation (IBM) is one of the world's leading computer services companies. Net sales break down by activity as follows:
- cognitive solutions and transaction processing software development (41.4%);
- IT services (31.6%): consulting (management of logistic chains, financial performance, CRM, human resources, etc.), application management, systems integration, cloud computing, hosting, technical support services, etc.;
- sale of IT infrastructure (25.3%): hybrid IT infrastructure solutions, microcomputers, servers, peripheral devices, networks, data storage equipment, etc.;
- financing of computer equipment (1%);
- other (0.7%).
Net sales are distributed geographically as follows: the United States (41.5%), Americas (9.8%), Europe/Middle East/Africa (29.7%), Japan (9%) and Asia/Pacific (10%).