Citi Discusses Results From IBM Analyst Day (IBM)

Citi Investment Research is out with a research report on IBM IBM after the company held its analyst day. It has a $175 price target and a Medium Risk rating on shares.

In a note to investors, Citi writes, "The company anticipates the three main segments of growth – Business Analytics, Smarter Planet, and Cloud Computing – to contribute a combined $16B in incremental revenues by 2015, accounting for over half of the
total revenue growth target. From a geo perspective, the 2015 target assumes that Growth Markets will add roughly $17B in incremental revenues, increasing from 21% to 30% of total sales in the next five years."

Citi goes on to say, "During the past 30 years, we find that IBM shares have traded at a mean multiple of 14X F12 EPS, but this includes periods of significantly-higher interest rates during the 1970s and periods of significant financial distress for IBM in the late 1980s and early 1990s. Since 1997, the shares have traded in a core range of 16- 20X F12 EPS, excluding unusual periods during the Internet bubble and subsequent economic downturn. On a relative basis, IBM shares have traded at 60-120% of the S&P 500 multiple during the past decade."

Shares of IBM gained $2.35 yesterday to close at $162.28, a gain of 1.5%.