IBM Posts Q4 Earnings Beat, Shifts Focus To Software As Analysts Raise Forecasts

Shares of IBM IBM were climbing in early trading on Thursday, after the company reported upbeat fourth-quarter results.

The company reported its quarterly results amid an exciting earnings season. Here are some key analyst takeaways.

Goldman Sachs On IBM

Analyst James Schneider maintained a Buy rating, while raising the price target from $250 to $275.

IBM reported its fourth-quarter revenues at $17.56 billion, in-line with expectations, while earnings from continuing operations came in at $3.92 per share, beating consensus of $3.79 per share, Schneider said. The company reported strong Software revenues, up 11.5% year-on-year, he added.

IBM's robust AI bookings performance, which took bookings to date above $5 billion, is "an incremental positive that should help drive share gains in the Consulting business over time," the analyst stated. The company appears on track "to complete its pivot to long-term growth driven by stronger Software performance and market share gains in Consulting," he further wrote.

Check out other analyst stock ratings.

RBC Capital Markets On IBM

Analyst Matthew Swanson reaffirmed an Outperform rating, while lifting the price target from $250 to $276.

The highlights of IBM's fourth quarter were the strong outperformance of free cash flows, GenAI bookings and Red Hat growth, Swanson said. All three are likely to build momentum into 2025, as reflected by the guidance of $13.5 billion in free cash flows, he added.

Investor focus would be on Software execution in the first half of the year, with both Consulting and Infrastructure expected to be backend weighted, the analyst stated. Management expects revenue growth to accelerate to over 5% in constant currency terms, he further said.

Stifel On IBM

Analyst David Grossman reiterated a Neutral rating, while raising the price target from $246 to $271.

With in-line revenues, IBM reported an earnings beat with margins coming in 40 basis points higher than expected, Grossman said. The company's free cash flows were around $500 million above estimates, he added.

The upside in free cash flows was driven by the Qradar divestiture, among other factors, the analyst stated. Management guided to growth of around 6% in free cash flows to around $13.5 billion in 2025, versus Street expectations of about $13 billion, he said.

IBM Price Action: Shares of IBMhad risen by 8.66% to $248.42 at the time of publication on Thursday.

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