IBM Shares Jump After Analyst Upgrade

Shares of IBM climbed higher in pre-market trading on Wednesday after receiving an upgrade from RBC Capital Markets.

The firm upgraded IBM from “sector perform” to “outperform” and said that it expects a range of secular and cyclical
catalysts to push shares even higher this year.

A team of analysts led by Amit Daryanani wrote, “A return to gross margin stability coupled with revenue growth in 2018 should set-up the stock for a year of out performance especially considering the depressed valuation.”

“We think IBM is an attractive large-cap value stock for investors in 2018 as the potential for revenue and margin stability should enable a re-rating.”

According to the firm, IBM’s valuation of 11 times price-to-earnings and dividend yield over 3% make the stock “very attractive” in 2018.

RBC also raised its stock price target from $160 to $180. The new price target represents a 17% upside to Tuesday’s closing price for the stock.

Disclaimer: We have no position in IBM Common Stock (NYSE: IBM) and have not been compensated for this article.