As International Business Machines Corp. (NYSE: IBM) stock remains trapped in a multi-month consolidation, James Friedman, a Wall Street analyst at Susquehanna, has initiated a neutral rating on the stock for the next 12 months.
Friedman initiated coverage of the IBM stock with a $303 price target for the next 12 months, according to a note sent to clients and analyzed by Finbold on July 10. As such, the Wall Street analyst implied roughly a 2.6% upside from IBM’s Friday price of approximately $295.30.
The firm signaled a Hold rating on IBM stock, valuing the company’s quantum computing option at $65 per share. According to Friedman, IBM’s WatsonX AI bookings have exceeded $12.5 billion, while double-digit growth in the company’s software segment appears durable.
The analyst also pointed to IBM’s z17 mainframe cycle, which he believes still has room to run. Friedman noted that the company is generating $15.7 billion in free cash flow, thus bolstering bullish sentiment over the next 12 months.
However, the analyst flagged concerns about the company’s stock due to its Consulting division, which he sees as vulnerable to disruption from automation and industry-wide oversupply.
IBM stock price forecast and performance
Following Friedman’s IBM stock price forecast, 18 Wall Street analysts surveyed by TipRanks, over the past 3 months have set an average 12-month target of $302.94.
With the moderate Buy rating, these analysts believe that IBM stock may not break through its year-to-date resistance. The large-cap company with a valuation of about $342 billion at the time of reporting faces potential stock burst as the Federal Reserve raised concerns that AI stocks are fueling inflation, as Finbold reported.
From a technical analysis standpoint, if the stock falls below its YTD support level of around $220 over the coming months, Wall Street analysts’ targets may not be met.
