BofA Global Research maintains a "Buy" rating on IBM, raising the price objective to $270 from $260, driven by strong free cash flow (FCF) potential in 2025 despite a weaker revenue guide. IBM's Q4 2024 results slightly exceeded expectations, with revenue at $17.6 billion and EPS at $3.92, supported by a robust software segment, particularly Red Hat, which grew 16% y/y. However, consulting and infrastructure segments faced challenges, with consulting revenue down 2% y/y.
Looking forward, IBM projects 2025 revenue growth of 5% or higher in constant currency, with FCF expected to reach $13.5 billion, surpassing Street estimates of $12.6 billion. The company anticipates software revenue to approach double-digit growth, driven by Red Hat and automation, while consulting is expected to grow at low single digits. BofA notes, "IBM's potential to deliver FCF well above expectations even with HashiCorp dilution gives us conviction that revs and margins can continue to move structurally higher over the next few years."
IBM's current stock price is $251.17, reflecting a 9.86% increase from the previous close.