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Investing.com - IBM (NYSE:IBM) received a reiterated Buy rating and $310 price target from Stifel on Friday, despite the stock falling 6% in after-hours trading following its second-quarter earnings report. According to InvestingPro data, the stock is currently trading near Fair Value levels, with analyst targets ranging from $190 to $350. The recent decline has pushed IBM’s RSI into oversold territory, suggesting a potential buying opportunity.
IBM reported second-quarter revenue growth of 5% at constant currency and earnings per share growth of 15%, both exceeding consensus expectations of 3.5% and 9% respectively. The company also improved its pre-tax income margins by 110 basis points during the quarter. This performance contributes to IBM’s impressive track record, with revenue reaching $64.04 billion in the last twelve months and maintaining a robust gross profit margin of 57.57%. Get deeper insights into IBM’s financial health with InvestingPro’s comprehensive analysis, including 12 key ProTips and detailed valuation metrics.
The main concern highlighted by Stifel was IBM’s decelerating organic software growth, which was estimated at approximately 3% for the quarter, down from 5-6% in the first quarter of 2025 and 6-7% in the previous year. The consulting segment remained flat while infrastructure grew by 11%, both in line with expectations. Despite these concerns, IBM maintains its position as a prominent player in the IT Services industry, with InvestingPro data showing strong financial health metrics and a 39.81% total return over the past year.
IBM maintained its 2025 guidance of over 5% constant currency revenue growth, which assumes high single-digit software growth and mid-single-digit organic growth. The company increased its pre-tax income margin guidance by 50 basis points to 100 basis points improvement year-over-year.
Stifel analyst David Grossman recommended "opportunistic purchases for defensive-minded investors" despite noting that "post-report selling may persist for a short period" due to the re-rating, elevated pre-report expectations, and concerns about slowing software growth.
In other recent news, International Business Machines (IBM) reported its second-quarter earnings for 2025, surpassing analyst expectations. The company achieved earnings per share (EPS) of $2.80, exceeding the forecasted $2.65, and generated revenue of $17 billion, outpacing the anticipated $16.59 billion. These strong financial results have been a focal point for investors. Additionally, UBS raised its price target for IBM to $200 from $195 while maintaining a Sell rating. UBS noted that while there was pressure on IBM’s Consulting segment, the anticipated launch of the z17 mainframe helped offset these challenges. These developments highlight the mixed performance and strategic adjustments within IBM’s operations.
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