IBM stock price target maintained at $315 by RBC ahead of Q3 results

Investing.com - RBC Capital has reiterated an Outperform rating and $315.00 price target on IBM (NYSE:IBM) ahead of the company’s third-quarter earnings report scheduled for October 22. The stock, currently trading at $280.75, has shown strong momentum with a 30.29% year-to-date return. According to InvestingPro data, IBM’s stock is currently trading above its Fair Value.

The firm expects IBM to deliver "solid" results in the upcoming earnings announcement, while noting that investors will likely focus on revenue sub-components as much as the overall top-line figure.

RBC Capital highlighted that market participants will be particularly interested in whether IBM’s Q3 performance eases concerns about the company’s path toward meeting full-year growth projections for both Red Hat and its total software business.

Free cash flow remains another key metric that investors will monitor closely, according to the investment firm’s analysis.

RBC noted that IBM’s free cash flow should continue to benefit from the company’s "clientzero" cost-saving initiatives, which utilize generative AI technology to improve internal operational efficiency.

In other recent news, IBM announced its plans to acquire Cognitus, a Dallas-based SAP S/4HANA services provider. This acquisition is expected to enhance IBM’s SAP implementation capabilities by incorporating Cognitus’ industry-specific expertise and proprietary software assets. Additionally, IBM has entered a strategic partnership with Bharti Airtel to expand cloud services in India, aiming to enhance the Airtel Cloud platform by increasing its availability zones from four to ten. This collaboration will leverage IBM’s cloud solutions and AI technologies to target enterprises in regulated industries such as banking and healthcare.

IBM also formed a partnership with S&P Global to integrate its watsonx Orchestrate AI framework into S&P Global’s supply chain management solutions. This integration aims to provide clients with improved visibility into supply chain operations by combining IBM’s AI technology with S&P Global’s data. Furthermore, IBM announced the release of its Spyre Accelerator for AI workloads on enterprise systems, which will be available for IBM z17 and LinuxONE 5 systems starting October 28. The Spyre Accelerator is designed to support generative and agentic AI applications while maintaining security and resilience for enterprise workloads.

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