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Investing.com - Erste Group downgraded IBM (NYSE:IBM) from Buy to Hold on Thursday, citing the technology company’s below-average growth prospects. The stock, currently trading at $240.07, shows mixed signals according to InvestingPro data, with analyst price targets ranging from $198 to $350.
The research firm noted that IBM’s sales growth remains significantly below the sector average, with no expected improvement for the remainder of 2025.
IBM’s latest forecast for 2025 projects moderate revenue growth of at least 5% year-over-year, while maintaining its free cash flow forecast at $13.5 billion.
Erste Group expressed concern about IBM’s current price-to-earnings ratio, which it considers high given the company’s growth outlook.
The downgrade comes as IBM continues to navigate challenges in accelerating its revenue growth to match broader technology sector performance.
In other recent news, IBM reported its second-quarter earnings for 2025, surpassing analyst expectations with strong financial results. The company achieved earnings per share of $2.80, exceeding the forecasted $2.65, and generated revenue of $17 billion, surpassing the anticipated $16.59 billion. IBM’s revenue growth was 5% at constant currency, and its earnings per share increased by 15%, both above consensus expectations. Additionally, the company improved its pre-tax income margins by 110 basis points during the quarter. Despite these positive results, UBS maintained a Sell rating on IBM while raising its price target from $195 to $200, citing pressure on the Consulting segment. Stifel, on the other hand, reiterated a Buy rating with a $310 price target, despite concerns about software growth. The recent launch of the z17 mainframe was noted as a significant development, offsetting some pressure in the Consulting segment. These updates reflect a complex picture for IBM, with varying analyst opinions on the company’s future prospects.
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