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Investing.com - Erste Group upgraded IBM (NYSE:IBM) from Hold to Buy on Friday following the company’s strong third-quarter performance and improved financial guidance. The tech giant’s shares are currently trading at $310.31, near its 52-week high of $324.90, with an impressive year-to-date return of 43.72%.
IBM management has raised its full-year 2025 revenue growth forecast to more than 5%, according to Erste Group’s research note. The company also increased its free cash flow expectation to approximately $14 billion for the full year, building on its current levered free cash flow of $12.47 billion for the last twelve months.
The software segment is expected to continue gaining importance for IBM in the future, largely supported by Red Hat products, Erste Group noted in its analysis of the company’s business outlook.
Erste Group anticipates IBM will achieve higher sales growth next year compared to the current year, suggesting continued momentum in the company’s business operations.
The research firm believes IBM shares should benefit from the company’s positive outlook and achieve further price gains, supporting the upgrade to a Buy rating.
In other recent news, IBM has been designated as a critical Information and Communication Technology third-party provider under the European Union’s Digital Operational Resilience Act. This designation subjects IBM to direct supervision concerning its services to financial institutions across Europe, aimed at ensuring these entities can withstand technology disruptions. Additionally, IBM announced a collaboration with Cisco to develop a network of large-scale, fault-tolerant quantum computers, with an initial demonstration expected within five years. In the analyst community, RBC Capital reiterated its Outperform rating on IBM stock, maintaining a price target of $300, citing growth and operational efficiency within IBM’s infrastructure segment. Similarly, Evercore ISI reiterated its Outperform rating with a price target of $315, highlighting IBM’s position in the IT/AI sector and its potential to benefit from enterprise AI adoption and other initiatives.
Furthermore, IBM has partnered with the University of Dayton to research next-generation semiconductor technologies, focusing on AI hardware and advanced packaging. As part of this collaboration, IBM will provide semiconductor equipment valued at over $10 million for a new nanofabrication facility on the university’s campus. This facility, expected to be completed in 2027, will also offer hands-on learning opportunities for students. These developments underscore IBM’s ongoing efforts to enhance its technological capabilities and strengthen its market position.
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