IBM stock remains an Outperform at Evercore ISI following solid earnings

Investing.com - IBM (NYSE:IBM), currently trading at $287.51 and showing a remarkable 30.54% year-to-date return, maintained its Outperform rating and $315 price target at Evercore ISI following the company’s third-quarter earnings report that exceeded expectations. According to InvestingPro analysis, IBM is currently trading above its Fair Value.

The technology giant, with a market capitalization of $267.82 billion and an "GOOD" Financial Health score from InvestingPro, reported revenue of $16.3 billion and earnings per share of $2.65, representing 7% growth in constant currency. The performance was driven by 9% software growth, consulting returning to 2% growth, and infrastructure rising 15% due to the z17 mainframe cycle.

IBM raised its full-year 2025 revenue growth guidance to "more than 5%" year-over-year in constant currency, up from its previous outlook of "at least 5%." With foreign exchange expected to provide approximately 150 basis points of tailwind, this implies reported growth exceeding 6.5%.

The company’s Red Hat business grew 12% in the quarter, showing some deceleration from previous performance. Evercore ISI estimates Red Hat growth will modestly slow to approximately 11% in the December quarter, reflecting tough year-over-year comparisons against 17% growth in December 2024.

IBM expects free cash flow of approximately $14 billion for 2025, with Evercore projecting this metric could reach $15 billion or higher in 2026 as the company continues to integrate its HashiCorp acquisition.

In other recent news, International Business Machines (IBM) reported its third-quarter 2025 earnings, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $2.65, which was higher than the projected $2.44. Revenue also exceeded forecasts, coming in at $16.33 billion compared to the anticipated $16.09 billion. Despite this positive financial performance, Goldman Sachs maintained its Buy rating on IBM, with a price target of $350.00. The investment bank expressed concerns over "slightly softer Software results," particularly in Transaction Processing and Red Hat growth, which could affect investor sentiment. These developments highlight both the strengths and challenges IBM faces in its current market environment.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.