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Investing.com -- Oppenheimer analysts recently engaged with investors to discuss their outlook on IBM (NYSE:IBM), addressing key questions about software growth, consulting revenue, and valuation methodology.
Despite some skepticism, Oppenheimer said in a note Wednesday that it remains confident in its $320 price target for IBM, supported by multiple valuation approaches that yield a range of $293 to $380 per share.
One major point of discussion was IBM’s software segment. Investors questioned Oppenheimer’s forecast of "10% or higher organic, constant-currency Software (ETR:SOWGn) growth in C2026/27," which exceeds management’s guidance.
The firm’s analysts cited Red Hat as the primary growth driver, noting that "IBM is benefiting from strong adoption for RHEL and OpenShift."
In contrast, investor sentiment toward IBM’s consulting business was more optimistic than Oppenheimer’s own projections.
While IBM has guided for consulting growth above market rates, Oppenheimer has taken "a much more cautious approach," expecting only low-single-digit growth. However, analysts believe that "consulting revenues inflect positively in 2H25."
The most significant pushback came on valuation. Some investors questioned Oppenheimer’s reliance on a "software-centric methodology of a single-value EV/sales," preferring alternative approaches such as P/E, EV/FCF, or a sum-of-the-parts (SOTP) analysis.
In response, Oppenheimer said it presented a "football field" analysis incorporating multiple valuation methods, all supporting its $320 target.
Ultimately, Oppenheimer maintains that "IBM’s shift to a software-centric model deserves to be evaluated on a single EV/sales" approach.
While differing methodologies create a wide valuation range, the firm sees IBM’s transformation as a key driver of long-term value, reinforcing confidence in its bullish stance on the stock.