Analysts are Bullish on IBM, But is it Actually Time to Buy This Stock? 3 Things to Consider First

Goldman Sachs analyst James Schneider helped send shares of International Business Machines (IBM) higher Monday with a bullish outlook on the company for the road ahead. He set a price target at $200 and says it’s time to buy this stock, which currently sits at $173.

Schneider is bullish on the IT services segment in general, launching coverage on 8 other companies at the same time. He noted that many of these companies, IBM included, have been struggling with a lack of spending for their services given macroeconomic pressures. 

There’s also been the issue of AI technology dominating company budgets, stealing attention away from traditional software like IBM’s offerings. 

However, it’s clear that IBM specifically is not just going to watch the AI trend unfold – it’s here to take a piece of the pie. The company started this year announcing its partnership with Casper Labs, which we wrote about in January.

Schneider also said that he sees light at the end of the tunnel for IBM as it successfully wraps up its pivot toward long-term growth. The company has worked to improve its infrastructure software offerings in tandem with its consulting business. 

He went on to give his forecast for the company’s long-term prospects – 5% to 7% revenue growth with free cash flow coming in at around 10%. He also sees a PE ratio growth potential of 18x, compared to a previous range of 9-13x.

The company’s continued ability to push financial performance higher is going to be contingent on its ability to leverage AI products and services, capture market share for consulting, and continue to grow its traditional software products.

The stock has only gained 6.5% this year and is actually down nearly 9% in the past 3 months. Yesterday’s update did spark a slight rally, but shares have retreated so far today. 

So, where does this leave you? Should you follow Schneider’s bullish call and BUY IBM? Not so fast – we found 3 things in the VectorVest stock software you need to weigh before making your next move.

IBM Has Good Upside Potential With Fair Safety and Timing

VectorVest simplifies your trading strategy through a proprietary stock rating system that delivers clear, actionable insights in just 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT). 

Each sits on a scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy. You’re also given a buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s what we found for IBM:

• Good Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year price projection), AAA corporate bond rates, and risk. This offers much better insight than the typical comparison of price to value alone. IBM has a good RV rating of 1.19 right now.
• Fair Safety: The RS rating is a risk indicator that’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. IBM has a fair RS rating of 0.92 right now.
• Fair Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year, offering the full look at a stock’s price trend. IBM has a fair RT rating of 1.03.

The overall VST rating of 1.04 is fair for IBM, but not enough to earn the stock a buy rating in the VectorVest system. It’s rated a HOLD for the time being. Take a moment to look at this free stock analysis for a deeper assessment of the opportunity in front of you and transform your trading strategy for the better!

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Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. IBM got a slight boost yesterday when Goldman Sachs analyst James Schneider launched bullish coverage of the IT services company. The stock itself has good upside potential with fair safety and timing.

Before you invest, check VectorVest! Click here to ANALYZE ANY STOCK FREE and see our system in action!