IBM shares gain the most in seven weeks on Wednesday, UBS upgrades the stock to “Buy”, boosts price target on AI, cloud computing outlook

September 27, 2018 8:01 am

Shares of International Business Machines (IBM) registered their largest single-session gain in a bit more than seven weeks on Wednesday, after UBS upgraded the tech company to “Buy” from “Neutral” previously, citing potential for higher-than-expected earnings in 2019.

UBS also raised its price target on the stock to $180 from $160 previously.

IBM shares closed higher for the fifth time in the past nine trading sessions in New York on Wednesday. It has also been the sharpest daily surge since August 3rd. The stock went up 1.81% ($2.70) to $151.61, after touching an intraday high at $153.35, or a price level not seen since April 17th ($162.00).

Shares of International Business Machines have retreated 1.18% so far in 2018 compared with an 8.69% gain for the underlying index, S&P 500 (SPX).

In 2017, IBM’s stock fell 7.57%, thus, it again underperformed the S&P 500, which registered a 19.42% return.

According to UBS analyst John Roy, a UBS survey of IT executives showed sound demand for IBM services, cloud and artificial intelligence offerings.

“We think sustainable growth for IBM is on the horizon,” Roy wrote in a Tuesday client note, cited by CNBC.

“The mainframe cycle will be ending and the FX headwinds are likely to hurt the top-line optics, but we believe this is priced in. IBM is operating better but we believe the multiple could expand as it beats expectations on Analytics and Cloud,” he added.

Roy pointed out that sales in IBM’s cloud computing business surged 22% to $7.2 billion in 2017.

The analyst also expects IBM’s full-year 2019 earnings to be $14.25 per share compared with a median analyst forecast of $14.04 per share.

According to CNN Money, the 21 analysts, offering 12-month forecasts regarding IBM’s stock price, have a median target of $160.00, with a high estimate of $200.00 and a low estimate of $125.00. The median estimate represents a 5.53% upside compared to the closing price of $151.61 on September 26th.

The same media also reported that 13 out of 24 surveyed investment analysts had rated IBM’s stock as “Hold”, while 8 – as “Buy”. On the other hand, 2 analysts had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, today’s levels of importance for the IBM stock are presented as follows:

R1 – $151.79
R2 – $151.98
R3 (Range Resistance – Sell) – $152.16
R4 (Long Breakout) – $152.72
R5 (Breakout Target 1) – $153.36
R6 (Breakout Target 2) – $153.62

S1 – $151.43
S2 – $151.24
S3 (Range Support – Buy) – $151.06
S4 (Short Breakout) – $150.50
S5 (Breakout Target 1) – $149.86
S6 (Breakout Target 2) – $149.60

By using the traditional method of calculation, the weekly levels of importance for International Business Machines (IBM) are presented as follows:

Central Pivot Point – $150.47
R1 – $153.48
R2 – $155.60
R3 – $158.61
R4 – $161.61

S1 – $148.35
S2 – $145.34
S3 – $143.22
S4 – $141.09

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