International Business Machines (IBM) is a multinational tech company that continues to evolve as time progresses. This provider of data and cloud platforms makes it easier for businesses to make the digital transition and take full advantage of tech innovation. Aside from providing cloud and data services, IBM also provides a litany of other tech solutions.
IBM’s offerings include but are not limited to IT solutions, quantum computing, computer systems, data storage systems, microelectronics, and enterprise software.
IBM has enjoyed a solid 2021. Let’s take a closer look at this tech powerhouse to determine if it is a solid investment for the remainder of the year.
IBM is on the Rise
IBM was priced around $125 one month ago. Today, the stock is priced just under $135. Rewind to October of 2020 and IBM was priced at a mere $106.65. The stock took off immediately after hitting this floor, jumping all the way to $131 on January 21. Though IBM dipped in late January, the stock has gradually moved right back to the $135 level. The pressing question is whether IBM will move back to its pre-COVID price of $153.41.
The Analysts’ Take on IBM
The analysts believe IBM will move higher, setting an average target price of $137.84 for the stock. If IBM reaches this level, it will have popped by more than 3%. The analysts’ high target price for the stock is $165. Of the 16 analysts who have issued recommendations on IBM, four consider it a Strong Buy, one considers it a Buy, and 11 consider it a Hold.
IBM POWR Ratings
IBM is a solid performer in the POWR Ratings, grading out as a B overall, meaning it is a Buy. IBM has B grades in the Quality, Momentum, and Value components of the POWR Ratings. Click here to learn more about how IBM fares in the Sentiment, Stability, and Growth components of the POWR Ratings.
Of the 48 publicly traded companies in the Technology – Hardware space, IBM is ranked 12th. You can learn more about the stocks in this industry by clicking here.
Is IBM Headed Even Higher?
It appears as though IBM is set to climb higher. The stock is still trading well below its pre-pandemic high of $153 and change. The increasing reliance on the cloud, data and tech solutions provided by IBM has the potential to escalate the stock to new heights.
Keep in mind, IBM is currently priced in the low $130s, equating to a forward P/E ratio of a lowly 11.93. This forward P/E ratio would have been considered a bit low for a tech stock such as IBM even in the 90s and early aughts. Nowadays, a forward P/E below 20 for a tech stock is considered fantastic value.
If you are worried by IBM’s risk level, consider its dividend. IBM pays an annual dividend of 4.89%, a spectacular figure considering the company’s tech offerings and growth potential. Even if the stock were to decline around 5% after you establish a position, the loss would be immediately offset by the robust dividend. Though there is no guarantee IBM’s dividend will be paid, chances are investors will receive the money as the economy is returning to normal, setting the stage for corporations to follow through on dividend payments as planned.
Though IBM has certainly had its struggles in recent years, the company’s gradual transformation bodes well for current shareholders. IBM will continue to pivot away from hardware and software, instead choosing to make cloud computing its strength. This high-growth segment will somewhat offset revenue reductions in IBM’s legacy operations. As an example, the company’s cloud sales hit an all-time high in the fourth quarter of 2020. In total, IBM’s cloud sales represent nearly 40% of its overarching aggregate sales. This statistic is particularly important considering the cloud space is characterized by high growth and massive margins.
Look for IBM to acquire even more companies in the year ahead including a couple of up-and-coming cloud tech specialists. Investors should not hesitate to buy and hold IBM for the foreseeable future.
This is a syndicated post. Read the original post at Source link .