On Thursday, RBC Capital adjusted its outlook on IBM (NYSE:IBM) stock, raising the price target to $211 from the previous $200, while keeping an Outperform rating. The revision follows IBM's recent performance, where the company showed strong key metrics and a significant increase in its Generation AI (GenAI) book of business, which doubled quarter over quarter to $2 billion.
The analyst from RBC Capital highlighted IBM's solid free cash flow (FCF), which exceeded expectations and contributed to the company's forward guidance through the fiscal year 2025.
Despite a temporary pause in the growth of its Red Hat segment, IBM's management expressed confidence in the second half of the year's potential for growth. The maintained revenue forecast coupled with the raised FCF outlook for the fiscal year 2024 indicates a year that is less dependent on end-loaded performance.
IBM's financial results have been bolstered by the doubling of its GenAI book of business, reaching a notable $2 billion. This growth is seen as a positive indicator for the company's innovation and market positioning in the field of artificial intelligence. The analyst's statement also reflects a positive stance on the company's overall trajectory.
The maintained Outperform rating signifies that RBC Capital continues to see IBM as a favorable investment. The increase in the price target to $211 is based on the higher estimates set forth by the firm, suggesting a positive outlook for IBM's stock value in the near future.
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