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Investing.com - Bernstein SocGen Group lowered its price target on International Business Machines Corp. (NYSE:IBM) to $280 from $330 while maintaining a Market Perform rating.
The firm noted that IBM has undergone a significant re-rating over the past five years, moving from hardware to software price-to-earnings multiples before recently de-rating alongside other software peers. The firm’s analysis examines valuation ahead of the company’s first-quarter fiscal 2026 earnings report scheduled for April 22.
IBM’s valuation has expanded meaningfully over the past five years, migrating from hardware-like multiples toward levels of software peers. Since peaking at 26 times forward earnings in June 2025, IBM’s forward price-to-earnings ratio has de-rated to 19 times as it was caught up in broader software sector weakness. The stock currently trades at a P/E of 20.71 with a PEG ratio of 0.29, and InvestingPro data shows the shares are undervalued relative to its Fair Value estimate.
On a sum-of-the-parts basis excluding Quantum, IBM now trades at a premium to what its business mix suggests. The firm identified three potential reasons for this premium: IBM’s software pricing appears more consumption and workload-based versus seat-based, valuation may embed some Quantum optionality, and IBM’s strong execution in mergers and acquisitions and higher profitability.
The company is now trading like a pure-play software company following its transformation from a hardware-focused business. According to InvestingPro Tips, IBM is trading at a low P/E ratio relative to near-term earnings growth, with analysts forecasting EPS of $12.61 for fiscal 2026. For deeper insights into IBM’s valuation and transformation, investors can access the comprehensive Pro Research Report, available for this and 1,400+ other US equities.
In other recent news, IBM has made significant advancements in its cybersecurity and AI offerings. The company launched IBM Autonomous Security, a service that utilizes AI agents to automate threat response and vulnerability management, reducing the need for human intervention. Additionally, IBM announced a partnership with Arm to develop dual-architecture hardware aimed at running AI and data-intensive workloads. This collaboration seeks to integrate Arm’s architecture with IBM’s enterprise systems capabilities.
IBM also received FedRAMP authorization for 11 of its AI software solutions, including products from its watsonx portfolio, which will be deployed on AWS GovCloud to meet federal compliance requirements. In the financial sector, BofA Securities lowered IBM’s stock price target to $300 from $340, maintaining a Buy rating, and noted that the Confluent acquisition is expected to contribute $50 million in revenue for the first quarter. Stifel also adjusted its price target for IBM to $290 from $340, citing potential headwinds from the Gulf conflict and foreign exchange movements while acknowledging the early closure of the Confluent acquisition as a positive factor. These developments reflect IBM’s ongoing efforts to enhance its technological capabilities and navigate market challenges.
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