Edward Jones was downgraded because it is now “fairly priced”, argues Edward Jones By

© Reuters. IBM (IBM) downgraded because it is now ‘properly priced’ argues Edward Jones

By Sam Boughedda

Edward Jones analysts downgraded IBM (NYSE:) to Hold from Buy in a note to clients on Monday, telling investors the company thinks the stock is priced appropriately.

Analysts acknowledge that IBM has largely succeeded in reorganizing its business to focus on the faster-growing end-to-end consulting and software markets following the decoupling of its business. infrastructure management business.

“With this change, IBM’s growth prospects will be more attractive to investors and lead to a higher share price,” the analysts said.

They added that after discontinuing the managed infrastructure business, IBM will deliver stronger growth.

The lean company will focus more on software and cloud services, which should lead to 4%-6% growth in the long term, the analysts argue. We believe the growth rate higher will help IBM be more appreciated”. .

However, they believe that with the business transformation complete and the stock rising due to the potential for faster growth, they think the stock now reflects the company’s growth expectations and is “priced appropriately.” .”

“IBM is trading at about 14 times our 2023 earnings estimate, well above the 11 average. We believe a higher P/E ratio is warranted as we move into multiple services. IBM has underperformed technology stocks over the long term as the company has struggled to make up for a decline in its legacy business, resulting in lackluster growth,” analysts said. tit said.

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