IBM (NYSE: IBM) shares were climbing in early trading on Thursday after the company reported its second-quarter results.
The results came amid an exciting earnings season. Here are some key analyst takeaways.
Goldman Sachs On IBM
Analyst James Schneider reiterated a Buy rating while raising the price target from $200 to $205.
IBM reported revenues of $15.77 billion, slightly higher than consensus of $15.63 billion, with total revenue from continuing operations up 3.8% in constant currency terms, Schneider said in a note. "Software and Infrastructure revenue were above the Street, but Consulting came in below," he added.
The company's earnings from continuing operations came in at $2.43 per share, surpassing Street's $2.18 per share, the analyst stated. Strong AI bookings performance is likely to be "an incremental positive that should help drive share gains in the Consulting business in the medium term," he further wrote.
RBC Capital Markets On IBM
Analyst Matthew Swanson maintained an Outperform rating while lifting the price target from $200 to $211.
Results in the quarter were better than expected across most metrics, including outperformance in revenues of $15.8 billion and free cash flows of $2.6 billion versus consensus of $15.6 billion and $2.4 billion, respectively, Swanson said. Management maintained its full-year guidance for revenue, while raising the free cash flow forecast to above $12 billion, he added.
The company doubled its GenAI book of business sequentially to $2 billion, the analyst stated. "While bookings remain strong, the Red Hat re-acceleration took a pause, but management is optimistic on 2H growth," he further wrote.
Stifel On IBM
Analyst David Grossman reaffirmed a Buy rating while raising the price target from $190 to $205.
Although IBM delivered a "solid" quarter, this is unlikely to be a catalyst, Grossman said. The "bigger driver is market recognition of 2025 growth set-up including improving software growth, mainframe cycle and stabilizing consulting fundamentals," he added.
"AI-related bookings nearly doubled q/q to ~$2bn, 75% services, more indicative of momentum than near-term revenue," the analyst wrote. Although management was bullish about longer-term opportunities, the revenue contribution of AI is currently small, he further stated.
BofA Securities On IBM
Analyst Wamsi Mohan maintained a Buy rating and price target to $209.
IBM's quarterly results were mixed, with upside being "partly driven by strong Transaction Processing revenues while areas like RedHat were weaker," Mohan said. Despite a weak macro, "the portfolio is delivering on mid-single y/y rev growth in the aggregate," he added.
The company guided to full-year revenue growth "in-line with its mid-single digit model," the analyst stated. "IBM's book of business in AI stands at $2bn inception-to-date with 75% from consulting signings and 25% in software," he further wrote.
IBM Price Action: Shares of IBM had risen by 5.49% to $194.06 at the time of publication on Thursday.