IBM May Climb Past Record to at Least $200

By Sarah Frier - Oct 15, 2011 3:27 AM GMT+0700
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International Business Machines Corp., which rose to an intraday record today, may keep climbing to $200 or more, according to analysts who are boosting their price targets for the stock. Photographer: Tony Avelar/Bloomberg

International Business Machines Corp. (IBM), which rose to a record today, may keep climbing to $200 or more, according to analysts who are boosting their price targets for the stock.

Eight of the 19 analysts with price targets surveyed by Bloomberg estimate IBM will rise to at least $200, 7.1 percent above yesterday’s close, according to data compiled by Bloomberg. Three analysts increased their price targets to $200 or more this week, ahead of IBM’s Oct. 17 earnings announcement, and Macquarie Capital began coverage with a $210 target today.

“IBM’s high recurring revenue business model has ‘Goldilocks’ characteristics, allowing IBM to perform well in a good or bad macro environment,” said Louis Miscioscia, an analyst for Collins Stewart, who raised his price target to $210 today and has a “buy” rating on the stock.

Under Chief Executive Officer Sam Palmisano, 60, IBM sold off its personal computer business and focused on software and services, helping lift per-share profit for more than 30 straight quarters. Now the world’s largest computer-services provider, IBM has gained more than 80 percent since Palmisano took over, including 30 percent this year.

Investors have been drawn by “a very stable earnings stream,” said David Grossman of Stifel Nicolaus & Co., who has price target of $210 for IBM. “If revenues start to come under pressure for economic reasons, there are several levers at their disposal that they can exercise to support earnings expectations.”

IBM, based in Armonk, New York, rose 2 percent to $190.53 at the close in New York.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net.