Barclays raised its rating on IBM shares to overweight from the underweight on Wednesday, advising investors that the company could rival Microsoft and Azure from Microsoft in the cloud technology business.
"We believe that IBM could emerge as the next important cloud provider after Amazon and Azure as customers seek a multi-cloud strategy to avoid vendor blocking or technological complacency," wrote Barclays analyst Mark Moskowitz. "As a result, IBM's strategic revenues should exceed legacy revenues, implying that the worst will have passed."
The analyst raised his target price to $ 192 from $ 133, which represents an increase of 17 percent from the close of Tuesday.
IBM has struggled to keep its top line stable in recent years as technology competition has become more fierce; The company's revenues have declined for 22 consecutive quarters since its earnings report for October. But the company has tended to exceed expectations lately and now expects to end the 2017 calendar year with at least $ 13.80 in earnings per share, 5 cents more than the consensus.
IBM reports fourth-quarter earnings on Thursday afternoon. Shares have fallen 2.4 percent in the last 12 months, compared to a 35 percent increase in the ETF Technology Select SPDR.
Advances in analytics, in the cloud, on mobile devices and in security technologies are being considered as a way to compensate for the revenue falls in the company's legacy products, according to Moskowitz. Approximately 46 percent of revenues in the third quarter came from these new strategic imperatives, while cloud revenues for the quarter were $ 4.1 billion, up 20 percent from the previous year.
As one of the technologies highlighted by Moskowitz, blockchain may also be an area in which IBM could capitalize. It currently has 1,500 employees assigned to the development of Blockchain, hoping to take advantage of popular technology with Walmart to address food safety.
"Eighty-four percent of investment managers plan to use multiple cloud providers, and IBM's blockchain and analytics initiatives could help the company become a more competitive provider for certain workloads in the cloud," he said. Moskowitz. "The adoption of these solutions would benefit IBM's revenues and help scale the margin of the company's cloud segment."
