Citi Upgrades Ingram Micro, Downgrades IBM Ahead of Q1 Results

Shares of IBM (NYSE: IBM) and Ingram Micro (NYSE: IM) are trading in opposite directions Tuesday afternoon following a downgrade and upgrade, respectively, from Citi's Jim Suva. IBM shares are trading down about 0.8 percent; shares of Ingram Micro are up about 0.1 percent.Suva downgraded shares of IBM from Buy to Neutral and set a $200 price target, while at the same time upgrading shares of Ingram Micro from Neutral to Buy and raising the stock's price target from $28 to $35. The analyst's note comes ahead of first-quarter results out of company's in the IT Hardware space. Suva is modeling for "at best an in-line quarter and guidance for most large enterprise vendors for 1Q14 given the lingering uncertainty over demand and on-going technology shifts (i.e. public cloud adoption) which are leading customers to re-think their datacenter strategy and sweat their assets in the meantime." Both Accenture and Oracle's recent results "largely support this view," according to Suva.The Citi analyst believes IBM shares "currently reflect long-term EPS growth characteristics" following the stock's strong outperformance since the last month of 2013. Risks mentioned by Suva include "tepid IT spending environment, macro uncertainty in emerging markets, divestiture of x86 and associated revenue pressures on associated storage, software, and services, continued pricing pressures and shift to cloud in services likely to temper margin expansion."Suva's upgrade on Ingram Micro is primarily predicated on his belief the Street's current estimates "fail to reflect the full benefit of the cost actions laid out by the company." Instead, Suva noted the Citi model points at about 15 percent upside to analyst's consensus estimate for FY15.