JP Morgan: Take Advantage of Weakness in IBM Shares

JP Morgan has published a research report on International Business Machines

stating that investors should take advantage of "sell on the news" weakness in shares of the company. In the report, JP Morgan writes, "We recommend that investors take advantage of any “sell-on-the-news” weakness in shares of IBM. We reiterate our Overweight rating and lift our recently-raised estimates. While software growth in 1Q was slightly lighter than we expected (5% YoY reported vs. JPMe 7%) , we expect a reacceleration as recently-closed deals stand to have a full quarter impact on 2Q in contrast to the partial impact on 1Q. IBM services business was mixed profit margins grew and signings of $11.8 billion topped our estimate of $11.1 billion, but services backlog declined 2% YoY as reported. Lastly, IBM injected some confidence that its hardware business could exhibit improvements in 2H 2012 as the PureSystems roll-out gains traction." JP Morgan maintains its Overweight rating and $225 price target on IBM, which is currently trading down $5.06 from yesterday's $207.45 closing price.