Market Overview

IBM Downgraded at Cowen

Share:

Moshe Katri, analyst at Cowen and Company downgraded shares of IBM (NYSE: IBM) from Outperform to Market Perform with a price target of $165.

“Our downgraded reflects Q-Q declines in a number of important demand metrics, including net project workloads, project execution and bench skill base levels,” the analyst wrote in an equity research report.

Katri noted “Big Blue's” poor performance throughout 2013 which lead to his bearish views. The company has consistently missed consensus expectations. The company has also seen a weaker bottom line due to negative foreign exchange exposure from the Japanese Yen. The company also performed poorly in emerging markets such as China and Brazil.

The analyst performed a survey of five global vendors and found that IBM's position declined from top of the list in June 2013 to third place in November. Project execution/delivery declined 1,000 BPTS from June, and Bench/skill base was down 500 BPTS from June.

The company is operating in an extremely competitive environment. “Stiff competition from the India centric vendors could have a detrimental impact on both revenue growth and margin levels,” Katri noted.

Katri believes that shares are justified at a lower valuation compared to the S&P 500. IBM is trading at 10X projected CY2014EPS, below the S&P 500's 15X. “In our view, a lackluster outlook for top line growth, combined with Street's appetite for high-beta, “growth” names could cap IBM's multiple.”

The analysts target reflects an expected negative return of 6.3 percent based on December 6th opening price.

Posted-In: Big Blue IBM Moshe KatriAnalyst Color News Downgrades Analyst Ratings

 

Related Articles (IBM)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
UPSUBSMaintains136.0
TXNUBSMaintains110.0
SHWUBSMaintains570.0
PGUBSMaintains126.0
MCDUBSMaintains212.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Windows 8 Now Loaded Onto 9.3% Of All PCs

InterOil Announces Approval of PRL39 by PNG Government, Clarification on Deal With Total