One former Wall Street darling that has been a serial underperformer during the greatest bull market of all time was the recipient of an upgrade Friday morning. That company is International Business Machines Corp IBM, and it's the PreMarket Prep Stock of the Day.
Long-Term IBM Price Action: IBM made its all-time high in February 2017 at $174.59. At the price of $129.50, it has a negative return of 26%. Over that same course of time, the S&P 500 index has yielded a positive return of 87% at 4,436.
Short-Term IBM Price Action: IBM bottomed on the same day (Feb. 24) as the S&P 500 index at $118.81. The recent high for the rebound ($133.08) was made one day after the index made its short top on March 30.
On Wednesday, the issue bottomed at $124.91 and rebounded to close at $126.14 and end a four-day losing streak.
Morgan Stanley's IBM Upgrade: Before the open Thursday, Morgan Stanley analyst Erik Woodring upgraded the issue from Equal-Weight to Overweight and raised the price target from $147 to $150. The rating, equivalent to a Buy rating, is IBM's first in almost two years.
It is not exactly a ringing endorsement of the company, but more or less identified the issue as a safe haven and one that is sporting a 5.1% dividend yield in a volatile investing environment. In other words, “a place to hide amid macroeconomic uncertainty.”
PreMarket Prep's Take On IBM: When the issue was being covered on the show Thursday, it was trading at the $128.30 area.
Co-host Dennis Dick is mixed on the issue: “I am not shorting it, it has been a bit sleepy lately and media coverage of it could kickstart a rally.”
The author of this article emphasized clearing the premarket high ($129.80) and being able to remain in the $130 handle. If the issue went into retreat mode, there was potential support at the top of Wednesday’s range at $126.67.
IBM Price Action: Off the open, the issue caught a bid with the index and breached the premarket high, rallying to $130.58 and reversing course.
The ensuing decline found support ahead of the top of Wednesday’s range ($126.67), only reaching $128.49. The stock was up 0.82% at $127.18 Thursday afternoon, according to Benzinga Pro.
The discussion on IBM from Thursday’s show can be found here:
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