IBM's stock (NYSE: IBM) ended the day as one of the best performers in the market, with a gain of 12.96% leading the stock to a new all-time-high at $261.80. Bulls piled in as the company announced its fourth-quarter earnings, surpassing Wall Street forecasts for both earnings and revenue. The move was supported with heavy volume, with 14.27 million shares changing hands, against the average daily volume of 3.875 million.
Earnings came in with an adjusted EPS of $3.92 against analysts' expectations of $3.78. The company's revenue was slightly ahead of projections as well, reaching $17.55 billion compared to the anticipated $17.54 billion. Despite a decrease in net income to $2.92 billion, or $3.09 per diluted share, from the previous year's $3.29 billion or $3.55 per share, the results were positively received due to strong performance metrics compared to forecasts.
Looking forward, IBM has projected a promising year ahead, estimating a full-year growth of around 5%, adjusted for currency impacts, alongside an expected free cash flow of $13.5 billion for 2025. The overall revenue for IBM rose by 1% in the fourth quarter, contributing to an annual revenue total of $62.8 billion, also up by 1% from the previous year.
The strong performance was driven significantly by IBM's software segment, which saw a substantial increase of 10% year-over-year, reaching nearly $8 billion. This growth was largely attributed to the rising demand for artificial intelligence (AI) solutions and notable results from its subsidiary, Red Hat. Additionally, sales in IBM's Data & AI solutions rose by 4%, and Red Hat products specifically grew by 16%.
Analysts were quick to raise price targets on IBM, with no fewer than sever major firms hiking on the day. The new prices from high to low, including the previous target in brackets are listed below.
- BMO Capital – $280 ($260)
- RBC Capital – $276 ($250)
- Stifel – $271 ($246)
- Jefferies – $270 ($245)
- BofA – $270 ($260)
- JP Morgan – $244 ($233)
- Morgan Stanley – $228 ($217)
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