IBM (IBM) will likely report in-line Q1 results on April 22, with the early close of the Confluent acquisition likely contributing about $50 million in revenue to the quarter, BofA Securities said in a note Monday.
IBM will likely leave its full year 2026 outlook unchanged as it will probably aim to offset incremental dilution with the added quarter of revenue and cost savings, the note said, adding the Confluent deal closed on March 17, one quarter earlier than expected.
BofA said it sees 2026 as a "more modest year" for IBM as it integrates Confluent and also as the sector "works through the impact of the AI agent disruption narrative."
BofA said its 2026 EPS estimate for IBM is now $11.98, down from $12.20, due to the additional quarter of Confluent dilution as well as a forecast for weaker growth in IBM's consulting business.
The investment firm said, however, it is still bullish on IBM's software moat as well as its free cash flow growth potential in the long term.
BofA reiterated its buy rating on IBM and lowered the company's price target to $300 from $340.
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