-- CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:
We lower our price target by $37 to $296, 23x our 2026 EPS view, above IBM's three-year average (~20x) on AI tailwinds and growing software exposure. We raise our 2026 EPS view by $0.07 to $12.86 and lift 2027's by $0.03 to $13.90. Q1 results offered a mixed response to the AI competition threat. Bears will focus on Software growth (ex-FX) decelerating to 8% from 11% in Q4 with the segment's 2026 outlook improving only slightly to 10%+ from 10% despite the Confluent acquisition closing early (providing a ~50-bp Software growth boost). Some analysts expected more out of Consulting and will point to its modest 1% sales growth as indicative of COBOL modernization pressure from emerging AI tools. We take a more bullish stance and see Consulting results as resilient, with sales/signings both growing despite ongoing macroeconomic pressures and 2026 growth still forecasted near 5%. On the Software side, ARR again grew 10% Y/Y (consistent with prior periods) and Red Hat encouragingly rebounded to 10% from 8% in Q4.