IBM (IBM) Stock Climbs as BMO Capital Lifts Price Target to $265 Following Strong Q3 Earnings

Key Highlights

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BMO Capital increased IBM’s price target from $230 to $265, keeping a Market Perform rating in place.
Third-quarter results showed $17.1 billion in revenue alongside adjusted earnings reaching $2.95 per share, surpassing analyst projections.
The software segment delivered 8% revenue growth, though BMO expressed reservations about underlying performance trends.
IBM elevated its free cash flow forecast for the full year while keeping revenue growth projections steady.
Stifel also lifted its price target for IBM shares to $260 after reviewing third-quarter financial data.

IBM stock received an upgraded price target from BMO Capital this Thursday, following the technology company’s quarterly results that exceeded market expectations. The financial institution moved its target from $230 to $265 while preserving its Market Perform stance.

International Business Machines Corporation, IBM

The adjustment came after IBM unveiled its third-quarter performance on Wednesday. Trading closed that day at $251.46 per share, with Thursday’s session bringing renewed attention to software sales momentum and expansion rates. BMO’s revised target sits approximately 5% above Wednesday’s final price.

Price Target Adjustment Accompanies Mixed Signals

BMO noted that IBM’s third-quarter revenue outperformed analyst forecasts, benefiting from transactions that moved into the latest reporting period. The bank’s evaluation followed coverage of IBM’s quarterly earnings. The firm raised questions about whether this momentum would persist absent more consistent software demand patterns.

IBM disclosed revenue totaling $17.1 billion with adjusted earnings at $2.95 per share. Revenue advanced 5% year-over-year, representing 6% growth when measured in constant currency. These figures topped Wall Street consensus estimates of $16.82 billion in revenue and $2.86 earnings per share.

Software Segment Performance Draws Analyst Attention

The software division produced $7.8 billion in revenue, marking an 8% increase. Transaction Processing climbed 9%, Red Hat advanced 11%, while Automation revenue declined 3%, creating varied performance signals across software operations.

BMO highlighted that organic software expansion trailed IBM’s longer-term objectives. The firm estimated softness in Data and Automation categories when acquisition contributions were excluded. Meanwhile, SAP’s latest quarterly results demonstrated 26% cloud revenue advancement, representing another significant business software development this week.

Consulting and Infrastructure Segment Overview

IBM’s consulting operations delivered $5.3 billion, remaining essentially flat compared to the prior year. Revenue expanded 2% on a currency-adjusted basis, with strategy and technology consulting recording moderate gains.

Infrastructure revenue totaled $3.7 billion, representing a 4% increase. Distributed infrastructure sales surged 31%, though IBM Z revenue contracted 20%. BMO credited portions of the infrastructure improvement to pricing adjustments and volume increases. Infrastructure support revenue dropped 3% during the quarter.

Cash Flow Projections and Wall Street Views

IBM produced $3 billion in free cash flow during the quarter and raised its annual outlook. The technology firm anticipates full-year free cash flow will increase by over $1 billion. In related consulting developments, Accenture expanded its services through an acquisition this week.

IBM preserved its guidance for 4% to 5% annual revenue growth measured in constant currency. Stifel elevated its price target to $260, while BMO indicated it requires stronger evidence of sustainable organic software expansion before adopting a more optimistic outlook.