Oppenheimer withdrew its recommendation to buy IBM stock following its historic plunge

Following the historic plunge in IBM’s stock and the company’s negative preliminary assessment of its second-quarter 2026 results, Oppenheimer analyst Param Singh withdrew his “buy” recommendation for the tech veteran’s shares and downgraded IBM from “outperform” to “market-neutral” (Perform), according to CNBC. Singh also decided not to set a price target for the company’s stock. The day before, on July 14, IBM experienced the worst day in its history on the stock market, losing a quarter of its market capitalization in a single day. During trading on July 15, the company’s stock rose 1.8%.

IBM’s preliminary results fell short of both Oppenheimer’s expectations and the consensus forecast across all segments, the analyst noted. He pointed out that, according to the company’s new estimate, its quarterly revenue will grow 1% year-over-year to $17.2 billion, while Wall Street had expected $17.9 billion.

Despite some positive developments in the server and storage segments, as well as the performance of Red Hat (a Linux-based software provider), HashiCorp (a developer of cloud infrastructure management software), and Confluent (a data streaming platform), Oppenheimer noted that software revenue is expected to grow by 5% for IBM compared to the same period last year. Singh had expected 12%.

"Without additional major acquisitions or significant catch-up in large deals," IBM will find it difficult to achieve double-digit growth in the software segment in calendar years 2026–2027, the analyst believes, as quoted by Investing.com. It will take time for this positive outlook to materialize, the strategist added, emphasizing that, in his view, IBM’s stock price will stagnate in the near term.

Oppenheimer’s previous price target for IBM shares—$350 per share, implying a rise of more than 60% from the latest closing price—has been withdrawn. The company’s failure to meet market expectations jeopardizes its ability to meet its financial targets for the entire current year, which will continue to put pressure on the stock, Singh warned.

Oppenheimer’s stance contrasts with the general sentiment on Wall Street, notes CNBC. According to LSEG data, most analysts remain optimistic about IBM’s stock outlook: of the 26 analysts covering the company’s stock, 16 recommend buying it, while the remaining nine advise holding it.

On July 14, IBM stock experienced the worst day in its history. The plunge in the stock price was triggered by the release of preliminary second-quarter financial results, which fell significantly short of Wall Street’s expectations. The company reported adjusted earnings of $2.93 per share on revenue of $17.2 billion. The FactSet consensus estimate, meanwhile, had projected earnings of $3.01 per share and revenue of $17.86 billion. IBM plans to release its official and full quarterly report on July 22.

This article was AI-translated and verified by a human editor