The analyst advised to buy IBM shares. He believes that the market undervalues the company

Oppenheimer analyst advised investors to buy shares of technology giant IBM, expecting their price to rise by almost a quarter. According to Oppenheimer, the market underestimated the scale of the company's transformation towards software business. Oppenheimer believes that IBM is facing a new growth cycle - from accelerating revenue in the software segment to the recovery of consulting and the emergence of new revenue streams thanks to AI applications.

Oppenheimer analyst Param Singh initiated coverage of IBM stock with an Outperform rating equivalent to a "buy" advice and a target price of $360 - 24% above the close of recent trading, CNBC reports. Singh believes the market is underestimating IBM's future growth potential. According to the analyst, the company is successfully shifting its focus toward software. He expects revenue from IBM's software business to grow at an average annual rate of 10% over the next two years. Singh cited the company's strong position in automation and the improved performance of Red Hat, IBM's open source software subsidiary.

"Our divergent view from the market is based on IBM's continued successful pivot to a software focus, and we expect an above consensus trajectory for revenue and margin growth," the analyst said in a note cited by CNBC. - We believe investors are too conservative in their assessment of IBM's transition, and among analysts covering the stock there are still many who specialize in legacy IT hardware and services."

Singh predicts that IBM's consulting division revenue, which returned to growth in the third quarter of 2025, will further expand at a moderate pace. He says this reflects a recovery in demand for business consulting and application services. In addition, the analyst believes IBM will be able to generate additional revenue through the development and maintenance of AI applications. According to him, companies that previously invested in building AI infrastructure are now looking to use it in real-world programs - and IBM, with its strong engineering expertise, could gain a significant advantage from this.

At trading on November 21, IBM shares jumped almost 3% to $298.6. Since the beginning of the year, the market value of the company has grown by 35%. For comparison: the main U.S. stock index S&P 500 for the same period added about 12.5%.

One of the most recent recommendations on IBM securities is for Daiwa Securities to raise its Oct. 28 target price from $273 to $300 and maintain a neutral rating, according to MarketScreener data.

Only 50% of analysts covering IBM stock advise investors to buy it (Buy and Overweight ratings). Another 30% are neutral (Hold rating), and the rest suggest selling (Underweight and Sell).

Wall Street's consensus target price of $288 is roughly in line with the Nov. 20 close of trading.

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