International Business Machines Corporation may be loved by Warren Buffett now with the huge stake owned by Berkshire Hathaway Inc....but it turns out that the brokerage firm Stern Agee loves Big Blue as well. The firm has started new coverage of IBM with a “Buy” rating, but more impressive is this $230.00 price target.
The firm calls its positioned for double-digit earnings growth that is unparalleled in its ability to solve customer problems with its deep industry expertise, broad set of offerings, and global presence. The $230 target is based solely on a 13.5x multiple on its 2013 earnings estimate of$17.00 in earnings per share (versus $16.42 EPS consensus from Thomson Reuters).
It noted, “We believe the company deserves to trade at a modest premium given its relative predictability and stability, and EPS growth profile of 10%-15%. We believe IBM’s goal of $20.00 in EPS in 2015 is achievable. In our view, the beauty of the IBM story is that double-digit EPS growth is not dependent on the top line, but rather a growing mix of higher-margin software (23% of revenue) through organic means and acquisitions.”
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