International Business Machines Corp. shares rose 1.2% in premarket trade Wednesday, after RBC upgraded the stock to outperform from sector perform and said it expects a range of secular and cyclical catalysts to propel the stock higher in 2018. “A return to gross margin stability coupled with revenue growth in 2018 should set-up the stock for a year of outperformance especially considering the depressed valuation,” analysts led by Amit Daryanani wrote in a note. Key levers include the mainframe cycle, which should drive hardware and software sales, currency is expected to become a tailwind and not a headwind in the year, the trend toward hybrid IT spend is expected to improve and the stock’s valuation is attractive-especially given the 3% plus dividend yield. RBC raised its stock price target to $180 from $160. Shares have fallen 8% in the last 12 months, while the Dow Jones Industrial Average has gained 25% and the S&P 500 has gained 19%.
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