18 January 2018

INVEST - Barclay's is Bullish on IBM's New Strategy in Cloud and Blockchain

A 'new dawn emerges' as Rometty Strategy Moves IBM

Image result for image for ginni rometty
Ginni Rometty, CEO of IBM.
Barclays raised its rating on IBM stock to overweight all the way from underweight yesterday.
"We think that IBM could emerge as the next important cloud vendor after Amazon and Azure over time as customers seek a multi-cloud strategy to avoid vendor lock-in or technology complacency," wrote Barclays analyst Mark Moskowitz. "As a result, IBM's strategic revenue should surpass legacy revenue – implying the worst may be over."
The Barclay's analyst raised his price target to $192 from $133, representing 17 percent upside from Tuesday's close.
IBM has struggled and the company's revenue had declined for 22 quarters in a row.
Developments in analytics, cloud, mobile and security technologies are all being considered as a way to offset revenue shortfalls in the company's legacy products, according to Moskowitz. Roughly 46 percent of revenue in the third quarter came from these new strategic imperatives, while cloud revenue for the quarter was $4.1 billion, up 20 percent from the previous year.
One of the technologies highlighted by Moskowitz, blockchain may also be an area in which IBM could capitalize. It currently has 1,500 employees assigned to developing blockchain, hoping to leverage the popular technology with Walmart to address food safety.
"Eighty-four percent of chief investment officers plan to use multiple cloud vendors and IBM's initiatives with both blockchain and analytics could help the company become a more competitive vendor for certain cloud workloads," Moskowitz said. "Uptake of these solutions would benefit IBM revenue and help scale the company's cloud segment margin."
While not mentioned by Moskowitz yesterday, InfoStream sees IBM's move to serve up 'Watson' as a service announced by Rometty at CES 2016 as being vital to the future of the company.

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