Street View: IBM's software, consulting units to see growth ahead

Hashicorp

25/04/2024 12:59

** International Business Machines  IBM.N  on Wednesday
reported first-quarter revenue marginally below estimates and
said it will buy HashiCorp  HCP.O  in a deal valued at $6.4
billion, expanding its cloud-based software products to tap into
an AI-powered boom in demand
    ** Shares down 8.6% at $168.25 in premarket trading

        SUCCESS OF HASHICORP DEAL LIES IN SYNERGIES
  
    ** BofA Global Research ("buy," PO: $209) sees the
acquisition of HCP being in line with IBM's focus on hybrid
cloud and AI, and believes IBM can drive cost synergies and
drive rev growth across its larger customer base
    ** Brokerage expects 2024 software business rev to grow
slightly above the high-end of IBM’s mid-single-digit percentage
model
    ** J.P.Morgan ("neutral," PT: $185) believes IBM's software
and consulting businesses are set for a 'hybrid cloud' and
'digital transformation' growth ahead
    ** Evercore ISI ("outperform," PT: $215): "Focus now will be
on how does IBM execute on revenue acceleration across both
consulting and software segments"
    ** Jefferies ("hold," PT: $190) sees the HCP deal as a
strategic asset and believes it should support IBM's
software-first initiative
    ** However, brokerage says "concerns around the monetization
of AI and the lack of a near-term catalyst keep us on the
sidelines"

 (Reporting by Reshma Rockie George in Bengaluru)
 ((Reshma.George@thomsonreuters.com))