In a report published Friday, Deutsche Bank analyst Chris Whitmore reiterated a Buy rating on International Business Machines Corp. (NYSE: IBM), but lowered the price target from $240.00 to $225.00.
In the report, Whitmore noted, ?IBM posted non-GAAP EPS of $3.00 on revs of $23.4B (vs. DB at $25.0B/$3.09, Street at $24.7B/$3.05) which missed Street expectations and our model. IBM called out $400M of transactional deals that did not close in the Q (Mainframe & SW). In the past, IBM has been able to manage top line weakness but the magnitude of the miss and high profit content raises a red flag for all our ITHW names (especially those with traditional HW offerings). We cut our IBM est's and PT to $225 as near-term valuation pressure for IBM appears unavoidable. However at ~$196 in the aftermarket (12x FY13E EPS) we'd be buyers on weakness ahead of est. improving 2H Services revenue growth.?
International Business Machines Corp. closed on Thursday at $207.15.
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