BMO Capital has increased its price target on IBM to $350.00 from $305.00, while leaving the stock's rating at Market Perform. The research note highlights a mixed quarter in which several underperforming areas were balanced by stronger results in other businesses and by attractive cash generation.
The firm described IBM's most recent quarter as a "reasonable quarter," noting softness in the Red Hat and Consulting segments. Those weaknesses were counterbalanced by healthy growth in the Data business and by strong free cash flow (FCF), according to the research commentary.
BMO said IBM's fiscal year 2026 revenue guidance appears to be in line with market expectations. The note added that the company's free cash flow guidance came in above what the firm had expected. BMO specifically called out roughly 7% year-over-year organic growth in Software as "solid," signaling that software performance was a key driver behind the more constructive target.
Despite lifting the price target, BMO maintained its Market Perform rating. The firm explicitly stated that IBM's current valuation does not look compelling enough to warrant an upgrade in rating, even with the higher target.
Recent quarterly results provide context for the analyst moves. For the fourth quarter of 2025, IBM reported adjusted earnings per share of $4.52, ahead of the $4.31 analysts had expected. Revenue for the quarter was $19.7 billion versus consensus expectations of $19.2 billion. The company delivered a 12% increase in overall sales year over year, or 9% on a constant-currency basis, with growth recorded across all three reporting segments.
Following these results, Evercore ISI raised its own price objective on IBM from $330 to $345 and continued to carry an Outperform rating. The combination of strong quarterly performance and the updated targets from multiple firms underscores investor attention on IBM's recent momentum.
Looking ahead, BMO said its watchpoints for fiscal 2026 include IBM's ability to sustain improved, consistent execution and to maintain organic Software growth. The firm argued that IBM has an "attractive strategy and positioning" in the market, but emphasized execution and valuation as the keys to whether that positioning translates into better returns for shareholders.
This analysis leaves investors weighing upward revisions in price targets and encouraging cash flow against pockets of operational softness and a valuation that some analysts find unappealing. How IBM demonstrates sustained execution and software growth over the coming quarters will be central to future analyst reassessments.