IBM (NYSE:IBM) shares rose Monday after BofA Securities raised its price forecast on the stock. In a note released Monday, BofA said IBM appears well-positioned to deliver solid second-quarter results and could modestly raise its full-year 2026 guidance.
BofA analyst Wamsi Mohan reiterated a Buy rating on the technology giant and raised the price forecast from $315 to $330.
Software Segment Drives Upward Adjustments
Mohan raised the price forecast to $330, based on a 21 multiple of estimated calendar 2027 enterprise value to free cash flow (EV/FCF). BofA Securities adjusted its full-year 2026 revenue estimate upward to $71.4 billion from $71.1 billion, and its full-year EPS forecast to $12.47 from $12.10.
The revisions reflect a stronger software mix and accelerated synergies from the Confluent integration, with BofA Securities estimating a $340 million contribution from Confluent in the second quarter. Organic software growth is projected to improve to 6% in the second quarter.
Enterprise AI Capitalizes Infrastructure Trends
For the second quarter, BofA Securities models an infrastructure decline of 2% in constant currency as the company laps the z17 product cycle launch. Despite a projected year-over-year decline continuing into the second half of 2026, Mohan noted “potential for upside given enterprise AI adoption & demand driving revs in Power and storage.”
Segment Forecasts Match Fiscal Guide
BofA Securities projects second-quarter organic revenue growth of 3.2%, yielding a total revenue estimate of $18 billion and an EPS of $3.05. Red Hat growth is modeled at 10% in constant currency, matching the first quarter. Automation software is forecasted at 11% growth for the quarter, while Consulting is modeled to grow 2% in constant currency, running in line with management guidance.
Price Forecast Valuation Risks
The new target multiple exceeds IBM’s historical median of 13 times, which Mohan justified by pointing to an “improving growth and FCF trajectory with Red Hat.”
Downside risks to the $330 price forecast include potential failure in executing the growth roadmap, inability to realize restructuring cost savings, hardware competition and tightening corporate IT budgets.
IBM Stock Price Activity: IBM shares were up 3.69% at $300.21 at the time of publication on Monday, according to Benzinga Pro data.
