International Business Machines (NYSE: IBM) has notably lagged behind its more glamorous peers in the tech sector. That wasn’t necessarily the case on Friday with its stock, as the shares rushed to close nearly 3% higher. This was more than double the 1.2% rate the S&P 500 index rose on the day. A researcher’s upgrade was the key reason for the pronounced upward move.
Evercore ISI raises IBM to the equivalent of buy
The IBM upgrader was a team of Evercore ISI analysts led by Amit Daryanani, which changed their recommendation on the stock for the better. The analysts now feel IBM rates an outperform (buy, in other words), one notch up from in line (hold). The prognosticators also raised their price target on the shares, to $200 apiece from the previous $165.
In their view, IBM is currently well poised to reap the benefits of bullish developments in the tech sector this year. They feel that businesses will raise their IT spending in order to improve productivity. Additionally, the explosive growth of artificial intelligence (AI) apps and functionalities should ramp up spending on segments such as consulting and software. IBM is active in both.
That said, the company isn’t necessarily associated with the rapidly emerging technology. The Evercore ISI team characterized it as “an overlooked beneficiary of increasing AI adoption.”
Knock-on effects anticipated
Consulting and software won’t be the only IBM specialties benefiting from these tailwinds, the Evercore ISI analysts believe. They also think that the take-up of AI will have a positive effect on its data business, and its own efforts in the AI sphere.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.
Why IBM Stock Soared Higher on Friday was originally published by The Motley Fool