IBM
International Business Machines Corporation$240.21
Unclear
Target $235.28
Report: Mar 07, 2026Technology • Information Technology Services • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$240.21-2.1%
Rec: UnclearConviction: High
Entry Target
$180.98
(25% below current)
Fair Value
$235.28
(2% below current)
Stop Loss
$120.55
(50% below current)
Position Size
Half
Time Horizon
Long-Term
Key Metrics
Live Snapshot
Market Data
52 Week High$324.90
52 Week Low$214.50
Avg. 3 Month Volume5.79M
Efficiency
LTM Gross Margin58.2%
LTM EBITDA Margin25.6%
LTM EBIT Margin18.2%
LTM Operating Margin18.2%
LTM ROA7.2%
LTM ROE36.9%
LTM ROIC14.2%
LTM ROCE11.2%
Capital Structure
Market Cap (MM)$227.4B
Enterprise Value (MM)$278.3B
Shares Outstanding936.48M
Total Debt (MM)$64.61B
Cash & Equivalents (MM)$13.64B
LTM Net Debt (MM)$50.97B
LTM Net Debt/EBITDA2.9x
Growth
TTM Rev. Growth7.6%
Last 3-Yr Rev. CAGR3.7%
Last 3-Yr EBITDA CAGR35.0%
Last 3-Yr EPS CAGR84.2%
Valuation
Street Target Price$349.50
LTM EV/Revenue4.1x
LTM EV/Gross Profit7.1x
LTM EV/EBIT22.7x
LTM EV/EBITDA16.1x
LTM P/E21.5x
LTM EV/FCF24.0x
LTM P/FCF19.6x
LTM P/TB3.1x
LTM P/B7.0x
Dividend Yield2.8%
Payout Ratio59.0%
Executive SummarySituation: Current price is $240.21 versus fair value $235.28 (-2.1% expected return), and valuation confidence is stable. Debate: Bull case depends on Closing of the Confluent Acquisition This acquisition will unify data streaming across hybrid cloud and AI agents. Bear case centers on Moat Erosion via AI-Driven Code Automation Advanced AI models could automate the maintenance and translation of legacy COBOL code, which currently forms a high-margin 'lock-in' for IBM's mainframe and consulting businesses. Conclusion: Recommendation is Unclear; maintain no position until reliability and catalyst evidence improve.
Bull Case
Software-led mix shift is driving record free cash flow ($14.7B in 2025) and margin expansion; Red Hat OpenShift ARR growth of 30% signals continued hybrid cloud leadership; The $12.5B AI book of business provides a long-term growth floor.
Bear Case
High financial leverage with Debt/Equity at 198% and negative tangible book value; Potential moat erosion as AI coding tools (e.g., Anthropic's Claude) automate the maintenance of legacy COBOL code; Dependency on TSMC for advanced 2nm AI-centric semiconductor fabrication.
Key Catalysts
Mid-Term (6-18 months)Impact: High
Closing of the Confluent Acquisition This acquisition will unify data streaming across hybrid cloud and AI agents. While dilutive in 2026 (~...
Near-Term (0-6 months)Impact: Critical
Monetization of the $12.5B AI Book of Business As the cumulative AI book converts from consulting backlog into high-margin software recurrin...
Long-Term (18+ months)Impact: Moderate
IBM is at a critical juncture as it laps the record-breaking Z-17 hardware cycle; the market is currently testing whether the software-led A...
Primary Risks
Concern: Medium
Moat Erosion via AI-Driven Code Automation Advanced AI models could automate the maintenance and translation of legacy COBOL code, which cur...
Concern: High
Geopolitical and Supply Chain Concentration IBM relies on TSMC in Taiwan for advanced 2nm and AI-centric semiconductor fabrication, creating...
Concern: Medium
The stewardship verdict is Status Quo. The board is exceptionally strong, featuring directors like Alex Gorsky (former J&J CEO) and F. Willi...
Recent Activity
2026-02-03SEC Filing (8-K)
-6.49%IBM files Form 8-K to incorporate debt securities documents into S-3 registration statement.
2026-01-29SEC Filing (8-K)
+5.13%IBM reports strong Q4 2025 results with double-digit revenue growth across Software and Infrastructure segments.
2025-10-24SEC Filing (8-K)
+7.88%IBM reports strong Q3 2025 results with 7% revenue growth and raised full-year guidance.
2025-07-24SEC Filing (8-K)
-7.62%IBM reports Q2 2025 earnings with strong performance: 8% revenue growth, raises free cash flow outlook
2025-04-24SEC Filing (8-K)
-6.58%IBM reports Q1 2025 results with 2% revenue growth and strong free cash flow.
Valuation Table
9.8/10Decision Grade
Scenario Range
$133
Bear
$6
Base
$281
Bull
$240