By Khac Phu Nguyen
Publication Date: 2026-10-16 19:38:00
IBM, the enterprise-computing and AI-services group IBM, faces a higher bar for cash generation despite a bigger analyst target, with shares at $231.59, down approximately 1.08%, at 11:27 a.m. ET on October 16. According to The Fly, Morgan Stanley lifted its target to $238 from $190 while keeping an Equal Weight rating. That is a 25.3% target increase, but the new target sits just 2.8% above the share price. The bank expects infrastructure strength to help offset sluggish consulting growth.
Cash flow explains why execution matters. IBM’s second-quarter results showed $2.5 billion in free cash flow and $1.6 billion in dividends. Those payments consumed 64% of quarterly free cash flow, leaving roughly $900 million after dividends. Software revenue reached $7.8 billion, up 5%, while Consulting revenue held flat at $5.3 billion. The next test is whether stronger businesses can generate more cash while consulting demand remains soft.
The valuation snapshot places shares 4.84% below the…