Prudential sees a compelling buying opportunity in International Business Machines (IBM) shares.
Analyst Steven Fortuna says he continues to believe there are a number of important catalysts on the horizon for IBM which should help reinvigorate investors in the stock during the seasonally strong back half of the year. Specifically, he thinks IBM will benefit from significant headcount reductions, reorganization of services operations, new mainframe cycle, and nstrong double-digit growth in both pSeries (Unix) and iSeries (AS400).
Historically, Fortuna says IBM trades at about a 25% premium to Hewlett-Packard (HPQ); currently IBM is trading at a 9% discount.
He reiterates overweight rating and $105 target price on the stock.