Key facts
- Barclays initiated coverage of IBM with an Overweight rating.
- Barclays set a price target of $350 for IBM stock.
- IBM stock surged 11-12% in premarket trading.
- IBM's software business generates nearly half of its revenue and the bulk of its profits.
- Barclays analyst Raimo Lenschow noted IBM's infrastructure software serves large, regulated enterprises.
Barclays' initiation of coverage on IBM with an Overweight rating and a $350 price target highlights the investment bank's positive outlook, primarily driven by the strength and sticky nature of IBM's software business. This segment, which accounts for nearly half of IBM's revenue and most of its profits, sells foundational infrastructure software to large enterprises, creating a stable, recurring revenue base. The call builds on recent positive momentum for IBM stock, which has seen significant gains over the past month and year.