IBM Share Price Forecast September 2021 – Time To Buy IBM?

Shares of the renowned American multinational technology organisation IBM (NYSE: IBM) are in the green today, after closing at $138.67 on September 8th (23:34 UTC-4). This movement exceeded the S&P 500’s 0.13 per cent drop, reflecting a +0.44 per cent increase compared to the prior day. As IBM prepares to release its latest earnings report in October, investors will be looking for signs of positivity.

IBM – Technical Analysis

According to the financial statement from IBM, the market cap of the corporation is at $124.293 billion with total assets worth $146.814 billion. Total revenue for 2020 was at $73.62 billion whereas in 2019 it was at $77.15 billion.

Moving averages for IBM such as Exponential Moving Average (10)(139.32), Simple Moving Average (10)(139.30), Exponential Moving Average (20)(139.94), and Simple Moving Average (20)(140.17) are pointing towards selling. Oscillators such as Relative Strength Index (14)(43.18), Stochastic %K (14, 3, 3)(32.35), Commodity Channel Index (20)(−73.06), and Average Directional Index (14)(13.44) are, on the other hand, neutral.

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Recent Developments

Shareholders should keep an eye on any new updates in analyst forecasts for IBM. These adjustments usually represent the most recent short-term industry trends, which are prone to revision. In essence, positive estimate revisions might be interpreted as a sign of confidence regarding the future prospects of the corporation. Arvind Krishna, IBM’s cloud chief, took over as the company’s CEO from Ginni Rometty in April, this year. IBM announced in October that its slower-growing managed infrastructure management division would be spun out into a new firm named Kyndryl. The spin-off is expected to be completed by the end of 2021, according to IBM.

Critics may argue that IBM is merely rearranging old pieces, but IBM expects the spin-off would generate additional resources to build its significantly greater hybrid cloud and AI operations. The data that travels between multi-clouds is processed by IBM’s hybrid cloud services, which are mostly driven by Red Hat open-source software. The hybrid cloud is also a potential market for artificial intelligence (AI) technologies that can analyse data and assist organisations in making data-driven choices.

Krishna sees a “$1 trillion market opportunity” in the hybrid cloud in the long run. If this expansion strategy succeeds, IBM may be able to achieve continuous growth in revenue all over again.

Should You Buy IBM Shares?

IBM is significantly cheaper than Amazon, Alphabet, and Microsoft, with its shares trading at 12 times forward earnings. However, IBM’s low P/E ratio may restrict its downside potential, making it a desirable and secure investment in the event of a financial downturn.

IBM has a Forward P/E ratio of 12.77 when it comes to its value. With an average Forward P/E of 25.39 for its market, one would assume that IBM is selling at a bargain. It’s also worth noting that IBM has a PEG ratio of 1.57 where the PEG ratio is comparable to the well-known P/E ratio, with the exception that the PEG ratio additionally considers the corporation’s projected earnings growth rate.

Another aspect to consider while deciding to buy/sell IBM shares is that although IBM claims it can create a position in the hybrid cloud industry, several major corporations are already expanding the range of their cloud platforms. In other terms, IBM’s major growth opportunity, hybrid cloud, might be progressively consumed by the rising public cloud industry.

Thus, in my opinion, shareholders who currently hold IBM shares might want to wait for the forthcoming spin-off, while those who don’t should look into other potential tech firms at this moment.

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