IBM (NYSE: IBM) Price Target Raised Amid Strong Q3 Earnings and Software Growth

• Jefferies raises IBM's price target to $280, implying 11.3% upside from its current share price.
• IBM surpasses Q3 revenue of $17.1 billion and adjusted earnings of $2.95 per share, driven by software and System Z sales.
• Software revenue grows 9%, with significant contributions from Red Hat and OpenShift, and AI-related work boosting consulting revenue.

IBM (NYSE: IBM) is a technology company that sells software, infrastructure systems, and consulting services. Jefferies analyst Brent Thill raises his price target to $280 from $270. At the stated share price of $251.46, the new target implies about 11.3% upside. A price target is an analyst’s estimate of where a stock may trade, not a guarantee.

The higher target follows third-quarter revenue of $17.1 billion, above the $16.8 billion analyst consensus. Adjusted earnings reach $2.95 per share, compared with the $2.86 estimate. Revenue rises 5.9% from a year earlier, while adjusted earnings grow 11%, supported by System Z sales and several software categories.

Software is a key part of that growth. Revenue in the segment rises 9%, while annual recurring revenue grows 8% to $24.9 billion. This measure tracks revenue IBM expects from ongoing customer contracts. Red Hat revenue grows 11%, and OpenShift annual recurring revenue reaches $2.4 billion, up more than 30%, as highlighted by GuruFocus.

Infrastructure revenue rises 5% and consulting revenue grows 2%. AI-related work accounts for about 30% of consulting revenue and 35% of its backlog, which represents work contracted but not yet completed. Free cash flow—the cash left after operating and capital spending—totals about $8 billion for the first nine months, up 8%.

The earnings beat does not produce a steady after-hours gain. Shares rise as much as 7.3% before reversing to a 4.6% loss around 5:35 p.m. ET. The available report does not establish the cause of that reversal, as highlighted by The Motley Fool.