IBM stock price target maintained at $310 by Stifel despite software growth concerns

IBM shares declined 6% after-hours despite the company reporting better-than-expected Q2 2025 results, with constant currency revenue up 5% and EPS up 15%, both exceeding consensus. Stifel reiterated a Buy rating and $310 price target, recommending opportunistic purchases for defensive investors, citing the stock's oversold RSI. However, investor concern was driven by decelerating organic software growth, which slowed to 3%, and a flat consulting segment, leading Stifel to caution that post-report selling may persist despite IBM maintaining its 2025 revenue and margin guidance.

Analysis

International Business Machines (IBM) presented a mixed operational picture in its second-quarter 2025 results, triggering a 6% after-hours stock decline despite headline beats. The company surpassed consensus expectations with a 5% constant currency revenue growth and a 15% increase in earnings per share, supported by a 110 basis point improvement in pre-tax income margins. However, investor sentiment was dampened by a significant deceleration in organic software growth, which slowed to approximately 3% from 5-6% in the prior quarter and 6-7% in the previous year. This key segment's slowdown, coupled with a flat performance in the consulting division, overshadowed the strong 11% growth in the infrastructure segment. Despite the market's negative reaction, which pushed the stock's RSI into oversold territory, IBM's management expressed confidence by maintaining its full-year 2025 guidance for over 5% revenue growth and increasing its pre-tax income margin outlook. Analyst commentary reflects this dichotomy: Stifel reiterated a Buy rating and a $310 price target, framing the pullback as an opportunity for defensive investors, while UBS maintained a Sell rating with a slightly increased $200 price target, citing consulting pressures offset by the upcoming z17 mainframe launch.

Key Decisions for Investors

• Defensive or value-oriented investors might consider the 6% post-earnings price drop an opportunistic entry point, given the stock's oversold RSI, strong headline financial performance, and reiterated full-year guidance.
• Investors should closely monitor IBM's organic software and consulting segment growth in the upcoming quarters, as a failure to re-accelerate could validate the market's present concerns and challenge the company's ability to meet its full-year targets.
• Given the negative market reaction and analyst warnings of persistent short-term selling pressure, traders should anticipate continued volatility and may consider a phased approach to accumulating a position.