⬛ IBM: ANALYSIS ⬛

⬛ IBM: ANALYSIS ⬛

IBM designs technology, software, and infrastructure services for businesses and governments. It focuses on enterprise artificial intelligence (with its watsonx platform), hybrid cloud computing, advanced cybersecurity, strategic consulting, and quantum computing development. The company has strategic partnerships with various companies, including hyperscalers, service providers, global system integrators, and software and hardware vendors that include Adobe, Amazon Web Services, Microsoft, Oracle, Salesforce, Samsung Electronics and SAP, and others. It also has a strategic collaboration with Arm Holdings plc for the development of new dual-architecture hardware that helps enterprises run future AI and data intensive workloads; strategic partnership with three.ws to advance ai-powered 3d agent technology; and collaboration with Lightwell to help strengthen open source software supply chain.

Based on a sample of the last year [2Q/26 TTM], its average margins have been:
- Gross margin: ≈ 58.0%
- Operating margin: ≈ 17.6%
- EBITDA margin: ≈ 25.2%
- Net margin: ≈ 14.8%
- Debt Net / EBITDA: ≈ 3.11X
- Solvency Ratio = 0.13x
- FCF margin: ≈ 24.7%
- FCF conversion: ≈ 121.2%
- FCF coverage: ≈ 7.4%

Pros:
- Resilience in recurring revenue and AI-driven initiatives. Furthermore, it is one of the leading large corporations investing in quantum computing for the specialized sector.
- Strong recurring revenue base (80% of software revenue is recurring)
- Resilient margins and net debt

Cons:
- Execution Shortfall in Software Deals and Weak Infrastructure Segment 
- Slight weakening of growth CAPEX compared to the increase in maintenance CAPEX
- Weak 2026 guidance 

According to the last previous , their normalized annual EPS was ≈ $11.43 USD and its last average ROIC [TTM] was ≈ 14.0%. If an annual Forward PER 20 is set as a benchmark with an EPS max intensity of ± 0.4895x, the potential forward spread target for the next 12 months could be:
- Optimistic: ≈ $308.71 USD
- Neutral: ≈ $228.18 USD
- Pessimistic: ≈ $145.08 USD
At least, an EPS of $1.8158 USD is required for the next quarter, to keep the metrics.

If an annal Forward EV/EBITDA 15 is set, an EBITDA increases of ± 10.1%, a Net Debt increases of ± 5.63%, a Dividends increase of 0% and Shares Outstanding increases of ± 1.12%, the potencial spread price target for the next 12 months could be:
- Optimistic: ≈ $252.57 USD
- Neutral: ≈ $219.14 USD
- Pessimistic: ≈ $190.8 USD

If an annual average Forward EV/FCF 20 is set, and FCF rate change of ± 10.67% and Shares Outstanding increases of ± 0.0%, the potencial spread price target for the next 12 months could be:
- Optimistic: ≈ $239.24 USD
- Neutral: ≈ $210.57 USD
- Pessimistic: ≈ $181.90 USD

Finally, the JJPL spread price target would be:
- Optimistic: ≈ $266.2 USD
- Neutral: ≈ $219.3 USD
- Pessimistic: ≈ $172.6 USD


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J. Joel Padilla
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