ARMONK, N.Y. (
(IBM - Get Report)
in avoiding the worst of the
is going to reap benefits for the broader stock market, according to analyst firm Auerbach Grayson.
The tech bellwether, which recently
its 2009 and 2010 profit forecast, forced its
during the downturn, despite falling revenue and an uncertain spending climate. The company's stock has also risen more than 44% this year as investors warm to the company's aggressive
and margin expansion.
Auerbach Grayson analyst Richard Ross says that IBM's shares, which currently trade around $121, will continue their upward trajectory.
"IBM is quietly in a very strong technical position which has the stock on the verge of a potentially explosive breakout," he wrote, in a note released Wednesday. "A move above $120.88 could propel the shares to a test of the old high around $131 at a minimum."
The Armonk, N.Y.-based firm's strong presence on the Dow could also impact the wider stock market, according to Ross. With its 9.3% weighting equal to that of
(GE - Get Report)
(PFE - Get Report)
Bank of America
(BAC - Get Report)
(INTC - Get Report)
(CSCO - Get Report)
(MSFT - Get Report)
, IBM could drag the Dow up on its own.
"The math alone is enough to drive the market higher (not that it needs any help)," wrote Ross. "IBM is well positioned as the global economic recovery unfolds and the growth story resumes in earnest."
In its recent
, IBM boosted its pre-tax margin by four points, its biggest margin improvement since it sold off its PC business to
in 2005. Despite seeing revenue dip 3% year-over-year, the firm also expanded its gross margin by two points.