He reduced the target to $135 from $155 and affirmed his market-perform rating, The Fly reports.
The target drop apparently didn’t affect the Armonk, N.Y., tech giant's stock on a day when the broad market is indicated sharply higher. IBM shares at last check rose 2.8% to just under $119.
The shares have dropped 16% over the past three months, about the same as the S&P 500 index.
Bachman lowered his estimates for IBM’s earnings per share to $11.69 from $13.33 for 2020 and to $13.02 from $14.02 for 2021.
Bachman noted in a report that it’s quite unclear when the economy will rebound, according to The Fly.
Red Hat, the open-source software unit that IBM bought last year, will struggle with upsells and new logo growth, though it should hold up better than other areas of the company, as 90% of its revenue comes from subscriptions, he said.
IBM on Monday reports first-quarter earnings. Analysts estimate earnings per share will total $1.70 for the quarter and $12.20 for the year, according to Zacks Investment Research.
IBM last week installed a new chief executive, Arvind Krishna. It has struggled in recent years, lagging Amazon.com (AMZN) - Get Report and Microsoft (MSFT) - Get Report in the fast-growing field of cloud computing.
IBM’s performance is a question mark, says Morningstar analyst Julie Bhusal Sharma.
It needs to refinance its debt over the next five years to allow substantial dividend growth, she wrote in an April 1 report.
The coronavirus pandemic will make that difficult in the short term. But longer term, “it’s still quite likely that IBM can refinance as macroeconomic conditions recover,” Bhusal Sharma said.