was finally picking up some lost ground Friday following a note from
Salomon Smith Barney
entitled "It's Back Up the Truck Time on IBM Shares."
Presumably, backing up the truck would reveal the deep tread marks investors have left on IBM in recent weeks. The computing giant has gotten crushed amid the general swoon in technology stocks. In that time, a number of tech firms, including IBM competitors
, have warned of slowing growth. And the slowdown talk has led many observers to question whether companies like
and, yes, IBM will also have to lower their guidance.
Not so, says Solly. "Rumors about a pre-announcement are, in our opinion, completely unfounded," wrote analyst John Jones. Why? For one thing, IBM, unlike Compaq, Gateway and
, has very little exposure to consumer PCs, having withdrawn from the retail market in that segment. As for IBM's commercial PC business, no one was really expecting much growth there, anyway. Jones claimed that strong results in Big Blue's servers, services, microelectronics and financing businesses should compensate nicely.
Jones wrote that IBM is undervalued on the basis of its price-sales ratio relative to the
, which currently stands at 0.53. In other words, IBM's price-to-sales ratio is just 53% of the S&P 500's. "This is a five-year low vs. a median number of 0.66 and a high performance of a 0.89 ratio," he wrote.
Jones reiterated his buy rating and price target of 130.
analyst Tom Kraemer downgraded IBM and H-P on his suspicion that corporate spending on information technology is slowing.
In early afternoon trading, IBM was up $6.75, or 8.2%, to $88.31, on the
New York Stock Exchange