Shares of IBM were down a little more than 1% in premarket trading on Friday after Morgan Stanley analyst Katy Huberty downgraded the stock to equal weight from overweight amid concerns over IT spending and margins in 2020.
Internal surveys “point to further deceleration in 2020 IT spend with a continued downward bias to budget revisions,” the analyst wrote in a research note to clients, adding that margins “… are a new risk in 2020.”
Huberty also cut her one-year price target on IBM shares to $155 from $170.
The stock drop follows a similar decline for the struggling tech company earlier this week after it received a downgrade from Evercore ISI analyst Amit Daryanani, who lowered his rating to in-line from outperform and reduced his price target to $145 from $160.
The company’s earnings forecast for the fourth quarter might be overly optimistic "given the slower enterprise backdrop highlighted by IBM itself, in addition to comments from peers such as Cisco, Dell, etc." Daryanani wrote in a report.
IBM is expected to have earned $4.69 a share when it reveals its most recent quarterly results on Jan. 21, according to FactSet consensus estimates. In the year-earlier quarter, IBM earned $4.87 a share. Sales are expected at $21.6 billion for the quarter, according to analysts.
Shares of IBM were down 1.25%, or $1.72 a share, at $136.27 in Friday morning trade.