Story updated at 10 a.m. to reflect market activity.
IBM gained 1% to $198.58 in morning trading.
The bank set a $200 price target for the computer company. Analysts Sherri Scribner and Joakim Mahlberg said virtualization continues to change the spending landscape.
"We view cost take outs and improving mix as a positive for margin expansion for IBM over the next few years," the analysts wrote. "In addition, the company continues to reduce its share count through buybacks, benefitting EPS. Despite these positives, we view growth as challenged for IBM, given its size and limited exposure to growth segments. Given the lack of growth, we expect shares to be range bound and expect the stock to trade modestly below historical multiples. With shares trading near these levels, we rate IBM a Hold."
Must read: Warren Buffett's 10 Favorite Growth Stocks
Separately, TheStreet Ratings team rates INTL BUSINESS MACHINES CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate INTL BUSINESS MACHINES CORP (IBM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, expanding profit margins, good cash flow from operations, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."