Why IBM Is Worth $220 a Share

NEW YORK (TheStreet) -- Shares of IBM IBM have dropped sharply this year, but one analyst believes that over the next 12 months, the stock has nearly 20% upside.

Cantot Fitzgerald analyst Brian White, who rates shares "buy" with a $220 price target, believes that value investors will start to move towards IBM, which trades at an approximately 40% discount to the S&P 500.

"Over the past few months, there has been a rotation in the mega-cap tech stocks in our coverage universe that has driven an average increase of 12.6% in this group (i.e., ex-IBM but including Apple, Cisco Systems, EMC, Hewlett-Packard, and Oracle) thus far in 2014 versus a 6.8% increase for the S&P 500. However, IBM has significantly underperformed the
group and is down nearly 1% thus far in 2014," White wrote in the note. He notes that IBM shares have risen just 1% since the end of 2011, compared to 57% for the S&P 500, and a 43% average rise for companies like Apple, Cisco, EMC, HP and Oracle.

He also notes that sentiment among the sell-side is exceptionally low, "with just 15% of sell-side analysts having buy ratings on the stock."

IBM is set to report second-quarter earnings later this month. Analysts surveyed by Thomson Reuters expect the company to earn $4.29 a share on $24.12 billion in revenue.

-- Written by Chris Ciaccia in New York

>Contact by Email.

More from Technology

Amazon Wants to Use Your Car as a Mobile Warehouse - Here's What That Could Mean

Amazon Wants to Use Your Car as a Mobile Warehouse - Here's What That Could Mean

3 Hot Reads From TheStreet's Top Premium Columnists

3 Hot Reads From TheStreet's Top Premium Columnists

Will China Save Tesla?

Will China Save Tesla?

Twitter's Turnaround Continues but Investors Don't Seem Entirely Convinced

Twitter's Turnaround Continues but Investors Don't Seem Entirely Convinced

Pro Tears Down Tesla's Model 3 and Here's What He Found

Pro Tears Down Tesla's Model 3 and Here's What He Found