AnalystScope equity researchCurrent company view

IBM

International Business Machines Corporation

Information Technology / IT Consulting & Other Services / Armonk, NY

View printable snapshot

AnalystScope signal

Buy

Scheduled quote

$213

Base fair value

$234

Bear / base / bull

$216 / $234 / $250

Upside / downside

+9.8 upside

Confidence

Low

Research updated Apr 10, 2026

Daily scheduled refresh as of Jul 21, 2026, 6:05 AM UTC. Fresh through Jul 22, 2026, 6:05 AM UTC.

Informational research only. Not personalized investment advice.

Model vs published view

Current model signal differs from the latest published analyst rating.

Investment summary

Current view and thesis

IBM now reads as a steadier Hold with improving enterprise execution, but the current valuation spread still looks moderate rather than especially wide.

Fair value $234 vs. current $213 (+9.8 upside). Current base fair value is $234 versus $213, implying +9.8 upside.

Key drivers

Hybrid cloud, software, and enterprise services support a steadier revenue base than IBM's legacy profile once implied.

Cash generation remains durable enough to support the valuation floor even with meaningful leverage.

The current multiple is more reasonable than many higher-growth software names, but the spread is still not especially wide.

Key risks

Consulting or infrastructure softness could keep growth and margin improvement below the current base case.

Leverage remains a constraint if execution weakens or cash conversion slips.

If the hybrid-cloud improvement narrative fades, the valuation support could narrow quickly.

What would change the view

A wider discount to fair value would make the enterprise-turnaround case more compelling.

Cleaner evidence of durable margin improvement across software and consulting would strengthen conviction.

If revenue quality weakens while leverage remains elevated, the current Hold case would deteriorate.

Valuation

Price, range, and method support

Base case $234 / +9.8 upside / low confidence

Price vs fair value

+9.9%

Model-implied return

Scheduled quote

$213

Fair value

$234

Valuation method stack

Weighted fair value $234

Published method weights

DCF (Base)

$221 | 45%

NTM P/E Multiple

$246 | 35%

EV/EBITDA Cross-check

$241 | 20%

Case / method	Value	Weight / support
DCF (Base)	$221	45%
NTM P/E Multiple	$246	35%
EV/EBITDA Cross-check	$241	20%
Bear case	$216	Mixed
Base case	$234	Mixed
Bull case	$250	Mixed

Fundamental analysis

Reported evidence and normalized model base

Normalized annual basis: FY2025

Download reported financials CSV Download normalized financials CSV

Normalized figures are AnalystScope's annual valuation model base.

Normalized metric	Latest value	Growth / margin context
Revenue	$67.5B	+7.5% YoY
Operating income	$11.9B	17.6% margin
Net income	$9.4B	EPS proxy $10.08
Free cash flow	$12.3B	18.2% margin
EBITDA	$17.4B	25.8% margin
Net cash / (debt)	-$38.0B	-56.3% of revenue

Metric	Reported	AnalystScope normalized	Basis note
Revenue (TTM)	$67.5B	$67.5B	Model revenue smooths consulting timing, infrastructure cycle noise, and hybrid-cloud mix rather than extrapolating a single quarter of backlog conversion.
Operating Margin	Unavailable	17.6%	Margin input keeps the base on durable software, consulting, and infrastructure economics rather than one period of mix or productivity benefit.
FCF (TTM)	$12.1B	$12.3B	FCF input adjusts for working-capital timing and keeps the cash-conversion base conservative.
Net Cash / (Debt)	($54.4B)	($38.0B)	Balance-sheet treatment remains cautious and does not minimize IBM's still-material debt load.

Fundamental snapshot

FY2025

Normalized annual model base

Revenue

+7.5% YoY

$67.5B

Op. margin

+0.8% pts

17.6%

FCF margin

+0.4% pts

18.2%

Revenue + margin trend

Annual normalized model-base history.

Revenue

2023

2024

2025

Operating margin

2023

2024

2025

AnalystScope annual model-base statements in USD across FY2023 | FY2024 | FY2025.

Income statement

Line item	FY2023	FY2024	FY2025
Revenue	$61.9B	$62.8B	$67.5B
Gross Profit	$34.0B	$35.0B	$38.1B
Operating Income	$9.9B	$10.6B	$11.9B
EBITDA	$15.2B	$15.9B	$17.4B
Net Income	$7.7B	$8.2B	$9.4B

Balance sheet

Line item	FY2023	FY2024	FY2025
Cash & Investments	$15.0B	$16.0B	$17.0B
Total Debt	$57.0B	$56.0B	$55.0B
Net Cash / (Debt)	($42.0B)	($40.0B)	($38.0B)
Total Assets	$135.0B	$138.0B	$141.0B
Total Liabilities	$111.0B	$112.0B	$113.0B
Shareholders' Equity	$24.0B	$26.0B	$28.0B

Cash flow

Line item	FY2023	FY2024	FY2025
Operating Cash Flow	$12.1B	$12.6B	$13.9B
Depreciation & Amortization	$5.3B	$5.3B	$5.5B
Capital Expenditures	($1.4B)	($1.4B)	($1.6B)
Free Cash Flow	$10.7B	$11.2B	$12.3B

Model assumptions

Base-case inputs and sensitivity

Published AnalystScope assumptions; private edits do not change this base case.

Revenue CAGR (5Y)

4.0%

+/- 1.0% => +/-$5/sh

Why this level: This is AnalystScope's base-case growth assumption, not a guarantee. It sits below the latest FY model-base revenue pace (2025.0%), so the model does not extend current strength too far into the outer years. Current company context: Hybrid cloud, software, and enterprise services support a steadier revenue base than IBM's legacy profile once implied.

Terminal Growth

2.5%

+/- 0.5% => +/-$3/sh

Why this level: This is AnalystScope's mature long-run growth assumption, not a perpetual hypergrowth claim. At 2.5%, it sits well below the 4.0% five-year revenue CAGR, so the model steps down from the explicit forecast period to a steadier long-run pace. For International Business Machines Corporation, that means a durable franchise can keep compounding after year five without assuming today's faster growth profile lasts indefinitely.

WACC

8.7%

+/- 0.5% => -$6/sh

Why this level: This is AnalystScope's base-case cost-of-capital judgment, not a precise CAPM output. It reflects the current rates backdrop, equity risk premium, and the company's balance-sheet posture. Leverage remains meaningful, but enterprise cash generation is durable

Operating Margin (Year 5)

18.0%

+/- 100 bps => +/-$4/sh

Why this level: This is AnalystScope's base-case margin view, not a promise of straight-line expansion. It keeps year-five margins close to today's model-base operating margin (17.6%), which implies the current margin structure is broadly durable. Margin input keeps the base on durable software, consulting, and infrastructure economics rather than one period of mix or productivity benefit.

Sensitivity drivers

Revenue CAGR (5Y)

4.0%

+/- 1.0% => +/-$5/sh

Terminal Growth

2.5%

+/- 0.5% => +/-$3/sh

WACC

8.7%

+/- 0.5% => -$6/sh

Operating Margin (Year 5)

18.0%

+/- 100 bps => +/-$4/sh

Confidence

Low

Method outputs show moderate dispersion of +10.7%.

Why the model view could be wrong

Consulting or infrastructure softness could keep growth and margin improvement below the current base case.

Leverage remains a constraint if execution weakens or cash conversion slips.

If the hybrid-cloud improvement narrative fades, the valuation support could narrow quickly.

Private analysis

Test your own assumptions in Scenario Builder

Private scenarios remain separate from AnalystScope's published base case.

Open Scenario Builder

Private workspace

Scenario Builder

Private scenario sandbox

This is a private modelling layer, not the public AnalystScope base case or printable snapshot. It keeps the public base case as the anchor, applies bounded changes to the four core valuation inputs, and updates your scenario fair-value estimate immediately.

Saved scenarios currently stay local to this browser for IBM. Base-case rationale remains in the public assumptions section above. Your scenario output reprices the published valuation methods from projected operating anchors when those anchors are available, while keeping market-multiple and capital-structure assumptions anchored to the AnalystScope framework.

Editable assumptions

Adjust your scenario inputs within the displayed plausible range for this company. The workbench stays anchored to the public AnalystScope base case.

This is a bounded scenario tool, not a free-form spreadsheet. Values outside the displayed range snap back to the nearest allowed value when you leave the field.

Matches the published AnalystScope base case.

Revenue CAGR (5Y)

Public AnalystScope base case: 4.0% | +/- 1.0% => +/-$5/sh

Allowed range: 0.0% to 10.0%

Terminal Growth

Public AnalystScope base case: 2.5% | +/- 0.5% => +/-$3/sh

Allowed range: 1.0% to 4.0%

WACC

Public AnalystScope base case: 8.7% | +/- 0.5% => -$6/sh

Allowed range: 6.7% to 10.7%

Operating Margin (Year 5)

Public AnalystScope base case: 18.0% | +/- 100 bps => +/-$4/sh

Allowed range: 10.0% to 26.0%

Saved private scenarios

Save up to 5 named scenarios for IBM. These are your scenarios: they never overwrite the public AnalystScope base case and remain clearly separate from public research.

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Notes stay local to this browser unless you sign in to the private workspace, and they never appear as published AnalystScope research.

No private scenarios saved yet. Make a change to the published base case, then save a named scenario here.

Published base case

Fair value

$234

Upside / Downside

+9.8 upside

Model signal

Buy

Published base-case output

Scenario output reprices the published DCF and multiple methods from projected year-5 revenue, margin, free cash flow, EBITDA, and EPS anchors. Market multiples and capital structure stay anchored to the published base framework.

Fair value

$234

$0/sh vs published base case

Upside / Downside

+9.8 upside

+0.0 pts vs published base case

Model signal

Buy

Unchanged versus the published base case.

Method movement inside the scenario

This breakdown shows what moved inside the published valuation framework when you edit the scenario. The published AnalystScope base case stays anchored, and any method without a clean projected anchor remains pinned to that framework.

Method rows below reflect the current edited scenario state, not just the saved scenario snapshots.

Influence tags are directional rather than exact attribution. They estimate which edited input is moving each method most by reverting one assumption at a time while the other edited inputs stay in place.

3 of 3 methods support model-native repricingModel-native bridge

Method	Published base	Edited scenario	Delta	How it moved / main drivers
DCF (Base) DCF-style \| 45% weight	$221	$221	$0/sh	Base-aligned This method is supported by the model-native bridge and currently stays aligned with the published base case. Edited inputs are largely offsetting each other, so this row stays close to the published base case.
NTM P/E Multiple P/E-style \| 35% weight	$246	$246	$0/sh	Base-aligned This method is supported by the model-native bridge and currently stays aligned with the published base case. Edited inputs are largely offsetting each other, so this row stays close to the published base case.
EV/EBITDA Cross-check EV-based multiple \| 20% weight	$241	$241	+$0/sh	Base-aligned This method is supported by the model-native bridge and currently stays aligned with the published base case. Edited inputs are largely offsetting each other, so this row stays close to the published base case.
Weighted fair value Published framework result \| Published framework result	$234	$234	-$0/sh	Moved Combines the repriced method outputs using the published AnalystScope weights. No single edited assumption is dominating this move in a material way.

Published base case vs private scenarios

Compare the published AnalystScope base case against your saved private scenarios in one view. Saved scenarios remain local to this browser, and the table below reflects saved snapshots rather than any unsaved edits currently sitting in the editor.

Fair-value comparisons use the same workbench recalculation path as the editor above.

Published base case stays pinned as the anchor row.

Scenario	Revenue CAGR (5Y)	Terminal Growth	WACC	Op. Margin (Y5)	Fair Value	Upside / Downside	Model Signal	Delta vs Base	Action
AnalystScope base case Published Official AnalystScope anchor row.	4.0%	2.5%	8.7%	18.0%	$234	+9.8 upside	Buy	Published anchor

Supporting research

Quality, normalization, and monitoring evidence

Annual model base: FY2023 | FY2024 | FY2025

Thesis scorecard

Growth

Moderate

Growth is improving, but still anchored to a steadier enterprise profile rather than a high-growth shape.

Profitability

Moderate

Margins are healthier, though not yet at premium software levels.

Balance sheet

Weak

Leverage remains material despite durable cash generation.

Valuation

Moderate

The valuation looks fair to mildly supportive, but not wide enough for a stronger rating.

Execution / Resilience

Moderate

Enterprise entrenchment helps, though consulting and infrastructure still add some cycle exposure.

Current source status

Quote: Daily scheduled refresh as of Jul 21, 2026, 6:05 AM UTC. Fresh through Jul 22, 2026, 6:05 AM UTC.

Reported fundamentals: Fundamentals refreshed 21 Jul 2026, 01:32 UTC. Fresh through 21 Jul 2026, 13:32 UTC.

Latest filing: 8-K filed Jul 14, 2026 | Reporting period Jul 14, 2026. Filing refreshed Jul 21, 2026, 1:32 AM UTC. Fresh through Jul 21, 2026, 1:32 PM UTC.

Annual model-base income-statement, cash-flow, and balance-sheet metrics, plus cross-statement quality relationships with compact prior-FY direction cues, derived from the curated statement backbone.

Basis: FY2023 | FY2024 | FY2025. Live reported fundamentals remain available in the reconciliation section.

Operating and cash-flow trends

Model-base statements

Revenue growth (1Y)

+7.5%

Gross margin

56.4%

Operating margin

17.6%

Operating margin change vs prior FY

+0.8 pts

EBITDA margin

25.8%

EBITDA margin change vs prior FY

+0.5 pts

Operating income growth (1Y)

+12.3%

Net margin

13.9%

FCF margin

18.2%

FCF margin change vs prior FY

+0.4 pts

FCF growth (1Y)

+9.8%

Balance sheet quality

Model-base statements

Cash & investments

$17.0B

Total debt

$55.0B

Net cash / (debt)

Net debt $38.0B

Net cash / (debt) as % of revenue

Net debt 56.3% of revenue

Liabilities / assets

Stable

vs FY2024 (-1.0 pts)

80.1%

Cross-statement quality

Model-base statements

Gross-to-operating spread

38.8 pts

Operating cash flow / net income

Stable

vs FY2024 (-0.1x)

1.5x

Operating cash flow / EBITDA

Stable

vs FY2024 (+0.0x)

0.8x

Free cash flow / net income

Stable

vs FY2024 (-0.1x)

1.3x

CapEx as % of revenue

Stable

vs FY2024 (+0.1 pts)

2.4%

CapEx as % of operating cash flow

Stable

vs FY2024 (+0.4 pts)

11.5%

CapEx / D&A

Stable

vs FY2024 (+0.0x)

0.3x

Cash & investments / total debt

Stable

vs FY2024 (+0.0x)

0.3x

Shareholders' equity as % of revenue

41.5%

Asset turnover

Stable

vs FY2024 (+0.0x)

0.5x

Compact model-base diagnostics for analyst triage, highlighting where the durable valuation base is diverging most clearly from the latest reported picture.

Adjustment focus

Large analyst adjustment

Balance sheet | Net Cash / (Debt) | +$16.4B / +24% of revenue

Revenue momentum

Improving

+7.5% latest 1Y growth

vs +1.5% prior 1Y

Operating margin trend

Stable

17.6% latest margin

+75 bps vs prior FY

FCF margin trend

Stable

18.2% latest FCF margin

+39 bps vs prior FY

Balance-sheet posture

Strengthening

Net debt 56.3% of revenue

vs Net debt 63.7% of revenue prior FY

How to read this

Reported = the latest company-reported figure. Model base = AnalystScope's comparable operating base used for valuation and thesis work. It may include standardization, conservative balance-sheet treatment, working-capital cleanup, and through-cycle adjustments when current reported numbers do not look durable.

This is an analyst model base, not a claim of perfect adjusted truth. Larger gaps can reflect deliberate cyclical or base-case adjustments, not just light accounting cleanup.

Why the model base differs

For IBM, the model base is intended to reflect steadier hybrid-cloud and enterprise-cash-generation economics rather than quarter-specific mix or backlog timing.

Rows are sorted by largest comparable adjustment first.

Metric	Model base	Live reported	Variance vs reported	Adjustment size	Why lower / higher?
Net Cash / (Debt)	($38.0B) FY2025 model base	($54.4B) Live reported balance sheet	+$16.4B / +24% of revenue	Large analyst adjustment	Model base is less conservative than the live reported balance-sheet figure because the latest reported balance does not appear fully representative. It remains cautious and does not minimize IBM's still-material debt load.
FCF (TTM)	$12.3B FY2025 model base	$12.1B Live reported TTM	+$200.0M / +2%	Close to reported	Model base is higher than live reported because the model does not assume the latest cash-flow drag is fully durable. It adjusts for working-capital timing and keeps the cash-conversion base conservative.
Revenue (TTM)	$67.5B FY2025 model base	$67.5B Live reported TTM	+$0.0 / +0%	Close to reported	Model base keeps revenue close to live reported because the latest run-rate already looks broadly representative. It smooths consulting timing, infrastructure cycle noise, and hybrid-cloud mix rather than extrapolating a single quarter of backlog conversion.
Operating Margin	17.6% FY2025 model base	Unavailable Live reported margin	Unavailable	Unavailable	AnalystScope keeps a separate model base when the latest reported figure is unavailable or not directly comparable. It keeps the base on durable software, consulting, and infrastructure economics rather than one period of mix or productivity benefit.

Near-term catalysts

Software growth, consulting demand, and infrastructure-cycle commentary remain the clearest near-term signals.

Free-cash-flow conversion and debt framing matter as much as headline revenue in this setup.

Any evidence that the current enterprise improvement is broadening beyond a few stronger segments would help sentiment.

What we are watching

Whether software and hybrid-cloud strength is broad enough to support the current through-cycle revenue base.

How durable free-cash-flow conversion remains after working-capital timing normalizes.

Whether leverage is trending down quickly enough to improve balance-sheet confidence.

Date	Event	Published rating	Note
Apr 10, 2026	New	Hold	Started coverage with a Hold view on improving enterprise execution and a still-contained spread to fair value.