BMO Capital analyst Keith Bachman raised the price target on IBM to $155 from $153 (17 percent upside) and reiterated a Market Perform rating.
The analyst says he is "a bit more positive" on the company due to the performance of Consulting and his "enthusiasm for services generally."
Still, the ongoing concerns about the durability of software growth keep him on the sidelines.
MoffettNathanson analyst Lisa Ellis reiterated a Sell rating on IBM with a $115 price target (13 percent downside).
The company's constant currency revenue growth jumped to 5.1 percent when excluding the benefit from Kyndryl transfers, Ellis notes.
IBM's sales benefit from "two significant tailwinds:" the spin-out of Kyndryl and a robust enterprise IT demand environment, says the analyst.
However, Ellis says IBM's substantial revenue growth improvement is not yet translating to improved profits and free cash flow. She expects IBM to remain a "chronic underperformer" in 2022 with weakening free cash flow and does not see the ITO spin-off as a significant positive catalyst.
Evercore ISIanalyst Amit Daryanani thinks IBM is starting to see benefits as their investments in software and consulting translate to the top line. While he thinks the March quarter could see tempered profitability, IBM "should see healthy improvement for the remainder of the year."
The tailwinds from digital transformation and hybrid infrastructure are "clear." Still, investors will look to see if IBM can convert these tailwinds into sustained profitability, said Daryanani, who is sticking with an In-Line rating and $140 price target (6 percent upside).