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Oct. 21, 2019, 8:44 a.m. EDT

IBM stock drops after UBS downgrade

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By Emily Bary

UBS analyst Munjal Shah cut his rating on International Business Machines Corp. shares /zigman2/quotes/203856914/composite IBM -0.82% to neutral from buy on Monday, writing that he believes it will be hard for the company to sustainably reach mid-single-digit revenue growth. For next year, he argues that challenges for IBM's legacy businesses will "somewhat offset" the growth that stems from the beginning of the mainframe cycle as well as IBM's recently completed Red Hat deal. "The following year (2021) should be even more challenging with greater revenue pressure due to tough Year 2 mainframe compare and lower incremental Red Hat contribution," Shah wrote. He lowered his target price to $140 from $170 on the stock, which is off 0.7% in premarket trading Monday. The stock has shed 10% over the past three months, as the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.33% has fallen 1.4%.

/zigman2/quotes/203856914/composite
US : U.S.: NYSE
$ 134.48
-1.11 -0.82%
Volume: 3.06M
Nov. 13, 2019 6:30p
P/E Ratio
15.63
Dividend Yield
4.82%
Market Cap
$119.98 billion
Rev. per Employee
$208,845
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,783.59
+92.10 +0.33%
Volume: 278.39M
Nov. 13, 2019 4:56p
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