IBM Shares Garner Bullish Outlook with New $360 Price Target

The first trading week of 2026 has begun with significant momentum for technology giant IBM. In a notable move, analysts at investment bank Jefferies upgraded their rating on the company's stock from "Hold" to "Buy" this Monday. The firm also substantially increased its price target, moving it from $300 to $360 per share. This optimistic projection implies a potential upside of approximately 23% from current levels.

Wall Street sentiment regarding IBM remains mixed. While Bank of America and Stifel have also issued buy recommendations, UBS maintains a sell rating. Analysts at UBS have expressed concerns about potential earnings dilution resulting from a major planned acquisition.

Investors will gain a clearer picture of the company's progress on January 28, 2026, when IBM is scheduled to release its quarterly earnings report. This update is expected to provide details on the integration of recent strategic purchases.

Should investors sell immediately? Or is it worth buying IBM?

Valuation Gap Presents Opportunity

Jefferies highlighted IBM's current valuation as a compelling reason for investment. The stock is currently trading at a price-to-earnings (P/E) ratio of 26 for the projected 2027 fiscal year. This stands at a notable discount compared to the peer group average of 35 for major software competitors. According to the analysts, this gap suggests room for the share price to appreciate if the company's software acceleration strategy delivers results.

Software Segment and Strategic Acquisitions Fuel Growth

The primary driver behind the Jefferies upgrade is an anticipated acceleration in IBM's software division growth. The analysts cited strong momentum from its Red Hat subsidiary and synergies from recent strategic acquisitions as key factors.

Central to this outlook is the planned $11 billion acquisition of Confluent, expected to be finalized by mid-2026. This deal is projected to significantly bolster IBM's capabilities in hybrid cloud and data streaming. Market experts forecast that this single acquisition could contribute an additional $1.6 billion in software revenue by 2027. Alongside these growth initiatives, IBM's legacy mainframe business continues to provide a stable foundation of recurring income.