IBM's Upside Hinges on Rebounding Revenue Growth

IBM stock has fallen by 12% over the past year while the S&P 500 rose by 16.5%. The company's second-quarter revenue missed expectations due to several large deals falling through.

The slipped deals were largely due to clients moving their budgets towards servers, storage, and memory. To gauge IBM's potential upside, analysts have built a scenario where revenue grows at a rate of 9.9% per year for three years, reaching $91.7 billion by the end of that period.

This projection assumes that the company will maintain its current net margin of 15.5%, which would result in earnings of $13.3 billion and a share price of $289 by the end of the three-year period, representing a 24% increase from today's price.