IBM (IBM US) Downgrade to Reduce: Prefer synthetic IBM to the real one

Research evidence excerpt

IBM (IBM US) Downgrade to Reduce: Prefer synthetic IBM to the real one

14 July 2026

IBM (IBM US) EquitiesIT Services

Downgrade to Reduce: Prefer synthetic IBM to the

real one United States

◆ We create a “synthetic IBM” to replicate IBM’s subsector

DOWNGRADE TO REDUCE

exposure using SAP (software), Accenture (consulting), HP

(hardware), and IonQ (quantum computing) TARGET PRICE (USD) PREVIOUS TARGET (USD)

◆ For the same upfront spend, synthetic IBM could offer 191.00 231.00

meaningfully better medium-term earnings power vs IBM SHARE PRICE (USD) UPSIDE/DOWNSIDE

◆ Downgrade to Reduce (from Hold); cut TP to USD191 (from 287.56 -33.6%

USD231) on lower multiples to reflect broader sector derating (as of 10 Jul 2026)

MARKET DATA

Market cap (USDm) 270,273 Free float 100%

Synthetic IBM appears much cheaper: We create a “synthetic IBM” to ascertain Market cap (USDm) 270,273 BBG IBM US

the value proposition of IBM vs peers. For USD287.56, investors can buy 1.19 shares 3m ADTV (USDm) 2,400 RIC IBM.N

of IonQ, 1.22 shares of SAP, 0.16 shares of Accenture, and 0.95 shares of HP FINANCIALS AND RATIOS (USD)

(vs 1 IBM share). On our estimates, this delivers 2030e “EPS” of USD23.15 vs IBM’s Year to 12/2025a 12/2026e 12/2027e 12/2028e

HSBC EPS 11.59 12.14 13.08 14.86

2030e non-GAAP EPS of USD16.59 (+40%), with broadly similar subsector HSBC EPS (prev) 11.59 12.32 13.03 14.65

exposure. Quantum computing accounts for c18% of initial investment in synthetic Change (%) 0.0 -1.5 0.3 1.5

Consensus EPS 11.35 12.44 13.44 14.75

IBM and a similar portion of our estimated EV for real IBM. PE (x) 24.8 23.7 22.0 19.3

Dividend yield (%) 2.3 2.3 2.4 2.4

IonQ may be stealing a march over IBM’s quantum business: Over the past five EV/EBITDA (x) 17.7 16.7 15.9 14.2