Evercore ISI has reaffirmed its Outperform rating on International Business Machines Corp. and kept its $345 price target despite a sharp decline in the company’s share price after an industry blog post about AI-enabled COBOL modernization.
The Tuesday drop sent IBM shares down 13% to $223.39, bringing the stock close to a 52-week low of $214.50. The dip followed a post describing how Claude Code can be applied to map dependencies across thousands of lines of COBOL, document workflows, surface migration risks and provide teams with the information needed to consider shifting workloads off mainframe systems.
Evercore ISI pointed to the fact that IBM has long made modernization tools available to customers, including a named offering, watsonx Code Assistant for Z. In its note, the firm underscored that the existence of modernization tooling has not erased demand for IBM’s z series hardware: according to the research, z17 has outperformed the z16 cycle through the first three quarters of that program.
From a valuation perspective, InvestingPro data included in the coverage shows IBM trading at a price-to-earnings ratio of 20.31 and a price/earnings-to-growth (PEG) ratio of 0.31. The coverage also highlights that the company has increased its dividend for 30 consecutive years.
Evercore ISI framed customer behavior as a deliberate choice rather than a consequence of limited options. Clients, the firm said, have had migration pathways off mainframes for many years but persist with the platform because of specific operational advantages: reliability, speed, volume and throughput, cost efficiency at scale, on-premises AI inferencing capability, security and regulatory constraints. The research note stresses that mainframes remain entrenched in sectors where those attributes are mission-critical - notably governments, healthcare and financial services - where public cloud migration is not always viable.
The firm also noted that the concept of moving workloads off mainframes is not a new theme; customers have been presented with migration options for decades. That context underpins Evercore ISI’s decision to maintain a positive stance on IBM even as the market reacted to the Claude blog post.
Separately, InvestingPro flagged IBM among the more than 1,400 U.S. equities covered by its Pro Research Reports, which it describes as a resource for translating broad financial datasets into investor-focused analysis.
Related developments in the technology sector featured in the same coverage. Confluent, Inc. reported fourth-quarter results that beat analyst expectations: revenue rose 21% year-over-year to $314.8 million, above a consensus figure cited at $308.06 million. Adjusted earnings were $0.12 per share versus an expected $0.10 per share. Subscription revenue climbed 20% year-over-year to $301.6 million, while Confluent Cloud revenue rose 23% to $169 million.
On the analyst front, Erste Group moved to downgrade IBM’s stock rating from buy to hold, citing a slowdown in the company’s infrastructure business. In its guidance, IBM expects sales growth of about 5% year-over-year by 2026 and projects free cash flow to increase by roughly $1 billion to about $15.7 billion.
Taken together, the recent analyst notes, company guidance and earnings reports paint a mixed but data-driven picture: investors are reacting to the operational and product implications of AI-assisted modernization tools, while research firms emphasize enduring reasons customers remain on the mainframe platform and point to valuation and cash-flow metrics in assessing the equity.