One former Wall Street darling that has been a serial underperformer during the greatest bull market of all time was the recipient of an upgrade Friday morning. That company is International Business Machines Corp (NYSE:IBM), and it's the PreMarket Prep Stock of the Day.
Long-Term IBM Price Action: IBM made its all-time high in February 2017 at $174.59. At the price of $129.50, it has a negative return of 26%. Over that same course of time, the S&P 500 index has yielded a positive return of 87% at 4,436.
Short-Term IBM Price Action: IBM bottomed on the same day (Feb. 24) as the S&P 500 index at $118.81. The recent high for the rebound ($133.08) was made one day after the index made its short top on March 30.
On Wednesday, the issue bottomed at $124.91 and rebounded to close at $126.14 and end a four-day losing streak.
Morgan Stanley's IBM Upgrade: Before the open Thursday, Morgan Stanley analyst Erik Woodring upgraded the issue from Equal-Weight to Overweight and raised the price target from $147 to $150. The rating, equivalent to a Buy rating, is IBM's first in almost two years.
It is not exactly a ringing endorsement of the company, but more or less identified the issue as a safe haven and one that is sporting a 5.1% dividend yield in a volatile investing environment. In other words, “a place to hide amid macroeconomic uncertainty.”
PreMarket Prep's Take On IBM: When the issue was being covered on the show Thursday, it was trading at the $128.30 area.
Co-host Dennis Dick is mixed on the issue: “I am not shorting it, it has been a bit sleepy lately and media coverage of it could kickstart a rally.”
The author of this article emphasized clearing the premarket high ($129.80) and being able to remain in the $130 handle. If the issue went into retreat mode, there was potential support at the top of Wednesday’s range at $126.67.
IBM Price Action: Off the open, the issue caught a bid with the index and breached the premarket high, rallying to $130.58 and reversing course.
The ensuing decline found support ahead of the top of Wednesday’s range ($126.67), only reaching $128.49. The stock was up 0.82% at $127.18 Thursday afternoon, according to Benzinga Pro.
The discussion on IBM from Thursday’s show can be found here:
