Markets & Finance

Lehman Upgrades IBM to 'Overweight'


Lehman Brothers upgraded IBM Corp. (IBM) to overweight from equal-weight.

Analyst Dan Niles says estimates have come down dramatically, and IBM's sentiment on IT spending has come down even more. He thinks concerns are overdone. Niles thinks third quarter earnings per share is in line with estimates, and he sees U.S. stability offsetting most European weakness. He also says IT spending should improve slightly in 2003, and that any estimate cuts should be modest.

Niles says IBM's valuation of 13 times the calendar 2003 price-earnings multiple compares well against the S&P multiple of 15. Additionally, he believes concerns over pension and stock options are overdone. He has a $80 target.


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