Ibm's Plunge Highlights Risks of Lofty Valuation

Dow Jones00:40

1239 ET - IBM's profile resembles that of Accenture, but it has been trading like a Microsoft, BNP Paribas analyst Stefan Slowinski writes in a note. The company warned that its software and infrastructure business would come in under expectations for the quarter, sending shares sliding. IBM, pre-announcement, traded at a 20x EV/EBITA multiple compared to Microsoft's 18x, even with far lower revenue growth and EBITA margins, Slowinski writes. The company's fundamentals more closely resemble Accenture, which trades at roughly a 7x EV/EBITA multiple. "It does serve as a reminder that IBM's business is large and complex, with profits and cash flows still largely driven by mainframe sales, and thus a premium valuation multiple may not be sustainable," he writes. IBM falls 25%. (elias.schisgall@wsj.com)

(END) Dow Jones Newswires

July 14, 2026 12:40 ET (16:40 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.

At the request of the copyright holder, you need to log in to view this content

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment