IBM initiated at overweight by Oppenheimer analysts

(Matthias Balk/Getty Images)

IBM gets a Wall Street-high price target from Oppenheimer

Oppenheimer slapped a price target of $360 on the stock as it initiated coverage.

Oppenheimer analysts published a bullish initiation of coverage on IBM on Friday, spotlighting software sales growth as a bright spot and the potentially rich growth in AI-related businesses to develop as reasons for their “overweight” rating:

“Our bullish stance is predicated upon the following: (1) IBM’s software portfolio should see sustained ‘double-digit’ revenue growth driven by strength in Automation (primarily HashiCorp) and improving growth in RedHat; (2) Consulting should grow at a sustained ‘low-single-digits’ with recovery in application development/management; and (3) additional revenue optionality with creation and management of AI applications (incl. Generative AI).

We believe these drivers will result in strong expansion activity with existing customers, and drive continued gross (on higher software mix) and pre-tax margin expansion. The stock should also re-rate higher when IBM’s pivot to software is more widely appreciated.”

Investors have seemed to focus on IBM’s software business, which merely met expectations last quarter, contributing to a post-earnings stock slide.

But beyond that, the Street’s view on the stock is pretty divided, with 11 of the 21 analysts covering the stock rating it a “buy” or the equivalent, while six have the stock at “neutral” — or as I like to call it, the gentleman’s “sell” — and four others officially branding IBM a “sell.”

Oppenheimer’s price target of $360 is indeed ahead of the consensus price target of about $292.50, which is roughly where the stock is currently trading. IBM is up about 34% this year, which is what it returned last year, as well.

Pharmaceutical Company Eli Lilly Headquarters

Eli Lilly jumps into the tech-dominated $1 trillion club

Lilly is crossing $1 trillion in market cap just as Wall Street is getting jittery over a potential AI bubble.

J. Edward Moreno1h

Max Knoblauch2h

Airlines climb on falling oil prices as the US pushes for a Russia-Ukraine peace deal

Oil prices fell on Friday, with West Texas Intermediate crude futures down more than 2% amid a US push for a peace plan between Russia and Ukraine. The US has reportedly pitched a deal that would see Ukraine cede land to Russia and agree to never join NATO.

As the market repeatedly shows: what’s bad for crude is good for airlines, which stand to benefit from lower fuel costs. Shares of major US carriers are up on oil’s price action, with Southwest Airlines up more than 5% and the rest of the big four airlines — American Airlines, Delta Air Lines, and United Airlines — up more than 3%.

Luke Kawa2h

There’s a full-blown meltdown in the AI boom’s supporting cast of speculative, volatile stocks

Nvidia’s results weren’t good enough to help the chip designer, but the reaction has been so much worse for other parts of the AI trade. The meltdown in the AI boom’s supporting cast of more speculative, volatile stocks is deepening sharply on Friday:

Bitcoin miners turned data center providers Cipher Mining and IREN are in a world where the market seems to have soured on everything they’re associated with. Shares of both have tumbled more than 7% on the day.
Neoclouds CoreWeave and Nebius are both off about 5% or more. The former is now 66% off its record closing high, while the latter is in a 40% drawdown.
Nuclear energy firm Oklo is down 8%, and has lost over half its value since mid-October. Its trailing price-to-sales ratio remains aggressively unchanged through this rout (because it is a zero-revenues company).
The Bloom (Energy) is off the rose, with the fuel cell company off more than 40% from its peak. Shares of Bloom Energy are cratering amid bearish options activity, with its put/call ratio at a four-month high as of 10:55 a.m. ET.

The rollover in these speculative pockets of the market (as well as bitcoin!) starting in October seems to have presaged the current bout of pain for major US indexes.

To repeat myself, when the question of, “Oracle will be able to pay me back, right?” enters your mind, that’s probably not consistent with a world where smaller companies on the outskirts of the AI ecosystem can continuously be bid up to the moon.

Luke Kawa3h

Opendoor surges after DE Shaw reveals 6.4% stake

Opendoor Technologies is soaring after a filing showed DE Shaw held a 6.4% stake in the online real estate company as of November 13.

This bears a close resemblance to the reaction after proprietary trading firm Jane Street revealed a 5.9% stake in the company in late September. That is, while many bulls are cheering this filing as a signal of validation from a major institution and a positive catalyst for the company, the reality is much less clear.

Consider the entity that holds the overwhelming majority of DE Shaw’s Opendoor stake: DE Shaw Valence Portfolios. It’s a statistical arbitrage fund, not a long-only equities strategy.

There are many reasons why DE Shaw might want to have accumulated a position in Opendoor at this particular time. The one that comes to mind first: to be the shareholder of record in time to receive the dividend of warrants, which may in turn be providing opportunities to profit from relative value trades between warrants and listed options. Really, only DE Shaw knows why it bought these, but the answer is very likely not “because it’s very bullish on Opendoor stock.”

Given that Opendoor is in the real estate business, the increased market-implied likelihood of a rate cut in December following comments from New York Fed President John Williams this morning is also likely helping the shares on Friday.

Matt Phillips4h

AST SpaceMobile rises on launch plans for new satellite

AST SpaceMobile rose after announcing launch plans for the first of its next-generation satellites next month, as it tries to execute its plan to offer satellite-based broadband service directly to consumers.

The services-from-space trade has been a popular market theme this year, with companies like AST SpaceMobile, EchoStar, Rocket Lab, and Planet Labs all periodically soaring on updates related to their partnerships and launch plans that might allow them to offer broadband and mobile telephone coverage directly to consumers from space.

AST SpaceMobile’s new satellite, the Bluebird 6, is larger than its predecessor, enabling larger amounts of data transmission and bringing the the services-from-space business closer to reality, the company says.

“Our next-generation satellites will soon enable ubiquitous cellular broadband coverage direct to everyday smartphones from space,” Abel Avellan, founder, chairman, and CEO of AST SpaceMobile, said in a statement.

The company, like competitors Rocket Lab and Planet Lab, remains unprofitable and is expected to post quarterly losses for the next two years, at least.