-- IBM (IBM) will likely exceed Wall Street's estimates for the first quarter and raise its revenue guide amid momentum in the software segment and an earlier completion of the Confluent acquisition, Oppenheimer said in a note Thursday.
The brokerage raised IBM's first-quarter revenue estimate to $15.7 billion from $15.6 billion and reduced the earnings per share outlook to $1.70 from $1.77.
IBM's software segment is seeing a pricing uplift on renewals of enterprise license agreements, according to the note. Open hybrid cloud technology company RedHat's contract values are trending 10% to 15% higher at renewal.
Oppenheimer analysts, including Param Singh, expect IBM to raise its full-year revenue guidance by a percentage point to more than 6% at constant currencies, including a tailwind from an earlier close of the Confluent deal.
IBM completed the acquisition of data streaming platform Confluent in March.
IBM's software portfolio excluding Confluent, HashiCorp and RedHat is estimated to rise 7% in the calendar year 2026, driven by higher ELA pricing and larger contract sizes, Singh said.
The company's consulting business is projected to grow 2.1% for 2026, excluding foreign exchange volatility, compared with consulting competitor Accenture (ACN), which recently guided to full-year 3% to 5% revenue growth, according to the note. IBM may face pressure from the US Department of Homeland Security shutdown that began on Feb. 14.
The shutdown resulted from a legislative deadlock between Congress and President Donald Trump over immigration and customs reforms.
Oppenheimer revised its price target on IBM's stock to $320 from $380, citing "recent compression in market multiples." The brokerage maintained its outperform rating.
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