IBM Corp shares can’t keep going down forever – the company ahs a very substantial break-up value that probably now exceeds its market capitisation, and Smith Barney Harris Upham & Co analyst Barry Bosak reckons that there are other reasons to buy the bombed-out stock. On Monday, he upgraded his rating on IBM to buy from hold, helping the shares to put on $1.875 to $92.25. One of the tasks of analysts is to conduct an early morning meeting with their firms’ sales teams to brief them on what they are going to say in their notes and which shares should be pushed to their clients, and on Monday, Bosak told the Smith Barney sales team that two of investors’ biggest concerns about IBM were the level of demand for the new high-end mainframes, and the corporate dividend. Bosak went on to say that he believes the new, highly profitable Summits are selling and that the dividend won’t be cut. He thinks IBM’s sales force has set realistic revenue targets, that the corporate reorganisation hasn’t disrupted the work force – that sounds a little contentions – and that improvements in year-over-year revenue comparisons will be easy for IBM. He thinks that the downside risk is limited to the low $80s at which the shares were trading in December, and that IBM has an upside potential to $110 compared with the high for 1991 of $139.75. Bosak has not changed his earnings estimate of $7 a share for 1992, compared with $10.51 in 1990 and $1.43 before the effect of the accounting change, that the company reported for the first nine months of 1991.
