IBM up on higher target, PC focus
Analyst sees tough competition from Compaq, Dell
By Tiare Rath, CBS MarketWatch
Last Update: 3:16 PM ET Nov 9, 1998
Also: Tech Repor
NEW YORK (CBS.MW) -- A report on International Business Machines
fueled energy into some computer stocks Monday after two analysts raised
their price targets for the company.
Steven Milunovich, of the investment firm Merrill
Lynch, said Monday he's bumping up IBM's (IBM)
12-month price target to $180 a share from $165 a
share. The analyst met with IBM's personal
computing executives, who reported they expect their
PC business to improve after a tough year.
Brown Brothers Harriman analyst William Milton Jr.
also raised his price target, pushing it up to $160 a
share from $150 a share.
IBM shares picked up 1 to 150 15/16. Also having a
positive day was Dell Computer (DELL), which got
kudos from Milunovich as well. Dell shares gained
13/16 to 66 1/2.
But the positive news couldn't buoy every tech stock
in an otherwise down day on Wall Street. See Silicon
Stocks and Market Snapshot.
The Goldman Sachs Computer Hardware Index ($GHA) fell 0.1 percent
following earlier gains Monday. Contributing to the decline were computer-makers
Apple Computer (AAPL), down 1 7/8 to 36 3/16; Hewlett-Packard (HWP), off 7/8 to
62 3/8; and Gateway 2000 (GTW), down 1 15/16 to 57 11/16.
While IBM reiterated its commitment to the PC market, Milunovich said Dell
has a better PC focus. Dell's image as a leader in service and direct sales
also frustrates IBM executives who think IBM's services are superior,
Milunovich reported. IBM faces stiff competition.
"Even if IBM has better products, a debatable point, many customers will
give the benefit of the doubt to Dell or Compaq (CPQ) because they
specialize in PCs," Milunovich wrote in a note to investors.
Also one to watch: Compaq will likely announce a new computer direct-order
program for small- and medium-sized business markets Wednesday,
according to Bear, Stearns analyst Andrew Neff.
Compaq stock fell 3/16 to 31 13/16. |
