• Jeff Matthews

Stock Upgrades I’d Like to See


IBM upgraded to Buy From Sell at ThinkEquity

That’s the first half of the headline on Briefing.com this morning, and I am not making it up.

Nor am I making up the second half of the headline:

Tgt raised to $110 from $70

“Gosh,” you might be thinking: “something profound must have changed to account for this $41 per share increase in the fellow’s ‘price target’ for IBM!”

And you would be wrong.

What has changed—let’s be honest about this—is the price of IBM’s stock itself.

As anybody with a Bloomberg machine or even Yahoo! Finance can see, IBM’s shares are 95 bucks, which happens to be much closer to $110—the new price target of the ThinkEquity research gurus—than to $70, which was the previous price target of the ThinkEquity research gurus.

And since it’s close to year-end, and since it doesn’t look like IBM stock is going down to $70 any time soon, what better time to upgrade the shares using some highfalutin excuse like, oh, this: Increased performance and profitability in IBM’s Global Service segment, together with strong software sales, causes us to reconsider our SELL rating and now recommend it as a BUY for this quarter. And that’s precisely how the ThinkEquity gurus start their multi-page about-face research report.

However, I believe there is an entirely more straightforward rational, and if I’d written the research report, and had been as wrong about IBM stock as the ThinkEquity folks have been—and believe me, I’ve been even wronger, to coin a word, on more stocks than the poor fellows in this case—it might instead start like this:

We are changing our rating on IBM from “SELL” to “BUY” and raising our price target from $70 to $110 for the following reasons:

1. We’ve been so wrong on the stock that it makes my head hurt when I wake up in the morning and realize “this is not a dream.”

2. My research director thinks I’m an idiot.

3. The sales people won’t make eye contact with me in the hallways—it’s like I’m dead meat. And when we marketed in Appleton last week the sales guy kept rolling his eyes while I talked. And I swear he was making those “he’s crazy” circles twirling his finger around his ear behind my back.

4. It doesn’t look like the stock is going to $70 any time soon. In fact, the chart looks like it blows through $100 and doesn’t stop until $110. At least, that’s what Cramer says. What the hell do I know?

5. Every time I look at the screen I know there are probably sixty or seventy stock tickers up there, but the only ticker I can see is IBM. It’s like my brain can’t focus on anything else but that stupid stock. It goes up every —-ing day.

6. It’s year-end: I can score points with clients upgrading into year-end. So why not?

Why not, indeed?

Jeff Matthews I Am Not Making This Up

© 2006 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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GENERAL

The content contained in this blog represents only the opinions of Mr. Matthews. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. The content herein is intended solely for the entertainment of the reader, and the author.

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