JPMorgan: IBM's software business driving growth expected to continue.

JPMorgan Chase stated in a research report that IBM has been repositioning itself from a hardware and services company to a platform focused on hybrid cloud and AI with software as the main driver for most of the past decade. Analysts at JPMorgan Chase stated that software is now the main driver of the stock, accounting for about 45% of total revenue, but about two-thirds of combined profits. JPMorgan Chase analysts said, "Given the higher profit margins, revenue recognition characteristics, better cash conversion rate, and higher quality earnings stream of software, which can support a higher valuation multiple than hardware and services businesses, we continue to view the transformation towards software positively." JPMorgan Chase upgraded IBM's rating from neutral to overweight, and raised its target price from $270 to $291, citing confidence in the future accelerated growth of the software business. IBM's stock rose 5% pre-market.