IBM bear drops sell rating - but falls short of saying 'buy the stock'

MoffettNathanson Analyst Lisa Ellis discusses the biggest challenges IBM still faces ahead after the firm upgraded its rating on the company.

You can see the entire interview here.

Key Video Takeaways

00:04: On what's driving IBM's profit

00:42: On where the company is 'treading water'

Video Transcript

LISA ELLIS: Yeah, look, they do still have a challenge, which is that much of the profit of the company is driven by their software businesses, many of which are still traditional software businesses on premise, license-based software businesses. And so while they're starting to grow, they're still, at some level, though, trading lower profit revenue for higher profit revenue that's bleeding off.

Like, so they haven't-- they have what I would call, like, kind of tip the Titanic a bit, gotten their head from below water to now above water. So they're moving in a good direction, but aren't yet in really a leadership position in either digital or cloud. They're just much more like kind of treading water, but still swimming upstream a bit.

BRAD SMITH: Lisa, always appreciate some of the time, insights, analysis. Lisa Ellis, SVP MoffettNathanson analyst, thanks so much for joining us this morning.