International Business Machines Corporation (NYSE: IBM) just hit a new all-time high… again. The prior high was $201.57 and now shares on Tuesday have even managed to get back above the $202.50 mark. With Warren Buffett having taken a large IBM stake for Berkshire Hathaway Inc. (NYSE: BRK.A), and with that stake reportedly now being even larger, we cannot help but wonder if a fairly recent analyst call from Stern Agee for $230.00 in the stock is even more insightful and likely than when it was issued.
IBM’s market capitalization is now $234.4 billion and shares keep inching higher and higher. One aspect that is interesting is that Thomson Reuters has a consensus price target objective of only $200.76. Analysts are playing catch up here on this one.
The company is under a new CEO and it continues to buy back its shares. Buffett himself endorsed that share buyback. When Stern Agee made the $230 IBM call, it was based on only a 13.5x multiple on its 2013 earnings estimate of $17.00 in earnings per share.
JON C. OGG