IBM Settles Patent Lawsuit With Airbnb; Street Sees 16% Upside

IBM on Dec. 23 announced the dismissal of its patent lawsuit with Airbnb that was filed in early 2020 in the Federal District Court in Delaware. Shares of Airbnb lost 3.2% at the close on Wednesday.

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The terms of the settlement between IBM (IBM) and Airbnb (ABNB) remain confidential.

“IBM invests more than $5 billion annually in research and development. This agreement further demonstrates the value of our intellectual property that results from this innovation. We’re pleased this matter has been resolved.” said IBM general manager Dr. William Lafontaine.

Citi analyst Jim Suva recently reiterated a Hold rating on IBM stock with a price target of $140 following the company’s Q3 results.

Suva noted that from both an operational and financial perspective, IBM is “getting even more complex” as the company did not provide a Q4 outlook and is going to have $2.3 billion in charges in Q4 and another $2.5B in 2021 as it realigns the cost structure. This will make modeling IBM’s financials even more difficult, the analyst added.

Suva believes consensus Q4 earnings and cash flows will move lower and that there is a risk that the seasonal Q4 budget spending “may not materialize to the full extent as it has in the past”.

With estimates moving lower and IBM likely shifting to more organic and acquisition investments rather than stock buybacks, a Hold rating is appropriate, he summed up. (See IBM stock analysis on TipRanks)

From the rest of the Street, the stock scores a cautiously optimistic analyst consensus of a Moderate Buy based on 2 Buys and 4 Holds. The average analyst price target of $144.33 implies upside potential of 16.5% to current levels.