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IBM Stock a “place to hide”

Morgan Stanley moved IBM from ‘overweight’ to ‘equal weight’

Morgan Stanley, in addition to announcing a earnings beat this morning, upgraded brokerage side IBM (NYSE:IBM) to “overweight” from “equal weight,” with the price target rising to $150 from $147. The company called the title “a place to hide” amid growing economic risk. IBM rebounded 3.3% to trade at $130.26 after the note.

On the charts, IBM tested its 80-day moving average, but has since cooled off its session highs. Today’s gains, however, allowed stocks to recover to their 12-month equilibrium level. In the shorter term, equity is down 2.5% in 2022.

IBM is also gearing up to turn a profit, with its first-quarter report due after the close on Tuesday, April 19. Over the past two years, the stock has averaged a post-earnings change of 5%, regardless of direction. This time around, options stands are pricing something similar at 5.1%. Of those eight quarters, five of the next day’s sessions ended positive, including a 5.7% jump last January.

The stock is seeing a surge in call volume right out of the gate this morning. So far, 8,403 calls have crossed the band – three times the intraday average – against 2,558 puts. The April 130 call is the most popular and expires today at the end of the day.

It is also worth noting the fairness Schaeffer Volatility Dashboard (SVS) sits at 84 out of 100, suggesting that IBM has exceeded options traders’ volatility expectations over the past year.