IBM "will do more acquisitions. They tend to like acquisitions of a few billion [dollars] in size," said Reitzes, who has the company at equal weight and a $176 price target. "They don’t like to do much over $10 billion [and] that’ll be in the software space."
The company, once known for its mainframe and laptop computers, also "has a good analytics strategy," Reitzes said. "They do a good job of selling software to analyze all that data" companies need. However, he expects IBM's hardware growth to be "pretty cyclical."
IBM is also "very good at realizing revenue" from past consulting contracts, Reitzes said.
"Last quarter their long-term signings were down 31 percent but they beat revenue in that segment," he added. "We want to see that do a little better" on long-term as well as short-term signings.
Not everyone is as optimistic about IBM. Wells Fargo downgraded the company earlier this month. A discussion on how to trade on the downgrade ishere.
Elsewhere in the sector, Reitzes' top pick continues to be Apple .
"I think there’s more for Apple to go," he said. "We think the new product cycle helps them there. Apple is a little defensive because it has $70 a share in cash. They are one of the strongest companies in the world financially and they will weather any storm."
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Ben Reitzes does not own shares in IBM but his company has an investment banking relationship. Information was not available on any relationship with Apple.