Societe Generale upgraded IBM Corp's stock to "hold" From "sell", saying the world's largest technology services company would be able to increase revenue as technology spending improves in the second half of 2012, especially in Europe.
IBM forecast better-than-expected full-year results on Tuesday after reporting a solid fourth quarter.
The company's shares were set to open 4 percent higher on Wednesday. It closed at $196.06 on the New York Stock Exchange on Tuesday.
SocGen raised it price target on the stock to $201 from $188. BMO Capital Markets also raised its price target on the stock by $13 to $233, praising IBM's efforts to cut costs and the solid performance in its mainframe business.
Mainframe computers are used primarily for bulk data processing and transaction processing.
IBM expects earnings of $16.70 per share for the full year. Analysts on average were expecting $16.57 per share, according to Thomson Reuters I/B/E/S.
"IBM has delivered a solid performance overall in 2012 and is on track to reach its 2015 EPS target of $20 per share," SocGen analyst Richard Nguyen wrote in a note to clients.
Nguyen said IBM's gross margin continues to improve with double-digit growth in analytics, cloud computing and what it calls smarter planet, which aims to improve areas such as traffic, power grids and food production.
(Reporting By Aditya Kondalamahanty in Bangalore; Editing by Don Sebastian)