12:13 PM EDT, 04/26/2024 (MT Newswires) -- International Business Machines ( IBM ) delivered on free cash flow and Red Hat sales in Q1 for a "solid" start to the year despite trailing estimates on total revenue, RBC Capital Markets said Thursday in a report.

"The highlight from our perspective was the performance of our two focal metrics" with free cash flow of $1.9 billion topping RBC's $1.7 billion estimate and Red Hat revenue in line with expectations, according to the report.

IBM ( IBM ) on Wednesday reported Q1 adjusted earnings rose to $1.68 a share from $1.36 a year earlier, topping the Capital IQ consensus of $1.59. Revenue rose to $14.46 billion, trailing the consensus of $14.54 billion.

"The biggest negative surprise was around the consulting space where IBM's ( IBM ) resiliency relative to the broader market over the past year showed some signs of softening," RBC said.

On Wednesday, IBM ( IBM ) also agreed to buy multi-cloud infrastructure automation company HashiCorp (HCP) for $6.4 billion.

IBM's ( IBM ) management indicated it expects HashiCorp to have synergies with its Red Hat, watsonx, data security, IT automation and consulting businesses, the report said.

RBC maintained IBM's ( IBM ) outperform rating and the $200 price target.

IBM ( IBM ) shares fell 1.3% in recent Friday trading.

Price: 166.75, Change: -2.16, Percent Change: -1.28