11:45 AM EST, 01/30/2025 (MT Newswires) -- International Business Machines ( IBM ) saw "unexpected" working capital tailwinds that drove the outperformance of its Q4 free cash flow and are expected to flow through to the company's 2025 free cash flow, Morgan Stanley said in a Thursday note.

IBM ( IBM ) reported Q4 non-GAAP earnings Wednesday of $3.92 per diluted share and revenue of $17.55 billion. Morgan Stanley said the results were "slightly" better than expected but the quarter's free cash flow "materially outperformed," leading to the company's free cash flow guidance of $13.5 billion for 2025.

Morgan Stanley said it also raised its 2025 free cash flow and earnings per share forecast for IBM ( IBM ) by 4% to 6%, citing the company's efficient spending and better gross margins.

Morgan Stanley raised its price target for IBM's ( IBM ) stock to $228 from $217, while the equal-weight rating is maintained.

Shares of IBM ( IBM ) were up over 13% in recent trading.

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