IBM could suffer a slowdown in revenue growth and changing economic cycle dynamics that could make it harder to hit the recent outperformance, Morgan Stanley warned on Wednesday. Analyst Erik Woodring downgraded the stock to balance due to overweight. He also cut his price target by $4 to $148, which would mean a gain of just 1.9% from Tuesday’s closing price. “If our 2023 Sector Outlook proves to be correct and early-cycle dynamics emerge in mid-2023, then we see an outperformance risk as the stock is trading close,” Woodring said. record highs, and IBM has a history of underperforming IT Hardware and its peers in early-cycle environments.” in a note to customers. Shares fell 1.9% in premarket trading on Wednesday. It has gained 3.1% since 2023 starting after gaining 5.4% in 2022, while the S&P 500 lost 19% and the broader tech sector was hit by a higher rate. Woodring said one of the biggest challenges the company faces is revenue growth, as he wonders if IBM can meet its goal of expanding constant currency revenue from 4% to 6%. He expects the company to hit its slightly lower 3.5% growth target in 2022, when in 2022 the headwinds turn into headwinds and the company feels moderation in its business units. business as a consultant. Woodring also said the possibility of a large-scale merger or acquisition remains open, though that doesn’t allay concerns about how the company will perform in 2023. , Woodring said looking at the company’s historical performance doesn’t garner much enthusiasm. The stock often underperforms early in the cycles and outperforms later, he said, due to its defensive pattern. That could mean trouble ahead as Woodring believes the end of the current cycle is about 75% over and a new head cycle will arrive in early or mid 2023. raised expectations for fourth quarter earnings due to an improved exchange rate . Woodring said management will likely focus on the 2023 revenue growth guidance and the company’s three-year target for free cash flow when it reports Jan. 25. He said a matching report. with initial revenue expectations and guidance within the expected range could lead to a neutral outcome. or positive gains in stocks. — Michael Bloom of CNBC contributed to this report.