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IBM bulls ahead

IBM helped boost a sluggish market today, following an analyst's report that Big Blue's share price could substantially rise in the next 12 months.

IBM helped boost a sluggish market Wednesday, following an analyst's report that Big Blue's share price could substantially rise in the next 12 months.

Salomon Brothers upgraded IBM (IBM) to a strong buy from a buy, citing IBM's likelihood it will reach $145 per share within the next 12 months.

That forecast helped push the Dow Jones Industrial Average, which includes IBM in its mix of 30 stocks, up 1.11 points to close at 5,712.38. IBM gave the index a nine-point rise based on its closing price increase.

"We think there is enough earnings growth in their products," said John Jones, an analyst at Salomon Brothers. "IBM replaced virtually all of their major products in the last 9 to 12 months with new versions. They have new versions of their Unix workstations, and on September 12 they'll have a new version of their family of mainframes."

Jones also noted that IBM has shifted its concentration on mainframe computers and related products to between 30 and 35 percent of its revenue mix, down from 70 percent in 1990.

IBM on Tuesday traded at 10.5 times its fourth-quarter earnings, and Jones thinks it can reach 11 times earnings in the next year. He added that IBM's program of buying back its stock, which tends to boost earnings for any company was not included into his forecast.

"If their buy-back program continues, that should further help their earnings," he said.