** International Business Machines IBM.N on Wednesday said 15 of its government contracts were shelved under a cost-cutting drive by the Trump administration, a setback that eclipsed its upbeat revenue forecast

** Shares down 7.94% at $225.98 in premarket trading

"DEFENSIVE BUT BETTER OFFENSE BEYOND"

** RBC Capital Markets ("outperform," PT: $276) continues to feel that IBM is well positioned to benefit from the buildout of hybrid cloud and GenAI infrastructure despite a more challenging near-term macro

** Evercore ISI ("outperform," PT: $275) says mainframe cycle tailwinds, visibility in Red Hat growth, and contribution from M&A should position the company for second half inflection

** Morningstar (fair value: $242) anticipates that constrained discretionary budgets and ongoing federal contract reductions will weigh on consulting revenue in the near to medium term

** "Nevertheless, robust software demand should continue to support overall growth"

** Morgan Stanley ("equal-weight," PT: $233) says while one quarter doesn't make a trend, software growth now needs to accelerate in the face of an uncertain macro backdrop and increasingly more difficult comparisons

** However, brokerage expects a free cash flow $(FCF)$ upside this year, if USD remains weak

(Reporting by Joel Jose in Bengaluru)

((joeljose@thomsonreuters.com))