Kyndryl Holdings Inc. (NYSE:KD) saw a rise in its shares in early trading on Thursday following news that the company was considering a joint offer for DXC Technology Company (NYSE:DXC). According to Oppenheimer, this development signifies an interesting investment opportunity, as Kyndryl is expected to experience revenue growth, margin expansion, and earnings exceeding $3 in fiscal 2027.
Analyst Ian Zaffino, who covers Kyndryl Holdings, initiated coverage with an Outperform rating and a $33 price target. Zaffino noted that since splitting from IBM, Kyndryl has been reassessing the pricing of its legacy low- and no-margin contracts. By the end of the fourth quarter of fiscal 2024, around half of these contracts had been repriced, and approximately two-thirds are expected to be repriced this year.
Additionally, Kyndryl has successfully negotiated deals with major hyperscalers, transitioned customers to its cost-saving operating platform (Kyndryl Bridge), and achieved double-digit growth in its Consult business. Zaffino believes that these positive developments will continue to drive the company’s transformation from a perceived bad deal or loss leader with IBM to an attractive growth at a reasonable price (GARP) investment.
As of the latest update, Kyndryl Holdings shares were up 2.02% to $25.79. In related news, the Federal Reserve’s stress test results for 2024 were deemed worse than expected by Goldman analysts, who anticipate the market’s reaction to be one of disappointment.
In conclusion, Kyndryl Holdings is positioned for growth and profitability following its split from IBM, with promising opportunities in contract repricing, partnerships with hyperscalers, and expansion of its Consult business. This positive outlook has led analysts to view Kyndryl as an intriguing investment option for the future.
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https://quantisnow.com/insight/this-it-stock-represents-an-‘interesting-investment-opportunity’-5580929
