The average target price of KD is 44 and suggests 12% upside potential. Usually, this means a HOLD recommendation among investment firms. This neutral recommendation suggests no significant price movement, up or down, in the next 12 months. The most optimistic analyst has a target price of 47.0. This translates into 21% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 38.9. This suggests 0% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Kyndryl Holdings, Inc. operates as a technology services company and IT infrastructure services provider worldwide. The company offers cloud services; core enterprise and cloud services; application, data, and artificial intelligence services; digital workplace services; security and resiliency services; and network services and edge services. It serves financial, telecommunications, retail, automobile, and transportation industries. The company was incorporated in 2020 and is headquartered in New York, New York.

Kyndryl Holdings, Inc.

Technology

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

KD reported revenue of USD 15 057mn in the last 12 months, down 0% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 85% from FY24 to USD 1.09. Market expects EPS to reach USD 1.16 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 19ppts and its growth accelerated by 21ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 7.7% in the last 12 months, a decline from 9.4% in FY24. 

Historically, KD has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 1.7%, a growth from 0.9% in FY24. 

Kyndryl Holdings, Inc. reported a return on equity (RoE) of 45.9% in the last 12 months, up from 12.1% in FY24. The market consensus projects an RoE of -146.7% in FY25, however, this time below its peers. 

Another important profitability metric, return on assets (RoA), amounted to 4.2% in the last 12 months, an increase from 1.3% in FY24. The market analysts predict that RoA will be -16.2% in FY25, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 6.4%, below the peers. The consensus estimate for FY25 for RoCE is -85.8%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.6 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

KD boasts very high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually quite stable and remains mildly favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note solid return on capital and low margin volatility, among the positive credit factors. Among the negative credit factors, we point to slow historical revenue growth, bleak profitability, and an unfavourable capital structure.

In highly turbulent market conditions, KD is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, KD is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to substantial. 

From both historical and forecast perspectives, the stock is moderately underpriced compared to similar stocks. Specifically, the stock is fairly valued on P/E, undervalued on EV/EBITDA, underpriced on P/FCF. 

Kyndryl Holdings, Inc.

$ 38.87

4

Kyndryl Holdings, Inc.

$ 38.87

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 38.87

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