James Faucette, an analyst from Morgan Stanley, has initiated a new Hold rating on Kyndryl Holdings Incorporation (KD).
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James Faucette’s rating is based on a combination of factors that reflect both caution and optimism regarding Kyndryl Holdings’ future performance. The Hold rating, or Equal Weight (EW), is supported by the company’s current stock price, which already reflects investor concerns about achieving long-term targets, as evidenced by a 14% decline year-to-date. However, the company has shown a 35% gain over the last year, indicating that the market still anticipates some improvement in growth and profitability.
Faucette also highlights the importance of Kyndryl’s self-help initiatives, which focus on improving profitability, mix, and cost discipline. Despite the company’s return on invested capital (ROIC) being below industry benchmarks, these initiatives offer potential for further improvement. The Hold rating is further influenced by three key debates: the achievability of FY28 targets, momentum in KD Consult, and the company’s relative performance compared to peers. Overall, the balanced view stems from both the challenges and opportunities Kyndryl faces in its strategic efforts.