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Investing.com - Morgan Stanley initiated coverage on Kyndryl Holdings Inc (NYSE:KD) with an Equalweight rating and a $30 price target, implying a 2% downside from current levels. According to InvestingPro data, the company currently trades at a P/E ratio of 25.7x and has a market capitalization of $7.1 billion, with analyst targets ranging from $40 to $55.
The price target is based on a 10x PE multiple on Morgan Stanley’s fiscal year 2027 EPS estimate of $3.00, which falls below the consensus estimate of $3.39. The firm’s valuation reflects a balanced view on the IT infrastructure services provider’s outlook. InvestingPro analysis suggests the stock is currently undervalued, with a "GOOD" overall Financial Health score.
Kyndryl’s stock has declined 11.5% year-to-date, indicating investor caution about the company’s ability to meet its fiscal year 2028 targets. The shares have gained 33% over the past twelve months, suggesting the market still anticipates improvements in growth and profitability. InvestingPro data shows the company maintains a healthy current ratio of 1.05 and has been profitable over the last twelve months.
Morgan Stanley acknowledged that Kyndryl is making steady progress on its self-help initiatives, and with the year-to-date decline, the current stock price already factors in significant uncertainty around achieving the company’s long-term objectives.
The investment firm’s Equalweight thesis centers on three key debates: the achievability of fiscal year 2028 targets, momentum in the KD Consult business, and Kyndryl’s relative performance compared to peer DXC.
In other recent news, Kyndryl Holdings reported its first-quarter earnings for fiscal year 2026, with earnings per share aligning with analysts’ expectations at $0.37. However, the company’s revenue fell short, recording $3.74 billion compared to the anticipated $3.83 billion, marking a revenue surprise of -2.35%. Kyndryl also announced plans to invest $2.25 billion in India over the next three years, focusing on modernizing technology infrastructure and expanding AI capabilities. The investment will include establishing an AI Innovation Lab in Bengaluru and providing digital training for approximately 200,000 citizens. Additionally, Kyndryl has joined the White House’s Pledge to America’s Youth, committing to advance AI education for young Americans. The company expanded its alliance with HPE to enhance AI private cloud adoption, providing services to support customer use of HPE Private Cloud AI. Furthermore, Kyndryl has partnered with Nova Intelligence to accelerate AI-driven SAP transformations, combining their expertise to facilitate efficient migrations to SAP Cloud ERP.
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