Scotiabank maintains price target on Kyndryl stock By Investing.com

Scotiabank reiterated its Sector Outperform rating and $30.00 price target on Kyndryl Holdings Inc (NYSE:KD). The bank highlights the company’s solid financial profile and its success in implementing its turnaround goals. According to the bank’s analysis, despite the challenging macroeconomic environment, infrastructure services have proven particularly resilient in the IT services industry due to their essential nature.

Kyndryl, a major player in this subsector, was named a top pick by Scotiabank. Michael Bradshaw, Global Practice Leader for Applications, Data and AI at Kyndryl, recently participated in an investor webcast. There he discussed the impact of AI on global IT infrastructures and strategies for introducing Enterprise AI/Gen AI. Bradshaw also explained Kyndryl’s role in supporting customers on their journey to AI readiness.

The bank’s discussions with Bradshaw reinforced its positive view of Kyndryl. They point to the company’s unique market position and its potential for a stronger presence as more companies integrate AI/Gen AI technology into their operations. Scotiabank believes Kyndryl’s focus on AI-powered infrastructure services, in addition to modernizing legacy infrastructure, makes it an attractive investment opportunity.

Scotiabank’s continued support for Kyndryl is based on the company’s ability to leverage the mission-critical nature of its business and benefit from the growing trend of AI integration into infrastructure services. The bank maintains its Sector Outperform rating and reiterates its $30.00 price target on Kyndryl shares.

Kyndryl Holdings, Inc. reported robust first quarter results that exceeded expectations. Despite an 8% decline in revenue to $3.7 billion due to the strategic exit from low-margin revenue streams, the company reported a 14% increase in orders and forecast a high-single-digit pretax profit margin. Kyndryl Consult, which accounts for 17% of revenue, and the AI-powered open integration platform Kyndryl Bridge contributed significantly to this growth.

The company’s adjusted EBITDA margin improved to 14.9% and adjusted profit before taxes increased 96% to $92 million. Strategic partnerships with industry leaders such as SAP, Microsoft, Google, AWS and NVIDIA underscore Kyndryl’s commitment to growth and market leadership.

InvestingPro Insights

Complementing Scotiabank’s positive view on Kyndryl Holdings Inc (NYSE:KD), recent data from InvestingPro provides additional context on the company’s financial performance and market position. Despite the aforementioned challenging macroeconomic environment, Kyndryl has demonstrated resilience, with its share price generating a significant total return of 52.38% over the past year.

InvestingPro picks highlight Kyndryl’s position as a “prominent player in the IT services industry,” which is consistent with Scotiabank’s assessment of the company’s unique market position. This position could prove crucial as companies increasingly adopt AI technologies, potentially driving demand for Kyndryl’s services.

However, investors should note that Kyndryl is currently “suffering from weak gross profit margins”, with InvestingPro data showing a trailing twelve month gross profit margin of 18.89%. This metric could be an area to watch as the company continues its turnaround efforts and expands its AI-related services.

For those looking for a more in-depth analysis, InvestingPro offers 11 additional picks for Kyndryl that provide a comprehensive overview of the company’s financial health and market prospects.

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