A Look At Kyndryl Holdings (KD) Valuation After Recent Share Price Moves

Why Kyndryl Holdings is back on investors’ radar

Kyndryl Holdings (KD) has caught investors’ attention after recent share price moves, with the stock showing mixed performance across different timeframes. This is prompting a closer look at how its current fundamentals line up with expectations.

See our latest analysis for Kyndryl Holdings.

At a share price of $27.09, Kyndryl’s recent 1 day share price return of 1.31% and 7 day share price return of 2.00% sit against a 1 year total shareholder return of 28.18% decline. The 3 year total shareholder return of 120.06% points to a longer term recovery story, suggesting momentum has cooled in the short term but remains stronger over a multi year view.

If Kyndryl’s move has you reassessing opportunities in tech and IT services, it could be a good moment to broaden your watchlist with high growth tech and AI stocks.

With Kyndryl reporting annual revenue of US$15.01b and net income of US$408m, plus a value score of 5 and an indicated discount to some analyst targets and intrinsic estimates, is this a genuine opportunity or is future growth already priced in?

Most Popular Narrative: 28% Undervalued

With Kyndryl’s last close at $27.09 against a narrative fair value of $37.60, the current setup hinges on how its newer service lines scale.

The accelerating adoption of hybrid and multi-cloud environments is fueling demand for Kyndryl's advanced integration and management services, as evidenced by a 44% year-over-year increase in signings and substantial growth in hyperscaler-related revenues, which supports ongoing revenue expansion and a higher recurring revenue base.

Read the complete narrative.

Curious what kind of earnings, margins, and cash flows would justify that higher value, even after using an 11.13% discount rate? The narrative lays out a specific path for revenue, profitability and the P/E multiple that underpins this gap.

Result: Fair Value of $37.60 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still pressure points, including revenue tied to older, lower margin contracts and the risk that large deal transitions arrive more slowly or in a lumpier fashion than expected.

Find out about the key risks to this Kyndryl Holdings narrative.

Build Your Own Kyndryl Holdings Narrative

If you see the story differently, the best way to stress test it is to work through the numbers yourself and build a custom thesis in a few minutes, then Do it your way.

A great starting point for your Kyndryl Holdings research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Kyndryl has sharpened your focus, do not stop here; broaden your search and let data rich stock screens surface ideas you might otherwise miss.

• Spot under-the-radar value by checking these 884 undervalued stocks based on cash flows that align with your return and risk preferences.
• Target cutting edge themes by scanning these 26 AI penny stocks tied to artificial intelligence and related technologies.
• Position your portfolio for income by reviewing these 12 dividend stocks with yields > 3% offering yields above 3%.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com