Analyst James Faucette from Morgan Stanley maintained a Hold rating on Kyndryl Holdings Incorporation and keeping the price target at $30.00.
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James Faucette has given his Hold rating due to a combination of factors involving Kyndryl Holdings’ growth trajectory, relationship with IBM, and future investment plans. The company is facing a cautious investor sentiment regarding its ability to achieve positive growth in the near term, particularly after a setback in the June quarter. However, there is optimism about meeting FY28 targets if the company can regain its turnaround momentum.
Another factor influencing the Hold rating is the ongoing transition from IBM, which involves managing costs related to legacy contracts and systems disentanglement. While there are concerns about potential cost increases, Faucette believes that transition-related challenges are largely under control, which could support margin improvement. Additionally, Kyndryl’s capital allocation strategy, which currently favors share repurchases over mergers and acquisitions, suggests a focus on cash flow confidence. Nevertheless, a more investment-led approach could enhance the company’s market position, especially as the industry shifts towards AI-driven solutions.
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