Kyndryl Stock Surges 26% Year-to-Date, Target Price Raised to $55

Kyndryl, an IT infrastructure company, is on the verge of surpassing its historical high, with Oppenheimer raising its target price to $55. This adjustment comes as the company continues to execute its business transformation effectively. Analysts Ian Zaffino and Isaac Selshausen from Oppenheimer have upgraded their rating for Kyndryl to "outperform," reflecting their confidence in the company's future performance.

Kyndryl's stock has shown significant strength, reaching a high of $44.20 during intraday trading and closing at $42.63. This performance suggests that the stock is on track to surpass its previous historical peak of $43.45, which was set on February 5. The company's year-to-date gains stand at 26%, indicating a robust upward trend.

The positive outlook from Oppenheimer is based on Kyndryl's strategic initiatives and operational excellence. The company's efforts in business transformation have been instrumental in driving its stock price higher. With the target price now set at $55, investors are likely to take note of the potential for further gains. The analysts' report highlights the company's ability to navigate market challenges and capitalize on growth opportunities, making it a compelling investment option.

Kyndryl has made significant progress in its business transformation over the past three years. The company's management has demonstrated strong execution capabilities, leading to a 46% year-over-year increase in contract signings for the 2025 fiscal year, totaling $18.3 billion. As older contracts from before the spin-off are re-priced, the proportion of high-margin contract signings is expected to rise from 50% in the 2025 fiscal year to approximately 67% in the 2026 fiscal year.

Kyndryl's consulting business has also contributed to the company's growth, accounting for about 24% of new contract signings. The analysts note that Kyndryl remains one of their top picks due to factors such as new contract signings, the re-pricing and expansion of high-margin businesses, and stock buybacks. These factors are expected to drive earnings per share (EPS) to approximately $5 by the 2028 fiscal year.

Additionally, the company's free cash flow (FCF) is projected to double from approximately $550 million in the 2026 fiscal year to around $1 billion by the 2028 fiscal year. This increased cash flow will not only support stock buybacks but also potentially fund dividend payments, further enhancing shareholder value.