Kyndryl Holdings (KD) Stock Forecast & Price Target

Kyndryl Holdings Inc. is poised for significant financial growth, with management projecting adjusted pretax income to increase by 30-50% year-over-year in F1Q26. The company's Kyndryl Consult segment reported a 29% revenue increase to $3 billion in FY25, driven by strategic expansion into AI, applications, and cybersecurity, with expectations for this growth to reach 85% by FY27. Furthermore, post-spin improvements have led to enhanced profitability, as evidenced by an expansion of adjusted EBITDA margins to 16.7% in FY25, positioning Kyndryl favorably for future financial performance.

Kyndryl Holdings Inc. faces several fundamental risks, including projected revenue growth failures due to delays in client signings and project ramp-ups, as well as an adverse pricing environment that may compress margins. The company's reliance on the U.S. market for the majority of its revenue exacerbates concerns around softer client demand and a potential decrease in business relationships if ratings decline. Additionally, the threat of increased labor costs in an inflationary environment, coupled with slower growth expectations for the IT infrastructure services sector, foreshadows challenges in maintaining operational effectiveness and profitability.