Why Kyndryl (KD) Is Climbing Today

The shares of Kyndryl (KD) are advancing 6% after Scotiabank increased its price target on the tech name to $45 from $35. The cloud services company was spun off from IBM (IBM) in 2021.

Why Scotiabank Is Bullish on KD

The bank raised its price target on KD after it unveiled higher-than-expected fiscal third-quarter earnings per share and in-line fiscal Q3 sales on Monday.

Scotiabank kept an Outperform rating on KD.

A data analyst in a lab monitoring a cloud-based software system to detect cardiac disease.

Scotiabank believes that Kyndryl’s embrace of automation, artificial intelligence, and analytics has helped the firm increase its profit margins and create value for investors.

The bank noted that KD’s consulting business, driven by the rapid proliferation of AI and cloud security systems, is expanding by double-digit percentage levels. The latter unit’s growth, in turn, is creating new opportunities for its Managed Services unit, according to Scotiabank.

The bank believes that the company is well-managed, while its services are necessary for its customers, leaving it largely insulated from negative macroeconomic catalysts.

More Information About KD

Analysts on average expect KD’s earnings per share to climb to $1.23 this year from a per-share loss of 11 cents in 2024.

In the last month, the shares have gained 13%, while they have soared 77% in the last three months.

While we acknowledge the potential of KD, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.