What Happened?
Shares of IT infrastructure services provider Kyndryl (NYSE: KD) fell 4.3% in the morning session after Morgan Stanley initiated coverage on the company with an "Equalweight" rating and a $30 price target.
The price target implied a potential 2% downside from the stock's trading level at the time of the announcement. The investment bank's view was balanced, noting that while Kyndryl was making steady progress on its own initiatives, the stock price already accounted for significant uncertainty about its long-term goals. The "Equalweight" rating centered on the company's ability to achieve its fiscal year 2028 targets. Analysts also pointed out that the stock's year-to-date decline reflected skepticism among investors regarding the company's growth and profitability prospects.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Kyndryl? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Kyndryl’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 16 days ago when the stock dropped 2.6% on the news that markets pulled back, reversing early gains, as investor sentiment remained cautious despite a softer-than-expected inflation reading.
Stocks rose in the morning session after an unexpected drop in the Producer Price Index (PPI) for August signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut. The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% last month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.
Kyndryl is down 17.2% since the beginning of the year, and at $29.40 per share, it is trading 32.3% below its 52-week high of $43.45 from February 2025. Investors who bought $1,000 worth of Kyndryl’s shares at the IPO in October 2021 would now be looking at an investment worth $721.47.
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