Analysis and Insights
To determine whether Kyndryl Holdings (KD) is overvalued, we analyze both technical and fundamental factors.
Technical Analysis:
Kyndryl's stock is currently trading at $33.85, below its Fibonacci pivot of $36.35, suggesting potential resistance at higher levels. The Relative Strength Index (RSI) values of 14.05, 27.26, and 30.17 indicate the stock is in oversold territory, which may signal undervaluation from a technical perspective.
Valuation Analysis:
From a fundamental perspective, Kyndryl's valuation metrics are mixed. The company has a high P/E ratio of 60.35 and EV/EBITDA of 10.1, which are above industry averages, suggesting potential overvaluation. However, the price-to-sales (P/S) ratio of 0.54 is relatively low, indicating undervaluation compared to its revenue.
Financial Performance:
Kyndryl reported Q3 2025 revenue of $3.74 billion, slightly below analyst expectations, but achieved a non-GAAP net income of $124 million, marking a turnaround from the prior year's loss. The company raised its fiscal 2025 guidance, anticipating at least $475 million in pre-tax income and $350 million in adjusted cash flow, driven by growth in its Kyndryl Consult unit.
Analyst Sentiment:
Analysts have raised their price targets for Kyndryl following improved earnings forecasts, with a new average target of $44.60. However, they expect the company to underperform compared to industry growth rates, highlighting cautious optimism.
Conclusion:
While Kyndryl's improved earnings and guidance are positive, its high P/E and EV/EBITDA ratios suggest overvaluation. The stock's technical indicators and mixed analyst sentiment further support this view. Investors should consider waiting for a price correction or stronger revenue growth before entering.