Kyndryl Reports Positive Revenue Growth Despite Q3 Earnings Miss

Kyndryl Holdings Inc.’s stocks have been trading up by 7.76 percent as market optimism surges following key strategic announcements.

Key Highlights

Scotiabank has initiated coverage of Kyndryl Holdings with an Outperform rating, citing a focus on highly recurring managed IT services and a $40 price target.
The company announced a five-year extension of its technology partnership with The Hertz Corporation, which capitalizes on cloud migrations and AI enhancements to bolster Hertz’s tech ecosystem.
Kyndryl’s Q3 results reveal an adjusted EPS of $0.52, which fell short of consensus estimates, yet revenues slightly topped forecasts at $3.9 billion.
After reporting a 3% increase in year-over-year revenue to $3.9 billion, the company underscored a remarkable 24% growth in Kyndryl Consult revenues alongside a 58% surge in hyperscaler-related revenues.
New strategic partnerships and innovations, such as the launch of an AI governance technology, are set to offer compliant and scalable AI solutions in regulated environments.

Technology industry expert:

Analyst sentiment – positive

Market Position & Fundamentals: Kyndryl Holdings (KD) is navigating a complex financial environment, with recent results reflecting both challenges and opportunities. The company’s gross margin of 21.2% indicates operational efficiency, yet profitability margins (EBIT margin of 4.4% and net profit margin of 2.72%) are modest, and the pre-tax profit margin is notably negative (-3.7%), suggesting cost pressures or inefficiencies. Despite a substantial revenue base of $15.057 billion, revenue has declined by 4.91% over three years, though it’s improved 9.36% over five years. The leverage situation is concerning, highlighted by a total debt-to-equity ratio of 3.28 and a high leverage ratio of 9.2, indicating significant borrowing. Management must focus on enhancing equity returns (currently -36.64%) and addressing return on assets (-6.8%). These areas warrant strategic attention to bolster internal efficiencies and profitability.
Technical Analysis & Trading Strategy: Recent weekly price patterns for KD reveal a mixed yet upward momentum. Starting from an open of 10.59 and concluding at 12.22, the overall trend suggests bullish sentiment. The price action from 11.34 to 12.21 marks potential resistance around the 12.12 closing of February, presenting a possible profit-taking point. Analyzing recent five-minute candlestick patterns indicates fluctuating volumes with consolidation around support levels of 11.12. Traders might look to buy on pullbacks near 11.2 while aiming for a breakout above 12.22 for upside potential. Monitoring volumes closely around these levels will help validate the strength of breaks or continuations.
Catalysts & Outlook: Kyndryl’s recent strategic moves bolster its long-term positioning. Scotiabank’s optimistic outlook, focusing on Kyndryl’s stable recurring revenue from managed IT services, aligns with their high gross profit growth focus. Although Guggenheim’s reduced price target indicates cautiousness about future deal executions, recent contract extensions, like with Hertz, and a transformative AI governance product showcase proactive growth strategies. The Q3 earnings beat and strong performance in hyperscaler-related revenue growth underscore robust operational dynamics, despite slight EPS misses. Compared to sector benchmarks, the company is focusing on technological partnerships and innovative service expansions. Crucial resistance at $40 aligns with Scotiabank’s target, suggesting bullish prospects. Given multiple positive catalysts, KD is positioned for growth with a positive outlook, contingent on strategic agility to mitigate potential challenges and leverage new technological advancements.

More Breaking News

Weekly Update Feb 09 – Feb 13, 2026: On Friday, February 13, 2026 Kyndryl Holdings Inc. stock [NYSE: KD] is trending up by 7.76%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Quick Financial Overview

Kyndryl Holdings has displayed commendable growth in recent quarters despite certain challenges. For fiscal Q3 2026, the company reported a 3% increase in revenues from the previous year, reaching $3.9 billion. This performance features a robust showing in new and existing ventures. Notably, Kyndryl Consult registered a significant 24% revenue growth, while hyperscaler-related revenues skyrocketed by 58%, pointing towards a strongly positioned service segment in the cloud-based IT solutions market.

Though the adjusted earnings per share (EPS) missed expectations, landing at $0.52 compared to an anticipated $0.60, the revenue beat could indicate future potential that balances these concerns. The company’s comprehensive strategic approach, including leveraging AI and IT service innovation, emphasizes its adaptability and foresight in tackling complex, evolving market demands.

Market reactions followed suit, evidenced by KD’s recent stock performance. After opening at $11.16, shares maneuvered through varying trading ranges, suggesting investor interest was neither diminished nor overly enthusiastic. However, the stock closed at $12.22 on the latest trading day, reflecting market confidence in the company’s promising financial trajectory.

Conclusion

Kyndryl’s forecasted expansion and strategic focus on reliable revenue streams serve as key indicators of ongoing growth potential despite the small setback in earnings expectations. As the company fortifies its market presence through innovation and collaboration, the outlook remains positive. For traders, these developments suggest a fundamental strength and adaptability, positioned well for both current and future market dynamics. As Tim Bohen, lead trainer with StocksToTrade says, “I focus on what a stock is doing, not what I want it to do. Let the stock prove itself before you make a move.” This perspective is valuable as Kyndryl continues refining its strategy. Kyndryl’s narrative of growth remains compelling, underscored by thought-out ventures and responsive strategies that align with market demands.

This is stock news, not investment advice. StocksToTrade News delivers real-time stock market updates tailored to highlight the key catalysts driving short-term price movements. Our coverage is designed for active traders and investors who thrive in fast-moving markets, with a focus on volatile sectors like penny stocks, AI stocks, Robinhood stocks and other momentum plays. From earnings reports and FDA approvals to mergers, new contracts, and unusual trading volume, we break down the events that can spark significant price action.

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