Kyndryl Holdings Inc (NYSE:KD) shares were climbing in early trading on Thursday, just days after the news of the company considering a joint bid for DXC Technology Co (NYSE:DXC).

The stock is an "interesting investment opportunity," as the company is poised to return to revenue growth, with margin expansion and earnings of more than $3 in fiscal 2027, according to Oppenheimer.

The Kyndryl Holdings Analyst: Ian Zaffino initiated coverage of Kyndryl Holdings with an Outperform rating and price target of $33.

The Kyndryl Holdings Thesis: After its spinoff from IBM (NYSE:IBM), Kyndryl has been repricing its legacy no- and low-margin contracts, Zaffino said in the initiation note.

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As of the fourth quarter of fiscal 2024, the company had repriced around half 50% of these contracts and "approximately two-thirds will be repriced this year," he added.

The company has also been able to "strike deals with major hyperscalers, move its customer to its cost-saving operating platform (Kyndryl Bridge), and grow its Consult business by double digits," the analyst wrote.

"These tailwinds should continue for the foreseeable future, and help transform the company, which was previously viewed as a bad business or loss-leader under IBM, into an interesting GARP investment," he further stated.

KD Price Action: Shares of Kyndryl Holdings had risen by 2.02% to $25.79 at the time of publication on Thursday.

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