IBM Spin-Off Kyndryl Announces $300 Million Buyback: What's Next For KD Stock?

Kyndryl Holdings Inc. KD is boosting investor confidence with the announcement of its first-ever share repurchase program, worth $300 million.

The International Business Machines Corp IBM spin-off is using the buyback to return capital to shareholders, signaling its belief in sustainable growth despite a competitive market.

Share Repurchase Reflects Management's Confidence

The new repurchase program comes as Kyndryl sees significant progress in both its financials and operational transformation. CEO Martin Schroeter emphasized that the buyback underscores Kyndryl's success in expanding its margins and generating free cash flow. The program allows the company to strengthen its capital structure while remaining flexible for future strategic moves.

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KD Stock Performance Shows Strength

Kyndryl's stock has demonstrated impressive momentum over the past year. Up 87% in 2023 and almost 40% year-to-date in 2024, the company has significantly outpaced market expectations.

This growth comes despite broader industry challenges, with Kyndryl's mission-critical IT services gaining traction, especially in cybersecurity and AI-driven solutions.

The technical indicators for Kyndryl stock also align with this growth, providing strong bullish signals for investors.

Chart created using Benzinga Pro

KD stock, at $30.44, trades above its five, 20 and 50-day exponential moving averages, a strong sign of upward momentum. The eight-day simple moving average (SMA) of $28.51 suggests a bullish signal for the short-term, as does the 20-day SMA of $26.16. The stock's 50-day SMA of $24.74 further supports this, reinforcing that Kyndryl is on a bullish path even over the medium term.

The Moving Average Convergence Divergence (MACD) indicator stands at 1.36, further suggesting that Kyndryl's stock momentum is bullish.

However, with a Relative Strength Index (RSI) of 79.50, the stock is in the overbought territory, which means that momentum has peaked and investors could expect a reversal from here.

The Road Ahead: A Focus On Sustainable Growth

With over three years as a public company, Kyndryl is entering a new phase of revenue growth and profitability. The $300 million share buyback reflects the company's ongoing transformation and its ability to thrive amid industry challenges.

For investors, Kyndryl's strong stock performance, backed by positive technical indicators, signals confidence, but caution is advised due to the current overbought conditions.

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