Oppenheimer analyst Ian Zaffino spoke to Kyndryl Holdings (KD) management after a short report was published, alleging accounting irregularities, manipulation of reported adjusted EBITDA and free cash flow, unusually high capitalized costs, and the specter of higher incremental costs from IBM (IBM). Overall, the firm does not believe there is a “smoking gun.” Management also issued a statement indicating the short report contains claims that are inaccurate and deliberately misleading. Oppenheimer would use this weakness as a buying opportunity and sees the dislocation as a chance to add to positions. The firm reiterates and Outperform rating on the shares with a price target of $43.
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