Kyndryl's (KD) weakness following a short report is seen as an opportunity to buy and add to positions, Oppenheimer said in a note Friday.

Oppenheimer analysts said they remain bullish on the stock and believed the company's accounting and disclosures "do not suggest nefarious activity."

The lower related party cost of services in fiscal year 2023, as highlighted in the short report released Thursday, is explained by the fact that IBM is no longer a related party as it sold down its post-spinoff ownership in Kyndryl in August 2022, the note said.

The analysts also said they do not see a meaningful attempt to manipulate free cash flow. An unknown increase in cost of service will also likely not materialize, as claimed by the short report, according to the note.

"Overall, we do not believe there is a 'smoking gun,'" Oppenheimer said, adding that management has said the short report contained "inaccurate and deliberately misleading" claims.

Oppenheimer reiterated its stock rating at outperform, with a price target of $43.

Price: 32.49, Change: +0.16, Percent Change: +0.51