Kyndryl (NYSE:KD) was in focus on Friday as Bank of America initiated coverage on the IT infrastructure service company with a Buy rating and $40 price target, noting it appears "poised for inflection."

Shares rose 1% in premarket trading, adding to Thursday's strong gain.

"Since the spin from IBM in 2021, the company has diligently cultivated an increasingly profitable book of business and is targeting a return to organic constant-currency growth by F4Q25," analyst Tyler DuPont wrote in a note to clients. "While we acknowledge recent meaningful share price outperformance following the positive investor day on 11/21, we believe the improving mix and growth trends are not fully reflected in KD’s current multiple vs. peers and see room for further upside."

Kyndryl is growing in size and becoming "increasingly profitable," as evidenced by recent quarterly results, DuPont added, which should drive "sustainable" top-line and bottom line growth, with pre-tax margins doubling by 2027.

Additionally, DuPont said he was impressed by the shift towards high single-digit margin contracts, an improvement in long-term booking trends and the company's recent investor day, where it announced medium-term guidance and a new $300M buyback plan.