Kyndryl (KD 15.98%) stock is surging in Thursday's trading. The IT company's share price was up 14.6% as of 3:15 p.m. ET. Meanwhile, the S&P 500 index was up 0.7%.

Kyndryl stock is making big gains on the heels of the investor conference the company hosted yesterday. At the conference, management outlined a major stock buyback plan and gave encouraging forward guidance for the business.

Kyndryl debuts new buyback plans

Kyndryl announced that its board of directors has authorized up to $300 million in stock buybacks. By buying back and retiring stock, Kyndryl will reduce its total number of shares outstanding. The repurchasing plan suggests that future earnings will be distributed across a smaller number of shares, which means that per-share earnings would rise on a comparative basis even if net profits remained the same. The buyback plan is a good indication that Kyndryl believes its stock is currently undervalued and that management is comfortable with the company's financial positioning.

Kyndryl's new guidance has investors feeling bullish

At yesterday's investor-day conference, Kyndryl said that it anticipates non-GAAP (adjusted) free cash flow (FCF) of $1 billion for its 2028 fiscal year, which wraps in March of that year. With the company sporting a market cap of roughly $7.6 billion, that means that the stock is trading at 7.6 times expected FCF for the year -- a valuation that could still prove to be quite cheap if the business continues to improve.

Kyndryl's guidance suggests that FCF will roughly triple from its 2025 fiscal year to fiscal 2028. Meanwhile, it expects that adjusted pre-tax income will roughly double from the current fiscal year to fiscal 2028. Kyndryl's turnaround is making encouraging progress, and the stock could have significant room to run if the business shows progress in line with management's newly issued performance targets.