Evercore ISI maintains “In Line” rating on Fidelity National Information Services (NYSE:FIS)
Evercore ISI maintains its “In Line” rating on Fidelity National Information Services (NYSE:FIS), with a price target of $55.00. The firm is cautious about FIS’s near-term prospects, particularly in its Banking Solutions business and competition from rivals targeting larger financial institutions.
One notable competitor is Fiserv, which recently secured Prosperity Bank and transitioned it to its DNA platform. This move demonstrates Fiserv’s appeal among larger banks. On the other hand, Fidelity National, through its WorldPay unit, is expected to lose market share in the small and medium-sized business (SMB) payments sector to competitors like Fiserv’s Clover, Square Seller, Toast, and Global Payments.
Challenges also extend to FIS’s Capital Markets segment, which is expected to face a 5 percentage point headwind from licensing revenue based on its performance in the fourth quarter of 2022. Despite these challenges, Evercore ISI’s adjusted EBITDA estimates for FIS for the fourth quarter of 2023 and the full year 2024 remain slightly optimistic, being 2% above and in line with the consensus, respectively.
According to InvestingPro data, Fidelity National Information Services has a market capitalization of $36.59 billion and has maintained dividend payments for 21 consecutive years, increasing its dividend for the last three. As of the latest recorded date, FIS had a dividend yield of 3.37%. Over the past three months, FIS has seen an 18.89% price total return, indicating positive investor sentiment towards the company’s strategic efforts. Despite a downward revision in earnings expectations for the upcoming period, analysts predict that the company will remain profitable.
InvestingPro offers additional insights into FIS, including expectations of net income growth versus concerns over short-term obligations exceeding liquid assets.
Analyst comment
Positive news: Evercore ISI maintains its “In Line” rating on Fidelity National Information Services (FIS) with a price target of $55.00.
Neutral news: FIS faces challenges in its Banking Solutions business and competition from rivals targeting larger financial institutions.
Negative news: FIS is expected to lose market share in the SMB payments sector and faces headwinds in its Capital Markets segment.
Market outlook: Despite challenges, FIS’s adjusted EBITDA estimates for Q4 2023 and FY2024 are slightly optimistic, and the company has a positive price total return. However, concerns over short-term obligations exceeding liquid assets may impact the market.
