Analyst David Koning of Robert W. Baird maintained a Hold rating on Fidelity National Info (FIS – Research Report), retaining the price target of $78.00.
David Koning has given his Hold rating due to a combination of factors concerning Fidelity National Information Services’ (FIS) financials and market position. Koning acknowledges FIS’s return to stable execution and its recent pattern of outperforming estimates, which could argue for a more bullish stance. However, he simultaneously notes that the rewards and risks are fairly balanced at this time. Factors such as free cash flow dynamics, with conversion from standalone earnings estimated at 85-90%, and the potential for non-recurring add-backs, contribute to his cautious outlook. Additionally, while there is an expectation of good results for Q1 and consistent execution could lead to mid-single-digit organic growth and double-digit EPS growth, the perceived balance in risk/reward maintains the Hold rating.
Moreover, Koning considers external economic factors, like the possibility of rising interest rates, which could impact FIS’s future performance. The anticipation of longer-term high-single-digit EPS growth and the current valuation metrics also play into the Hold decision. He points out that despite FIS’s solid track record and heavy buyback activity, there are certain limitations, including the potential for a slowdown in banking growth, the impact of future interest rate increases on debt costs, and the limitation on free cash flow conversion. Koning’s analysis is rounded out by a price target that reflects both the value of FIS’s Worldpay interest and its core operations, but he also acknowledges the challenges presented by less robust free cash flow conversion and non-recurring cash expenses compared to past years.
In another report released on April 17, Bernstein also assigned a Hold rating to the stock with a $65.00 price target.
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Fidelity National Info (FIS) Company Description:
Incorporated in 1968, Florida-based Fidelity National Information Services, Inc. operates as a financial services technology company in the United States and internationally. It operates through three segments: Merchant Solutions, Banking Solutions, and Capital Market Solutions.
