On Wednesday, BofA Securities adjusted its outlook on Fidelity National Information Services (NYSE:FIS), a leading provider of financial services technology. The firm increased the price target to $90 from the previous $88, maintaining a Buy rating on the stock. This change follows a robust second-quarter performance by FIS, which exceeded expectations.
The financial services technology company's shares have seen an uptick after reporting a successful second quarter, which included a forecast surpassing prior estimates.
BofA Securities believes that the potential for further valuation increases lies in the growth of FIS's Banking segment. Management's projection for Banking growth exceeds 5% in the fourth quarter, a significant rise from the roughly 3% seen in the second quarter.
The anticipated growth in the Banking segment is expected to stem from a slight increase in recurring revenue, attributed to the ramp-up of bookings in the second half of 2023, and a recovery in non-recurring revenue, benefiting from easier comparisons.
BofA Securities reaffirmed its Buy rating, citing several key strengths of FIS, including high recurring revenues, sustainable margin expansion, and the company's practice of returning cash to shareholders.
Fidelity National Information Services also holds a spot on the BofA US1 list. This endorsement reflects the firm's confidence in FIS's value proposition and its financial health. BofA Securities' update suggests a positive outlook for the company's near-term performance, underpinned by solid financial fundamentals and strategic growth in key business segments.
InvestingPro Insights
Recent analyses from InvestingPro provide further context to the positive outlook on Fidelity National Information Services (NYSE:FIS). The company has demonstrated a commitment to shareholder returns, with a history of raising its dividend for 3 consecutive years and maintaining dividend payments for 22 consecutive years. This consistent return to shareholders aligns with the strengths highlighted by BofA Securities.
InvestingPro data underscores FIS's stature in the market with a substantial market capitalization of $42.68 billion. While the company trades at a high earnings multiple, with a P/E ratio of 75.69, analysts have revised their earnings upwards for the upcoming period, signaling confidence in FIS's profitability. Additionally, the stock is trading near its 52-week high, reflecting a large price uptick over the last six months, which may interest investors looking for momentum.
For readers seeking deeper analysis, InvestingPro offers a wealth of additional tips, with 6 more insights available that can help investors make informed decisions. These insights include expectations on net income growth and profitability for the year, which may be particularly relevant given the strategic growth noted by BofA Securities. To explore these insights further, readers can visit InvestingPro's platform for Fidelity National Information Services at https://www.investing.com/pro/FIS.
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