Stephens cuts FIS stock price target to $90, keeps overweight rating

On Wednesday, Stephens analyst Charles Nabhan revised the price target for Fidelity National Information Services (NYSE:FIS) shares, reducing it to $90 from the previous $100, while maintaining an Overweight rating on the stock. The revision comes as FIS shares have declined over 11% in the past week, though InvestingPro analysis suggests the stock is currently trading below its Fair Value. The adjustment follows a sell-off in shares attributed to a disappointing outlook for 2025, which indicated weaker than anticipated margins and free cash flow (FCF), as well as revenue projections that are expected to increase more towards the end of the year. Despite these concerns, the company maintains a strong financial foundation with a current revenue of $10.03 billion and has maintained dividend payments for 23 consecutive years.

Nabhan noted that the adjusted revenue forecast aligns with targets set during the investor day, but project delays, which led to a revenue shortfall in the fourth quarter, are likely to continue posing challenges in the near term. The first quarter guidance has also been set lower than expected. The analyst pointed out additional factors that could impact the company’s financial performance, including less than optimal working capital management, increased capital expenditures, and dis-synergies from the Worldpay integration.

Despite these headwinds, the demand environment for FIS remains stable, and early successes in sales initiatives, as indicated by a 9% increase in annual contract value (ACV), support the medium to long-term positive outlook for the company. However, Nabhan suggests that investors adopt a "wait and see" approach in the short term, as the pressure is now on Fidelity National Information Services’ management to demonstrate improved results throughout the year. InvestingPro data shows the stock’s RSI indicates oversold conditions, with additional insights and 8 more ProTips available to subscribers through the comprehensive Pro Research Report.

In other recent news, Fidelity National Information Services (FIS) has been the subject of revised financial outlooks from both BofA Securities and Raymond (NSE:RYMD) James. BofA Securities lowered its FIS stock price target to $87, citing a lower than expected free cash flow (FCF) conversion rate for 2024 due to increased capital expenditures and working capital deficits. Despite maintaining a buy rating, the firm expressed concerns over the company’s execution capabilities.

Similarly, Raymond James trimmed its price target for FIS to $78, following the company’s fourth-quarter results which showed revenues marginally missing expectations. Despite this, the firm upheld its Outperform rating on FIS shares, noting the company’s strong sales momentum, including record core wins and a 9% increase in new sales.

On the earnings front, FIS reported fourth-quarter results that surpassed earnings expectations but fell short on revenue. The company posted adjusted earnings per share of $1.40, outperforming the consensus forecast of $1.36, while revenue of $2.6 billion missed expectations of $2.63 billion. For the first quarter of 2025, FIS projects EPS of $1.17-$1.22 and revenue of $2.485-$2.51 billion, both below analyst estimates. These are recent developments that investors should take into account.

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