Susquehanna cuts FIS stock rating, lowers target to $81

On Wednesday, Susquehanna analyst James Friedman downgraded Fidelity National Information Services (NYSE:FIS) from Positive to Neutral and reduced the price target to $81 from $103, despite the company’s perfect Piotroski Score of 9 indicating strong financial health. The stock has fallen 11% in the past week, with InvestingPro analysis suggesting it’s currently trading below its Fair Value. The decision reflects concerns over the company’s financial performance, particularly in its major Banking segment, which makes up approximately 66% of total revenues and has faced numerous setbacks recently.

Friedman noted the company’s management team has shown areas of strength, such as an 11% year-over-year increase in Professional Services and durable Capital Markets results. While the company maintains a solid 38% gross profit margin and generated $2.8 billion in levered free cash flow over the last twelve months, he expressed concern over fading margins and cash flow, questioning the future direction of the company. The Capital Markets segment’s guidance of 6.5-7% also fell short of the previously projected range of 7.5-8.5%. For deeper insights into FIS’s financial health and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed Research Reports.

The analyst pointed out that FIS is experiencing challenges with free cash flow, combined with weak reported margins, which could be indicative of future performance issues. These challenges come in a difficult market where bank IT budgets are uneven, raising doubts about the management’s ability to get back on track.

Friedman suggested that Fidelity National Information Services needs time to reconfigure its operations. He also highlighted a growing concern within the IT Services sector, which FIS is now a part of, to be watched more closely. The reduction in the price target to $81 reflects these challenges and the analyst’s adjusted expectations for the company’s stock performance. Susquehanna’s aftercall notes on the matter are available upon request for investors seeking further details.

In other recent news, Fidelity National Information Services (FIS) has been in the spotlight due to revisions in its financial outlook by several analysts and its fourth-quarter results. Stephens’ Charles Nabhan lowered the price target for FIS from $100 to $90, maintaining an Overweight rating. This followed a sell-off of shares due to a disappointing outlook for 2025, which indicated weaker than expected margins and free cash flow (FCF), as well as revenue projections expected to increase later in the year.

BofA Securities also adjusted the price target for FIS, reducing it from $96 to $87 but maintaining a Buy rating. The adjustment followed FIS’s announcement of its FCF conversion rate for 2024, which fell short of the expected 85%.

On a similar note, Raymond (NSE:RYMD) James reduced its price target for FIS from $101 to $78 while maintaining an Outperform rating. This revision came after FIS’s fourth-quarter results, which showed revenues slightly below expectations.

In addition, FIS’s fourth-quarter results beat earnings expectations but fell short on revenue, and its guidance was below analyst estimates. The company posted adjusted earnings per share of $1.40, but its revenue of $2.6 billion missed expectations of $2.63 billion.

These are recent developments that highlight the challenges and opportunities for FIS in the near term.

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