Fidelity National Information's Growth To Accelerate In Q2 After A Slow Start In Q1: Analyst

Several analysts lowered the price forecast on Fidelity National Information Services, Inc. FIS following fourth-quarter results reported on Tuesday.

Revenue of $2.599 billion, which increased 3% year over year on a GAAP basis, missed the consensus of $2.63 billion, and adjusted EPS of $1.40 (+49% Y/Y) beat the street view of $1.36.

The company expects FY25 revenue of $10.435 billion to $10.495 billion versus the consensus of $10.6 billion and adjusted EPS of $5.70 – $5.80 against the Street view of $5.72.

FIS projects first-quarter of 2025 revenue of $2.485 billion – $2.510 billion (vs. $2.568 billion est.) and adjusted EPS of $1.17 – $1.22 (vs. $1.28 estimate).

BofA Securities analyst Jason Kupferberg trimmed the price forecast from $96.00 to $87.00 while retaining a Buy rating.

The analyst says that shares are down sharply due to weaker-than-expected banking growth for fourth-quarter FY24/first-quarter FY25.

Management cited late-quarter headwinds, including a 1% contract adjustment impacting recurring Banking revenue and a 3% decline in non-recurring revenue due to a delayed license deal and a $20 million reversal of a termination fee from a canceled bank merger, per the analyst.

The analyst writes that Banking revenue growth for 2025 is expected to accelerate to 3.7%-4.4%, driven by a 150bps boost from strong 2024 sales (+9% YoY) and ~60bps from the Dragonfly acquisition, partially offset by lower non-recurring revenue.

The analyst adds that recurring revenue is projected to outpace overall segment growth, while non-recurring and professional services are expected to be modestly slower.

Moreover, Kupferberg writes that WP revenue is expected to be a 20-30bps headwind, and Capital Markets revenue growth guidance of 6.5%-7.0% is slightly below Investor Day targets (7.5%-8.5%) due to a lower acquisition contribution (~140bps vs. 150-200bps expected) and a higher 2024 base.

The 2025 FCF conversion guidance of 82%-85% reflects expected improvements in AP and AR management. With the banking segment missing, investor focus has shifted to FCF performance, adding the analyst.

Other analysts’ price revisions are:

Susquehanna analyst James Friedman downgraded the stock from Positive to Neutral rating and trimmed the price forecast from $103 to $81.
RBC Capital analyst Daniel Perlin maintained an Outperform rating and cut the price forecast from $104 to $95.
Wells Fargo analyst Andrew Bauch kept an Equal-Weight rating but lowered the price forecast from $88 to $80.
Stephens & Co. analyst Charles Nabhan reiterated an Overweight rating and slashed the price forecast from $100 to $90.
Compass Point analyst Dominick Gabriele maintained a Buy rating and cut the price forecast from $126 to $113.
Morgan Stanley analyst James Faucette retained an Equal-Weight rating and lowered the price forecast from $92 to $86.
Keefe, Bruyette & Woods analyst Vasundhara Govil kept an Outperform rating and slashed the price forecast from $102 to $92.