FIS's Future Forward Initiative Gains Traction: Analyst Highlights Prospective $1.25B Cash Spending Reduction

Susquehanna analyst James E Friedman reiterated a Positive rating on Fidelity National Information Services, Inc. FIS, with a price target of $81.

The analyst believes that the company's Future Forward initiative to deliver a $1.25 billion reduction in cash spending seems underway, with improving margin visibility towards year's end. 

The analyst expects FIS to benefit from new prospective regulatory capital requirements. In addition, their Banking Solutions group is seeing some traction in non-FIs, specifically among Corporates and Governments. 

Also Read: Analysts Cheer Fidelity National Information Services Q1 Performance, Raise Expectations

The analyst notes that Fidelity's professional services growth in Banking remains elevated as a fair amount of implementation work continues.

For FY23, the analyst expects Merchant revenue to decline 1.6% to $4.7 billion, while the analyst adds that banking revenue will grow 1.2% to $6.8 billion. Capital Markets are likely to grow by 4% to $2.9 billion. 

In FY24, revenues are likely to grow by 1.2% to $14.7 billion, with margins of 42.9% and adjusted EPS of $6.30.

The analyst notes that Fidelity aims to reduce $50 million from Banking, $20 million from Capital Markets, $40 million from merchants, and $40 million from Corporate as a part of the $150 million cash expense reductions target in FY23.

Price Action: FIS shares are trading lower by 1.10% to $54.10 on the last check Thursday.