TD Cowen analyst Bryan Bergin maintained a Hold rating on Fidelity National Info (FIS – Research Report) yesterday and set a price target of $81.00.
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Bryan Bergin’s rating is based on several considerations surrounding Fidelity National Info’s current and projected financial outlook. The company has expressed its intention to stabilize its model by 2025, but this comes with added variability and reduced potential upside compared to investor expectations. Although the initial stock reaction seemed exaggerated, especially given the temporary factors affecting the fourth quarter banking results, there remains limited flexibility in free cash flow conversion. The 2025 targets reflect a slight shortfall from the stated goals, influenced by factors like non-core business wind-downs and foreign exchange impacts.
The recent adjustment in FIS’s share price makes it more appealing, with core EBITDA expected to grow annually by about 6% through 2026. This growth, alongside consistent share repurchases, contributes to a projected 9-11% EPS growth. The valuation at approximately 10 times EBITDA is seen as reasonable, considering the company’s steady growth and predictability. However, Bergin notes that FIS’s focus on a second-quarter acceleration story may limit immediate investor urgency, leading to a Hold rating and a revised price target of $81.