On Friday, RBC (TSX:RY) Capital Markets updated its outlook on Fidelity National Information Services (NYSE:FIS) shares, increasing the price target to $93.00 from the previous $82.00, while retaining an Outperform rating. The adjustment follows recent investor meetings with the company's CFO and Head of Investor Relations.
The firm cited several reasons for the raised target, including confidence in the Capital Markets segment to meet its medium-term revenue growth guidance of 7.5%-8.5%.
Additionally, the possibility of Banking segment acceleration was acknowledged, though there was some investor skepticism regarding the challenging comparison in the third quarter of 2024.
RBC Capital also noted that the growth in the company's Worldpay Merchant Solutions (WP) segment is less dependent on top-line growth than initially anticipated. This insight adds to the positive outlook for Fidelity National Information Services.
Furthermore, the firm highlighted the company's shift towards becoming a story of high-recurring total return, moving away from its legacy as a payments-focused entity. This transition is seen as a positive development for FIS and is reflected in the increased price target.
The new price target of $93 represents RBC Capital Markets' expectation for FIS stock value, based on these identified company strengths and strategic shifts. The Outperform rating suggests that the firm continues to see the stock outperforming the broader market or its sector.
In other recent news, Fidelity National Information Services (FIS) has been making significant strides in the financial technology sector with a series of notable developments.
FIS recently announced an expected annual growth of 9-12% in adjusted earnings per share (EPS) over the medium term, while also raising its full-year 2024 financial outlook. The company has also set ambitious targets for adjusted revenue growth and EBITDA margin expansion for the years 2025 and 2026.
In addition to its growth targets, FIS has increased its share repurchase target by $500 million to $4 billion for the year 2024, with plans for annual share repurchases between $0.8 billion and $1.2 billion in the following two years. This strategic capital allocation is expected to deliver a total annual return of 11-14%, inclusive of an approximate 2% dividend yield.
Several financial firms have recently updated their outlooks on FIS. RBC Capital Markets and Keefe, Bruyette & Woods (KBW) have both increased their price targets for FIS to $82 and $85 respectively, while maintaining an Outperform rating. TD (TSX:TD) Cowen also increased its price target for FIS from $70 to $75, maintaining a Hold rating.
These recent developments highlight FIS's commitment to innovation and growth, with a particular focus on expanding its product offerings and delivering sustainable and profitable growth.
The company's recent launch of the Atelio platform, an embedded finance platform, further underscores its dedication to innovation and growth in the financial technology sector.
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