- Jefferies on Friday downgraded Fidelity National Information ( NYSE: FIS ) to Hold from Buy to reflect risks to FY23 Street estimates as margins are unlikely to expand till H2 and decelerating banking growth.
- As inflationary cost pressures are likely to persist into 2023, estimates for ~100bps of Y/Y expansion in FY23 are at risk, analyst Trevor Williams noted, adding that "the Street is baking in close to a best-case for timing/magnitude of cost saves".
- Williams said the payment services provider's merchant organic revenue growth will likely continue to trail peers since growth is capped in the mid-single-digits as mix of revenue shifts to ~90% e-commerce/enterprise.
- "Until there is greater visibility around the medium-term growth profile and margin trajectory, we see limited potential for multiple expansion (without an activist)," he added.
- Jefferies also slashed its price target on Fidelity ( FIS ) to $75 from $95 (7.5% potential upside to last side), reflecting 12x the research firm's estimate for FY23 EPS.
- Late last month, Bernstein said Fidelity ( FIS ) is a good candidate for potential activist involvement .
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Fidelity National cut to Hold at Jefferies to reflect margin risks