Fidelity National Information Services (FIS) could see upside as its stock has been trading below peers’ multiples due to concerns to its exposure to Europe and the outlook for this bank and payments company changes after some quarters of organic growth, says Brett Huff, Research Analyst at Stephens Inc.
“Fidelity National Info Systems, we like a lot. We have liked this company for quite some time, really for two things. One is that it traded below its peers multiple both on free cash and EBITDA for quite some time for a variety of reasons, one of which we think it had European exposure that some people were worried about. People perceive there to be customer concentration where I don’t think there was any meaningful customer concentration, etc. I think they have — that particular reason they have started catching up with their peers in terms of valuation,” Huff said.
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Huff says FIS is the one core-processing provider that provides the most services to the very large banks in the United States, and those banks spend the most on technology.
“FIS has put up between 4% and 5% organic revenue growth over the past several quarters, and we think there is potential upside from that number over the next year or two at any particular juncture. And as I mentioned before, since these really trade on that organic revenue growth percentage, we think that could drive the stock up. The drivers of that potential upside to growth are a couple of them,” Huff said.
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