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Barclays analyst Ramsey El-Assal upgraded Fidelity National Information Services (NYSE:FIS) to Overweight from Equal Weight on Thursday on the view that its Capital Markets Solutions business “has become an increasingly critical growth driver.”
The sell-side analyst cited a number of secular growth trends in the segment that could drive up FIS’s valuation, including: international expansion, increased penetration of Insurance, Commercial Lending and other non-traditional verticals, and more cross-sell opportunities with Banking Solutions and Worldpay.
In a note to clients, El-Assal called FIS undervalued, changing hands at nine times his 2024 price-to-earnings estimate. Year-to-date, the stock fell 24.3% vs. S&P 500’s 12.8% climb.
“As these trends continue to play out in the Capital Markets segment and Banking reverts to its normalized mid-singledigit growth profile, we see the overall heritage FIS growth algorithm as driving normalized ~5% growth,” he contended.
The Overweight rating contrasts with the SA Quant system rating of Hold and agrees with the average Wall Street analyst rating of Buy.
