Bright Skies Ahead? A Look at FIS after the SunGard Acquisition
FIS’s stock performance
So far in 2016, FIS’s (FIS) shares have outperformed the financial sector as well as the broad market. The Financial Select Sector SPDR ETF (XLF)(VFH) represents the financial sector. Year-to-date, the financial sector has lost 1.8%. In comparison, FIS has gained 8% during the year so far.
Analysts are bullish on FIS
On April 27, FIS’s stock closed at $66.40. With an average consensus price target of $73.83, it’s expected to gain 12% in the next 12 months. Among the 22 analysts following the stock, 16 (73%) have assigned “buy” ratings, and six assigned “hold” ratings. There were no “sell” ratings.
A Goldman Sachs (GS) analyst recently upgraded his rating on the stock and provided a positive outlook for the company. The analyst expects revenues to accelerate in 2016, as the Capco consulting business will deliver high growth in the second half of the year. Furthermore, margins will expand as the company benefits from restructuring activities following the SunGard deal.
Valuations
FIS’s shares currently trade at 2.3 times their book value, which is much cheaper than peers’ shares. Peers Jack Henry & Associates (JKHY) and Fiserv (FISV) trade at a premium to FIS.
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