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Fidelity National Information Services (NYSE:FIS) rose 3.5% after a Bernstein analyst said she views the payment tech company as a good candidate for potential activist involvement.
“We see value creation opportunity through divestiture of underwhelming merchant business, better company operation, better guidance management and improved earnings quality,” Bernstein analyst Harshita Rawat, who has a market perform and $70 price target on FIS, wrote in a note on Tuesday.
Rawat argued that a divestiture of the merchant business could unlock at least 30% stock upside for FIS. She sees a 8x EV/EBITDA 2023 for merchant & LDD multiple for banking/capital markets businesses. She also highlighted that FIS trades at 9.7x 2023 PE vs peers such as Fiserv (FISV) trading at 14x.
“The FIS-Worldpay merger has been underwhelming,” Rawat wrote. “The revenue synergies have been modest at best. Worldpay has turned out to be a less attractive asset than originally perceived, and has added more earnings volatility and valuation discount to an otherwise steady-ish FIS business.”
Fidelity National (FIS) purchased Worldpay for about $35 billion in 2019.
Last Tuesday Bloomberg reported that Fidelity National (FIS) plans to cut thousands of jobs as incoming CEO Stephanie Ferris strives to win over investors by cutting costs.
Image and article originally from seekingalpha.com. Read the original article here.