Fidelity Upgraded to Strong Buy - Analyst Blog

On Apr 9, 2014, Zacks Investment Research upgraded Fidelity National Information Services FIS to a Zacks Rank #1 (Strong Buy). With a strong return of 32.4% over the past year and a positive estimate revision trend, Fidelity is an attractive investment opportunity.

Why the Upgrade?

We upgraded the stock on the back of strong 2014 outlook. Continuing organic growth, growing customer base and margin expansions driven by solid demand for the company's products are the primary reasons behind this expectation.

Fidelity continues to add new clients in North America, particularly from the banking industry. The company's recent partnership with Microsoft MSFT to fight cybercrime is also a significant positive, as it will help it to expand in the fast growing cyber security market.

Per a joint report from IDC and the National University of Singapore NUS, enterprises are expected to spend approximately $500.0 billion globally to fight malware and data breaches in 2014.

Fidelity recently entered into a licensing agreement with Visa V to offer EMV enabled debit cards to its NYCE Payments Network partners. We believe increasing EMV adoption in the U.S. will drive Fidelity's top-line growth, going forward.

Moreover, strong demand for its solutions such as Cardless Cash Access solution and Active Analytics suite are expected to boost top-line growth in the near term.

Further, International sales are expected to drive growth, as the company continues to win new awards. These will help it to face significant competition from the likes of Fiserv FISV.

Earnings Estimate Revision

Fidelity is expected to report stable first-quarter fiscal 2014 results on May 1, 2014. The Zacks Consensus Estimate has remained constant at 56 cents per share over the last 30 days.

The Zacks Consensus Estimate for fiscal 2014 remained steady at $2.50 per share over the last 30 days. For fiscal 2015, the Zacks Consensus Estimate remained constant at $2.85 per share over the same period.