TD Cowen upgrades Fidelity National to 'Buy' on cleaner model, macro resilience

Investing.com -- TD Cowen upgraded Fidelity National Information Services (NASDAQ:III) to “Buy” from “Hold” raising its price target to $92 from $80 driven by company’s shift toward a more stable and transparent business model amid growing macroeconomic uncertainty.

The firm said FIS’s divestiture of a 45% stake in Worldpay and acquisition of Issuer Solutions creates a plug&play offering that increases recurring revenue, enhances margins, and improves free cash flow.

FIS is the right investment for right now,” TD Cowen wrote, calling the transaction a top grade swap for an even steadier model.

On a separate note TD Cowen analysts downgraded Global Payments as it plans to take Worldpay stake off Fidelity’s hand, saying it undermines efforts to streamline operations and introduces fresh execution risks.

Unlike other recent deals in the space, TD Cowen said the FIS transaction carries minimal near-term synergy risk, with modest revenue synergy targets and a quicker path to normalized leverage.

Issuer Solutions is nearing completion of a cloud-based platform modernization and has already secured client renewals that should support growth into 2025, the note added.

The upgrade follows what TD Cowen called solid preliminary 1Q performance that de-risks the 2025 outlook.

We see an opportunity for multiple expansion and potential upside to consolidated pro forma free cash flow, analysts said.