Zacks Investment Research downgraded shares of Fidelity National Information Services Inc. (FIS) from OUTPERFORM to NEUTRAL on August 07, 2014, with a target price of $58.00.
Fidelity reported strong second-quarter results with both earnings per share and revenues comfortably beating the Zacks Consensus Estimate. The company provided optimistic revenue outlook for the full year, with growth forecasted to accelerate in the second half. However, faster growth from lower margin international and consulting business will negatively impact EBITDA margins in the rest of 2014. We believe that Fidelity's commanding position in the financial services market, increasing international exposure, recurring revenue model, diversified product portfolio, cost synergies from acquisitions and a loyal customer base will drive growth over the long term. However, increasing consolidation in the banking sector, challenging environment for the Payments Solutions business, stiff competition and uncertain regulatory environment are the major headwinds affecting profitability. Thus, we downgrade our recommendation from Outperform to Neutral and set a price target of $58.00.
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