This financial services company beat analysts’ estimates by $0.18 last quarter, and 23 analysts have recently increased their EPS forecasts for the company.
Fidelity National Information Services (FIS)
From Pivotal Point Trader
The financial services sector is in the midst of a digital transformation. With 20,000 clients worldwide and 27 billion transactions processed, Fidelity National Information Services (FIS) is in a unique position to capitalize. Its business and share price have reached a pivotal point of inflection.
Fidelity is the world’s leading provider of financial technology solutions. It offers an industry-leading software platform, and consulting services to make sure everything runs smoothly. And with major divisions in banking, payments, brokerage, and corporate services, its reach is deep. Clients merely add on the bits and pieces they want to service their customers. Increasingly, they want many of those bits and pieces.
In 2016, sales grew 40.1% to $9.24 billion as banks, brokers, insurers and enterprises embraced digital. There is good reason. It improves operational efficiencies. Customers have come to expect the convenience of doing most transactions on their smart phones, tablets and computers.
For the industry, it’s a huge win. Replacing customer service agents with computer software is an enormous cost savings. According to a Reuters report, European Union banks closed 9,100 branches in 2016, and gave 50,000 workers pink slips. Although the industry still employs 2.8 million people, that figure is the lowest since 1997.
This trend is moving to the United States. Wells Fargo (WFC), an enthusiastic early adopter of financial tech, plans to shutter 450 branches. Widespread closures are planned at Bank of America (BAC) and JPMorgan Chase (JPM), too. The goal is to move a large part of the front end of the operation online.
It helps that banks are now courting a generation who grew up online. Eighty-five million millennials are coming of age right now. McKinsey & Co., a global consultancy, finds they are considerably more open to online banking than the preceding generations.
All of this dovetails with the services Fidelity provides.
After reaching a high at $96.67 recently, Fidelity shares have pulled back. The consolidation is almost complete. The stock is now near-term oversold. A rally beyond $96.67 would be a major upside breakout and will set up the next big leg higher.
Jon Markman, Pivotal Point Trader, issues@e.moneyandmarkets.com, 1-800-291-8545, November 15, 2017