Fidelity Shares Drop 6.3% Despite Strong Q2 Results

Fidelity National Information Services (FIS) has reported better-than-expected second-quarter results. Shares of the fintech company dropped 6.3% in Tuesday’s trading session after its guidance for Q3 earnings of $1.66-$1.69 fell short of analysts’ expectations of $1.73.

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Q2 adjusted earnings of $1.61 per share grew 40% year-over-year and surpassed the Street’s expectations of $1.55 per share. The company reported adjusted earnings of $1.15 per share in the same quarter last year.

Revenues jumped 17% year-over-year to $3.5 billion and beat the consensus estimate of $3.4 billion. The increase in sales reflected improvement across all three operating segments, especially Merchant solutions as it witnessed 45% growth. (See Fidelity stock charts on TipRanks)

The company reported adjusted EBITDA margin of 43.7% in Q2, compared to 39.1% last year.

The Chairman and CEO of Fidelity, Gary Norcross, said, “Even as the world slowed, we continued to invest in our talent and our cloud-native solutions portfolio, creating a significant pipeline with our clients and prospects.”

For full-year 2021, the company expects to report adjusted EPS in the range of $6.45-$6.60. Also, revenues are anticipated to be between $13.9-$14 billion.

Following the release, Rosenblatt Securities analyst Sean Horgan reiterated a Hold rating on the stock with a price target of $156 (upside potential of 19.6%).

Horgan noted, “We note trends in the merchant segment in July appear to be improving, which bodes well for the higher revenue and EPS growth expectations for the year. Moreover, FIS’ banking segment continues to accelerate.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus based on 10 Buys and 4 Holds. The average Fidelity price target of $170.93 implies 31.1% upside potential from current levels.