Citigroup (NYSE: C) sent shares of Fidelity National Information Services (NYSE: FIS) up 1.1% for the day after the New York-based bank initiated coverage on the company.
Citi’s analyst wrote, “In addition to the attractive valuation, other reasons for our favorable view include FIS’ leading market position; 85% recurring revenue model; cash flow characteristics; and potential synergies from its recent acquisition of Metavante. The major investment risks are listed below. Overall, we view the risk/reward as attractive and recommend that investors Buy FIS.”
The bank pointed out that Fidelity National Information Services has an attractive valuation and that its recently completed merger with Metavante could be a positive for the company.
Citigroup also commented on risk: “Our main concern is that bank spending in the area of core systems may not recover before 2011. Based on investor Q&A at conferences, other concerns seem to be (i) Currency (international revenues are 12% of total and currency has moved against FIS since guidance); (ii) Bradesco contractual uncertainty.”
