Analyst Note| Brett Horn, CFA |
After reassessing our assumptions, we are boosting our long-term growth and margin assumptions, as well as raising our fair value estimates, for the three bank technology providers we cover--lifting our fair value estimate for Fidelity National Information Services to $131 per share from $98, for Fiserv to $108 per share from $89, and for Jack Henry to $149 per share from $131. Additionally, we have lowered our uncertainty rating for Fidelity National to medium from high, and raised our stewardship rating on the firm to Standard from Poor. We are maintaining our wide-moat rating for Jack Henry, and our narrow-moat ratings for Fidelity National and Fiserv. We believe providing core processing and complementary services remains a wide-moat activity, given extremely high switching costs, but that M&A has diluted Fidelity National and Fiserv’s businesses to a point where a narrow-moat rating is more appropriate.