Analyst Note| Colin Plunkett, CFA |
Narrow-moat FIS Global's results are being noticeably affected by the ongoing coronavirus pandemic as organic growth fell to 2% from the previous year, a sequential decrease of 500 basis points. Most of this deceleration was attributable to slowing growth in merchant solutions, which houses the company’s Worldpay acquisition. Here, organic growth collapsed from 10% in the fourth quarter to zero growth this quarter. Before suspending guidance, the company had anticipated 2020 revenues of approximately $13.6 billion. We now anticipate revenues will be approximately $1 billion lower in 2020, about a 7.5% variance from before. Nevertheless, we do anticipate revenues will rebound, which is why we’re only lowering our fair value estimate to $98 per share from $99.