FIS stock sinks after spinoff, earnings report

A poor forecast for 2023 disappoints investors.

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Fidelity National Information Services Inc., or FIS, was by far the worst-performing stock in the S&P 500 index Feb. 13 after announcing a plan to spin off the Worldpay Inc. business it bought for $43 billion in 2019.

The spinoff was big news but investors may have been more disappointed in the Jacksonville-based financial technology company’s earnings forecast for 2023.

FIS reported a $17.4 billion net loss for the fourth quarter, but that was due to a noncash goodwill write-off related to Worldpay.

The company’s adjusted earnings of $1.71 a share were a penny higher than the average analyst’s forecast, according to Yahoo Finance.

However, the company’s 2023 earnings projection of $5.70 to $6 a share was below analysts’ forecasts, which ranged from $6.13 to $7.01.

FIS’ stock fell by $9.43 to $66 on Feb. 13, a 12.5% drop.

The 2023 forecasts include the merchant payments technology business of Worldpay, since FIS expects the spinoff to take 12 months.

Once it spins out Worldpay as a separate public company, FIS’ focus will be its core banking technology business.

“FIS is returning to its roots,” CEO Stephanie Ferris said in her first conference call with analysts since taking over the job in December.

“2023 will be a year of recommitment for FIS,” she said.

She also said FIS is expanding its planned cost-cutting from $500 million in annual savings to $1.25 billion by the end of 2024, excluding the impact of the Worldpay spinoff.

Worldpay has produced disappointing results since the acquisition, which was designed to expand FIS beyond the banking technology business.

Even so, Morningstar analyst Brett Horn questioned whether divesting Worldpay is the right move, despite management’s frustration.

“The short- and long-term outlooks for Worldpay appear to be much weaker than we had anticipated, but we question whether current management is mistaking poor execution for a poor strategy and throwing out the baby with the bathwater,” Horn said in a research note.

After digesting the news, Raymond James analyst John Davis said in a research note he is maintaining a “strong buy” rating on FIS.

“All told, we do believe this is truly a kitchen sink guide from the new management team, and we still expect the Merchant spin to create significant shareholder value,” Davis said.

“As such, we are sticking with the stock but admit patience is required.”

Morgan Stanley analyst James Faucette analyst upgraded his rating on FIS from “equal weight” to “overweight” on Feb. 14, after the previous day’s drop.

“While we acknowledge continuation of recent structural issues can make it difficult for stock to work near-term, we think downside is limited,” Faucette said in his research note.

Regency says it
has low exposure
to store closings

Regency Centers Corp. reported strong year-end occupancy at its 404 properties across the country, mainly grocery-anchored shopping centers.

During the Jacksonville-based company’s Feb. 10 conference call with analysts, Regency officials said they don’t see a big impact from some high-profile store closures.

“It’s important to acknowledge that the challenging macroeconomic backdrop is bringing with it more tenant bankruptcies and early store closures, which have been relatively light for the last couple of years. But importantly, our exposure to at-risk tenants is limited,” said CEO Lisa Palmer.

Regency’s portfolio was 94.8% leased at the end of 2022, and Palmer isn’t worried about that dropping.

“Where we do have exposure, we see upside opportunities in getting spaces back and taking advantage of the strong leasing environment,” she said.

Regency will lose some tenants this year. Struggling Bed Bath & Beyond has announced about 400 store closures in recent weeks and five of those are in Regency properties, said Alan Roth, East Region president for the company.

That will leave Regency with five Bed Bath & Beyond stores.

Roth said Regency has less exposure to two chains that have recently filed for bankruptcy: it has six Party City stores and one Regal Cinema.

West Region President Nick Wibbenmeyer said the company’s new developments are performing well, including the Publix Super Markets Inc.-anchored East San Marco center that opened in Jacksonville in 2022.

“The property is 100% leased and outperformed original expectations on all metrics, including timing, cost and rents,” he said.

Regency reported funds from operations (basically earnings excluding noncash charges) of $1.05 a share in the fourth quarter, up from $1.01 in the fourth quarter of 2021.

Same property net operating income, excluding lease termination fees, grew by 4.3% in the quarter.

Treace sells $100 million in new stock

Treace Medical Concepts Inc., which completed its initial public offering in April 2021, priced a secondary offering of about 4.8 million shares Feb. 7 at $21 each.

The Ponte Vedra Beach-based company, which markets a surgical treatment for bunions, said its net proceeds after expenses from the $100 million stock sale will be about $94 million.

Treace will use the proceeds for general corporate purposes, including research and development and sales and marketing activities.

Treace sold 11.25 million shares at $17 each in its 2021 IPO, including 6.25 million new shares and 5 million shares sold by existing stockholders.

There were no existing shares sold in the secondary offering.

Duos expects at least 30% revenue growth in 2023

Duos Technologies Group Inc. said Feb. 7 it expects to report 2022 revenue of $15.4 million, 86% higher than 2021, and projects revenue to grow 30% to 36% this year to between $20 million and $21 million.

The Jacksonville-based company, which provides technology focusing on the railroad industry, expects to report final results for last year at the end of March.

“As we continue to grow our high-margin recurring revenue base through further AI enhancements, expanded service and maintenance agreements, and our new subscription offerings, we also expect steady progress towards improved profitability in the quarters ahead,” CEO Chuck Ferry said in a news release.

ComSoverign enacts 1-100 reverse split

ComSovereign Holding Corp. announced a 1-for-100 reverse stock split on Feb. 9 to lift its trading price above the Nasdaq Capital Market’s $1 minimum price requirements.

The reverse split reduced the number of shares outstanding from about 266 million to 2.66 million. The stock, which continues to trade under the ticker “COMS,” opened at $5.27 on Feb. 10 after the split.

The company was created in late 2019 by the merger of Jacksonville-based Drone Aviation Holding Corp. and ComSovereign Corp. 

Its Drone Aviation subsidiary continues to be headquartered in Jacksonville while ComSovereign’s main office is in Dallas. Besides the tethered drone business, it also operates telecommunications subsidiaries.

ComSovereign is also trying to catch up with its required quarterly financial filings to keep its Nasdaq listing.

The company filed its first-quarter 2022 report in December and its second-quarter report in January.

The company said it will file its third-quarter report by the end of February.

Florida Pension Group acquired
by One Digital

Kansas-based OneDigital Investment Advisors announced Feb. 6 it acquired St. Johns-based Florida Pension Group, which provides retirement plan and wealth management services.

Florida Pension Group, founded in 1998 by Jacksonville native Troy Tummond, has more than $500 million in assets under management.

Terms of the deal were not announced.

Shivers retires from Navitas Credit

United Community Banks announced Feb. 8 that Gary Shivers is retiring as CEO of its Ponte Vedra Beach-based subsidiary, Navitas Credit Corp.

Shivers founded Navitas, an equipment financing company, in 2008. Georgia-based United Community Banks acquired the company for $130 million in 2018.

Navitas has more than $1.3 billion in assets and 196 employees in eight locations, United Community Banks said. 



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