Goldman: Total System Services Shares No Longer A Bargain, But Still Room For Upside

Total System Services, Inc. TSS announced a quarterly dividend of 13 cents per share payable Jan. 2. 

The Analyst

Goldman Sachs' James Schneider downgraded Total System Services from Buy to Neutral and maintained the $80 price target.

The Thesis

Schneider decided to downgrade the stock because it's approaching Goldman's price target, he said. (See Schneider's track record here.) 

Total System Services has around 5 percent upside potential, the analyst said.

The company is in a good position to win medium-sized card issuing contracts in the coming quarters, driving incremental upside to Street estimates, Schneider said. He added that he expects margin expansion in 2018.  

The stock is no longer trading at a substantial discount to its peers, but it is capable of modest multiple expansion, Schneider said. New card issuer wins and stronger margin performance are upside risks, while slower growth and consumer credit cyclicality are downside risks, he said. 

The Price Action

Total System Services was trading nearly flat at $76.59 at the time of publication. It has gained around 30 percent in the last six months and more than 50 percent year-to-date.

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