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Since the 1950s, financial technology has evolved, from the development of a credit card to the mobile cashless payment apps that we use today. The prevalence of "FinTech" in today’s society cannot be understated. Yesterday, Mizuho published a report in which they initiated coverage for nine companies within the Financial Payments & Technology sector.

Mizuho initiated Buy ratings for both Fiserv (FISV) and Fidelity National Information (FIS) with price targets at $145 and $165, respectively. FISV and FIS are both market leaders within the payments and processing sector of FinTech. These companies work behind the scenes to act as the middle-men for P2P transactions involving banks, merchants, and consumers.

In the past decade, approximately 3-5% of banks have closed each year. Given that FISV and FIS rely heavily on banks in order to facilitate transactions, this could have had a negative impact on their overall growth. However, In recent years, both companies have experienced exceptional growth as the increase in total assets under management per bank positively counteracts the loss of business from bank closure.

Over the last few years, FISV has experienced organic growth of ~3% per year while FIS has grown at ~3% and ~5% in 2018 to 2019 respectively. FIS has invested heavily in technology in order to improve the payment processing efficiency which is largely responsible for the growth mentioned above.

The future outlook for both companies seems to follow a similar trend. FISV is expected to continue to have medium to high growth in revenue and EBIT while the acquisition of Worldpay (WP) by FIS last year is expected to create synergies accumulating to over $500 million along with continued growth. Mizuho analysts expect that growth to continue in the near and distant future.

Disclosure: At the time of publication, I have no positions in any of the securities mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for creating this article (other than from TheStreet) and have no business relationship with any company whose stock is mentioned in this article.