Baird, a financial services firm, has updated its outlook on Fiserv (NYSE:FI) (NYSE: FISV), a leading global provider of payments and financial services technology solutions.
The firm raised the price target on Fiserv shares to $210 from the previous $200, while reaffirming an Outperform rating on the stock.
The analyst at Baird expressed a positive view of Fiserv's performance, anticipating that the company would finish the year with strong results.
The projection is based on the expectation of a slight beat in revenue and earnings per share (EPS) for the third quarter. Furthermore, the analyst anticipates that Fiserv's guidance for 2024 will be adjusted towards the higher end of the revenue and EPS spectrum.
Fiserv's success in gaining market share across its business segments was highlighted as a key factor in the analyst's optimistic outlook. The company's ability to outperform in the current market environment, which favors strong performers, was also noted as a reason for the raised price target.
The analyst's commentary suggests that Fiserv's stock could sustain a price-to-earnings (P/E) ratio of approximately 20 times the next twelve months (NTM) earnings, given its status as a "steady compounder" and its competitive position in the market. This assessment reflects confidence in the company's continued growth and profitability.
In other recent news, Fiserv saw a significant increase in second-quarter 2024 revenue, reaching a record $5.11 billion, a 7% year-over-year increase, and a 31% increase in second-quarter earnings. Despite anticipating a non-cash impairment charge of between $400 million and $600 million due to the expiration of its joint venture with Wells Fargo, Fiserv maintains its medium-term performance outlook, projecting 9-12% organic revenue growth and 14-18% adjusted earnings per share growth for 2025 and 2026.
Several analyst firms have expressed confidence in Fiserv's growth strategy, with Bernstein raising its price target to $244, RBC Capital maintaining a $183 price target, TD Cowen raising its target to $200, BMO Capital increasing its target to $191, and Citi maintaining a Buy rating with a price target of $187. Fiserv has also entered into a multiyear agreement to continue providing processing services for Wells Fargo's merchant customers and expanded its collaboration with PayPal (NASDAQ:PYPL) Holdings, Inc. to enhance the checkout process for U.S. merchants.
InvestingPro Insights
Baird's optimistic outlook on Fiserv aligns with several key metrics and insights from InvestingPro. The company's market cap of $111.25 billion USD underscores its position as a prominent player in the Financial Services industry, as noted in one of the InvestingPro Tips. This substantial market presence supports Baird's confidence in Fiserv's ability to gain market share across its business segments.
The analyst's projection of strong results is further supported by Fiserv's impressive financial performance. According to InvestingPro data, the company has shown a revenue growth of 7.2% over the last twelve months, with a robust gross profit margin of 60.96%. These figures indicate a healthy financial position, aligning with Baird's expectation of a slight beat in revenue and EPS for the third quarter.
Moreover, the InvestingPro Tips highlight that Fiserv is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.71. This suggests that the stock may be undervalued considering its growth prospects, which could justify Baird's increased price target and Outperform rating.
It's worth noting that InvestingPro offers 11 additional tips for Fiserv, providing investors with a more comprehensive analysis of the company's potential. To gain access to these insights and make more informed investment decisions, consider exploring the full range of tips available on InvestingPro.
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