The third quarter results for global fintech and payments company Fiserv Inc. (FISV) exceeded expectations. The company provides solutions for banking, global commerce, merchant acquiring, billing and payments, and point-of-sale.
However, FISV shares tanked 10% in Wednesday’s trading session, following management’s comments on the loss of a large processing client through one of Fiserv’s joint ventures, impacting 5% of North American processing volumes.
Fiserv’s adjusted earnings per share (EPS) of $1.47 rose above the Street’s expectations of $1.45 and $1.20 reported in the year-ago period.
Meanwhile, Q3 revenue climbed 10% year-over-year to $4.16 billion and surpassed analysts’ expectations of $3.96 billion. The upside can be attributed to 18% growth in the Acceptance segment, 5% in the Fintech segment, and 6% in the Payments segment. (See Fiserv stock charts on TipRanks)
President and CEO of Fiserv, Frank Bisignano, said, “Given our strong financial results year to date and increased visibility into the fourth quarter, we are tightening our internal revenue growth and adjusted EPS outlook. The strength of our assets, our agility and our new product launches continue to accelerate our growth.”
Fiserv expects internal revenue growth of 11% and adjusted EPS in the range of $5.55 to $5.60 (up 26% to 27% year-over-year) for 2021.
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Following the release, Mizuho Securities analyst Dan Dolev maintained a Buy rating on Fiserv with a price target of $160 (61.9% upside potential).
Dolev noted, “Nevertheless, we worry that the slowdown in e-comm volumes, which we estimate was due to Stripe going in-house (vs. via the WFC JV) may weigh on sentiment. We note that while volume impact is more meaningful, the actual drag on revenue is marginal amid low take rates for that revenue stream.”
The Street is optimistic about the stock with a Strong Buy consensus rating based on 7 Buys and 2 Holds. The average Fiserv price target of $148.44 implies 50.2% upside potential from current levels.
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Fiserv is currently Very Positive, as the cumulative change in holdings across all 19 hedge funds that were active in the last quarter was an increase of 7.5 million shares.
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