Fiserv’s Growth Potential and Diversification Strategy Affirm Buy Rating

David Koning, an analyst from Robert W. Baird, maintained the Buy rating on Fiserv (FI – Research Report). The associated price target remains the same with $186.00.

David Koning has given his Buy rating due to a combination of factors including recent company presentations and financial indicators. Fiserv’s strong positioning in the merchant solutions sector, accounting for around half of its revenue, is a noteworthy aspect. The company has seen some positive trends in consumer spending, as evidenced by the strength in the Fiserv small business index during April. Additionally, the potential for increasing software penetration with Clover, their payment processing solution, particularly among early adopters, is promising. Fiserv’s international expansion plans for Clover, specifically targeting markets like Australia, Mexico, Brazil, and several European countries, demonstrate a strategic approach to growth and diversification. With the Argentine market’s impact expected to diminish more quickly than anticipated, the overall revenue outlook remains positive.
Furthermore, the Financial Solutions division, also comprising about half of Fiserv’s revenue, shows encouraging signs. They are progressing through the regulatory environment (RegII) with a clear path ahead. The consistent sales performance, with clients buying additional products every hour, indicates strong cross-selling capabilities and customer loyalty. Fiserv’s strategy to encourage existing customers to purchase a more extensive range of products from their portfolio underscores their comprehensive approach to driving sales. The company’s mergers and acquisitions (M&A) strategy is also carefully considered, with a focus on deals that are accretive and contribute to growth, suggesting a disciplined approach to expanding their business. These combined factors underpin Koning’s optimistic view of Fiserv’s stock potential, leading to the Buy recommendation.

FI’s price has also changed moderately for the past six months – from $124.830 to $152.840, which is a 22.44% increase.

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Fiserv (FI) Company Description:

Fiserv, Inc. is a technology-based financial services company that provides commerce-enabling technology and solutions for financial institutions, merchants, and card issuers. Further, it offers products and services that facilitate electronic payment transactions. Also, the company provides account processing, loan origination and servicing products, item processing and source capture, cash management and consulting services.