On Wednesday, Baird has increased the price target on shares of Fiserv (NYSE:FI) to $186 from the previous $185, while maintaining an Outperform rating on the financial services technology company. The adjustment follows Fiserv's solid performance in the first quarter of 2024 and a slight upward revision of its earnings per share (EPS) guidance for the year.
Fiserv's recent quarterly report showed a robust year-over-year (yoy) growth in small and medium business (SMB) volume, with an 8% increase, and a 12% yoy rise in Enterprise transaction growth. This performance suggests that the company is likely gaining market share. The growth has been attributed in part to the success of Clover, Fiserv's point-of-sale system, and an increased penetration of value-added services (VAS), which have together improved the company's revenue yield.
Baird's positive outlook is also supported by Fiserv's long-term growth prospects, which are considered to be among the best in recent years. The firm noted that Fiserv has room for margin expansion, has returned to normal leverage levels, and is engaging in aggressive stock buybacks.
The analyst firm appreciates Fiserv's consistent track record, highlighting 38 consecutive years of at least 10% EPS growth. This consistent performance is accompanied by faster growth and less volatility compared to the S&P 500 index, with Fiserv's stock trading at approximately a 15-20% discount to the S&P's next twelve months (NTM) price-to-earnings (P/E) ratio.
InvestingPro Insights
In light of Fiserv's recent performance and the positive outlook from Baird, let's delve into some real-time data and InvestingPro Tips that could provide additional context for investors considering this financial services technology company. Fiserv's market capitalization stands at a robust $91.49 billion, reflecting its significant presence in the industry. The company's P/E ratio, a measure of its current share price relative to its per-share earnings, is 27.84, which is adjusted to 29.48 for the last twelve months as of Q1 2024, indicating investors' expectations of future earnings growth.
The company's revenue growth is also noteworthy, with a 7.07% increase over the last twelve months as of Q1 2024, underscoring its consistent performance. Moreover, Fiserv has demonstrated a large price uptick with a 34.6% total return over the last six months, signaling strong investor confidence. This is complemented by a price that is currently trading at 97.11% of its 52-week high, suggesting a sustained positive momentum.
From the InvestingPro Tips, it's important to highlight that management's aggressive share buybacks could signal their confidence in the company's valuation and future prospects. Additionally, the fact that 8 analysts have revised their earnings upwards for the upcoming period could indicate potential for earnings surprises. For investors looking for more in-depth analysis, there are additional InvestingPro Tips available, which can be accessed through the InvestingPro platform for Fiserv.
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